Griffith Park Wayist

5 comments:

1. Petra Fried in the City said... July 7, 2011 1:45 PM

   And they didn't even get the rate increase percentages right:
   
   The 26% Electric Zap
   06.20.2011
   
   Jack Humphreville
   
   LA WATCHDOG - Our residential POWER rates are projected to increase by about 26% over the next two and a half years, or 9.6% per year, substantially higher than the rate of inflation.
   
   And while this percentage increase of 26% is not too different from the 24% increase in our water rates, the total dollar difference is over four times, $800 million for power versus $200 million for water.
   
   This billion dollar bump does not include the increase in the 8% Power Transfer Fee or the 10% City Utility Tax that add another $150 million to the Ratepayers’ tab. Nor does it include an additional $120 million in our sewer fees that are part of our anxiously awaited bimonthly bill from our Department of Water and Power.
   
   Overall, we are talking about an increase of $1.25 billion in our DWP bills over the next two and a half years, assuming that the Mayor does not increase his Trash Tax for the sixth time since 2005.
   
   About 70% of the proposed power system rate increase relates to its Basic Business Needs. These include costs associated with meeting the $3.4 billion of Regulatory Mandates over the next three years (Solar, Other RPS, and Once Through Cooling), the ever growing pension costs for the 70% funded DWP Retirement Plan, inflation, wage increases, and other basic requirements.
   
   The basic business costs also include an astonishing $530 million over the next three years to “Protect the Ability to Borrow.” This averages out to about $175 million per year, or about 5.5% of this year’s power revenues.
   
   The proposed 26% power rate increase also includes $509 million of operating and capital costs for the Strategic Power Investments for Energy Efficiency ($47 million), Renewables ($110 million), Power Reliability ($319 million), and Accelerated Coal Replacement ($33 million), all of which DWP considers vital to its long term reliability.
   
   There are many aspects of the power rate increase that need more review: the DWP pension plan; the IBEW Labor Premium; manpower and staffing levels, especially given the hiring of 1,600 City employees; the efficiency of DWP’s operations and the need for benchmarking as recommended by the last two charter mandated Industrial, Economic, and Administrative Surveys; the efficiency of Shared Services; and the Joint Training and Safety Institutes.
   
   Also needing additional scrutiny are the Solar Initiatives, including Solar Incentives, Feed In Tariffs, and Utility Built Solar installations; the five year projections that include the income statements, balance sheets, and cash flows; the Rate Restructuring Plan; the infamous Energy Cost Adjustment Plan; the cost of any cap and trade payments; and the impact of Proposition 26 (the Supermajority Vote to Pass New Taxes and Fees Act) on the Rate Increases and the Power System’s 8% Transfer Fee to the City’s General Fund, especially since this matter will be litigated.
   
   However, there are four areas that need a comprehensive review and analysis.
   
   What are the tradeoffs between the Power System’s current AA- credit rating; the costs associated with protecting that credit rating, especially given DWP’s high debt ratio; the very modest increase in interest rates associated with a downgrading to A+ rating (still a very respectable investment grade rating that allows access to the bond markets); and how does a lower investment grade credit rating impact the increase in rates?
   
   We also need to have a thorough understanding of the Strategic Investment in Power Reliability, the Department’s past performance subsequent to the 2008 rate increase that was designed to address the infrastructure’s reliability, and whether the proactive steps associated with this Strategic Investment are sufficient to insure long term reliability of our Power System.
   
   snip...  

2. Bill Haller said... July 8, 2011 11:02 AM

   Still waiting for the No on Measure B folks to come up with their own solar plan... The clock's ticking.  

3. Petra Fried in the City said... July 8, 2011 11:17 AM

   Did the No on Measure B people you're talking about (who exactly) say they would present a solar plan?
   
   Otherwise, it's a long wait Bill.  

4. Bill Haller said... July 8, 2011 2:21 PM

   Yeah. Stephen Box did on my FB. This is why I'm so nonplussed by the Hatfields, Humphrevilles, Boxes, Kayes... They incite old white voters on saving pennies while offering nothing toward the long term upgrading of our seriously out of date energy grid. Does L.A. really need to have a Chicago summer (1995) where hundreds died? Guess which age group was hit the hardest?  

5. Petra Fried in the City said... July 8, 2011 2:49 PM

   Jack Humphreyville is very good at analysis, and I appreciate that.
   
   I'd like to see Stephen send you his solar plan, if he said he would.
   
   Oh, the answer is: THE ELDERLY and THOSE OF LIMITED MOBILITY.  

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