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Higher Electric Rate Proposal Dead, For Now

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In a dramatic duel between the City Council on one side and the mayor and Department of Water and Power on the other over how large a rate hike DWP ratepayers would receive, any hike at all is dead for at least the next three months.

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The City Council wanted a 0.6 cent per kilowatt hour (KWH) raise; the DWP board wanted 0.7 cents per KWH hike, which it represented as a compromise, since the mayor wanted a 0.8 cent per KWH hike.

At stake for the mayor was a bevy of new wind, solar, and geothermal projects; at stake for the city, according to scary comments from the DWP, was $73 million that DWP was supposed to kick into our fiscally struggling city's general fund. But late Wednesday night, the Council unanimously voted down DWP's proposal. As this L.A. Times story explains:

the standoff had effectively killed the effort by Mayor Antonio Villaraigosa, the council and the DWP to impose higher rates for the next three months. That's because Thursday was the deadline to sign off on the increases, which can only be imposed on a quarterly basis under California law, officials on both sides of the dispute said.

The L.A. Times talked to valley residents thrilled the hike is delayed.

The Times also has a very helpful editorial untangling the history and structure of political responsibility over the DWP in L.A., which helps explain the context for this duel between mayor and City Council. Some excerpts:

The DWP has long been overseen by a five-member Board of Water and Power Commissioners, each member named by the mayor and confirmed by the City Council. Originally, however, members served staggered five-year terms, so leadership was to some degree independent of any particular mayor or any interest group backing the mayor. No single commissioner could be removed in the middle of a term by the mayor without the assent of the council. The commissioners were in a very real sense a board of directors: They hired, and could fire, the department's general manager.

But independence is necessarily at odds with accountability, and over time voters altered the City Charter to put the DWP under more direct control of elected officials. One amendment gave the mayor -- acting with the consent of the City Council -- the power to hire and fire the general manager. More recently, seeking to make the department even more accountable, voters allowed the mayor to oust the general manager without the council's consent. They also eliminated commissioners' five-year terms and allowed the mayor to remove board members at will. The result is that now both the general manager and the commissioners serve at the mayor's pleasure.

Commissioners can still keep the department on its toes. But because the commissioners and the general manager are equally answerable to the mayor, it's unreasonable to expect the board to object to an initiative that comes from the department or directly from the mayor's office. Last week's Board of Water and Power Commissioners vote on the mayor's carbon surcharge thus came off as something of a charade. The mayor wanted the plan; department management presented the plan; and the board, answerable to the mayor, adopted the plan.

And for now, the City Council has killed the plan. But the fight over rate hikes will doubtless continue into the next quarter. See City of Angles blogging about how the DWP rate-hike proposal began.

The image associated with this post was taken by Flickr user Juan Tan Kwon. It was used under user Creative Commons license.

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