LADWP Board Approves Electric Rate Changes to Modernize and Upgrade Power Infrastructure and Continue Power Supply Transformation to Clean Energy

Proposed Power Rate Ordinance is sent to City Council for Consideration

The recommended power rate ordinance provides for a $5.85 average monthly increase for residential customers using a typical amount of energy (500 kilowatt-hours, or kWh, per month) at the end of five years. That represents an average monthly increase of $1.17, or 1.56 percent each year. Depending on the amount of power a customer uses, their monthly bill for electric service could increase between $4.20 (250 kWh per month) to $26.30(900 kWh per month), at the end of five years. The proposed ordinance will provide average annual revenue increases of $144 million over the next five years for a total of $720 million.

The Board’s action today follows over six months of public outreach and incorporates input from residents, businesses, a variety of stakeholders and the Office of Public Accountability/Ratepayer Advocate (OPA/RPA). The five-year electric rate proposal will allow the Los Angeles Department of Water and Power (LADWP) to accelerate the replacement of aging power infrastructure; continue modernizing in-basin power plants to reduce ocean water cooling, improve efficiency, and ability to support renewable energy; support the growth of rooftop solar; and continue expanding renewable energy and energy efficiency programs to meet state climate change mandates.

“This power rate increase will fund two main things: meeting the local, state and federal mandates to ensure that we convert our power resources to renewables; and repairing our aging and broken infrastructure,” said Mel Levine, Board of Water and Power President. “Without this rate increase, we will default on our mandates, and risk power disruptions that would have astronomical costs and significant impacts to our quality of life.” He adds, “While no elected official wants to put forth a rate increase, I urge the City Council to pass this rate increase. Approving this rate proposal is the responsible thing to do.”

About 80 percent of new power revenues are necessary to meet clean energy and climate change goals and regulatory requirements. Over the next 10 to 15 years, LADWP will eliminate the use of coal power to reduce greenhouse gas emissions, expand renewable energy to 33 percent of power sales by 2020, and increase energy efficiency to reduce electricity use by 15 percent by 2020. LADWP must also modernize its coastal power generating stations to eliminate the use of ocean water for cooling while improving their fuel efficiency, reliability and flexibility to back up the increase of renewable energy that will be brought into the power grid. 

More revenues are necessary to upgrade and replace aging electrical infrastructure, much of which was installed between the 1920s and 1970s. Nearly half of LADWP’s 320,000 power poles are at least 60 years old, which is the average design life of a pole. 

Incorporating input from the OPA/RPA and stakeholders, combined with declining fuel costs and other changes in the energy market that will be passed along to customers, the proposed power rate increases are 0.9 percent per year lower than those originally proposed by LADWP in July.

LADWP expects the proposed power rate ordinance to be considered by the City Council in the coming weeks together with the water rate ordinance approved by the Board on Dec. 15, 2015.

In a report on the proposed power rate action issued last week, the Ratepayer Advocate characterized the rate request at “just and reasonable,” and recognized the Department’s support and inclusion of reporting mechanisms in the rate ordinances as “unprecedented and a reflection of more mature and sustainable management practices.” 

At the Board meeting, representatives of the Central City Association, the Greater Los Angeles Chamber of Commerce and the LA Business Council along with environmental organizations including The Sierra Club, Natural Resources Defense Council and the Environmental Defense Fund also provided statements of support for the proposed power rate increase.

The rate proposals will next be considered by the Los Angeles City Council’s Energy and Environment Committee and the full City Council thereafter.

For more information about the proposed water and power rates request, visit www.MyLADWP.com

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