Los Angeles – After weeks of increasingly acrimonious dispute, the Board of Water and Power Commissioners bowed today to pressure from the City Council and voted unanimously to increase electricity bills by an average of 4.8 percent starting July 1.

The rate hike is considerably smaller than the 6.5 percent increase the board approved on March 18 and a 5.7 percent increase approved March 31. Both those increase were vetoed by the council.

The council reiterated on Wednesday that it would support a rate hike of no more than 4.8 percent during a recession.

“It has become apparent to the commission… that what we need to do is take a deep breath, work with the City Council, work with the mayor’s office, and try to do what is best for the city of Los Angeles,” Commission President Lee Kanon Alpert said today.

Mayor Antonio Villaraigosa said, “With the approval of a compromise plan today by the Board of Water and Power Commissioners, the city now has a reasonable rate plan that safeguards the financial health of the Department of Water and Power while protecting ratepayers.”

Villaraigosa added that the rate hike “addresses the concerns of ratepayers, commits the DWP to clean, renewable energy, and maintains the fiscal well-being of the DWP.”

DWP Acting General Manager Raman Raj warned the smaller increase would “make it almost impossible” for the DWP to meet a goal — set by Villaraigosa — to have renewable energy make up 20 percent of the DWP portfolio by the Dec. 31.

Raj said it would also force the DWP to scale back certain operations but added, “We will take whatever actions are necessary to ensure our bond rating is maintained.”

“Though the recommendation before you (the commission) is not what was originally requested, we believe it will garner the most support and therefore secure approval,” Raj added.

Villaraigosa’s deputy chief of staff, Matt Szabo said “no solution, which is where we were last week, was simply unacceptable.”

Under the city Charter, the council has more than a week to decide whether it will assert jurisdiction over the rate hike.

If the council allows that period to elapse without taking action — which is likely because the board went along with its recommendation — then the rate hike will stand.

Raj said he will wait until the rate hike becomes final before deciding whether to release $73.5 million that the city had been expecting from DWP. He has been withholding that money since the council rejected a previous rate hike proposal last month.

Ray Ciranna, the acting city administrative officer, said without that infusion of cash from the DWP, the city’s budget deficit would grow to $221 million this fiscal year, instead of shrinking to $148.9 million.

The rate hike approved by the board today will take the form of a six-tenths of a cent per kilowatt hour increase in the DWP’s Energy Cost Adjustment Factor surcharge.

Of that amount, a half-cent would be used to offset the DWP’s failure in recent years to collect a large enough surcharge to cope with volatile fluctuations in the prices of oil and natural gas.

The other tenth of a cent would be used to fund Villaraigosa’s programs to develop new sources of renewable energy.

DWP Chief Financial Officer Jeff Peltola initially estimated the rate hike proposed by the council would average out to 4.6 percent system-wide. However, he later corrected that and said the rate hike would actually average out to 4.8 percent system-wide.

All DWP customers will have their bills increase 4.8 percent because the DWP offers discounts to those consume less energy, Peltola said.

Large businesses can expect a 5.3 percent rate hike; medium-sized businesses, 4.7 percent; and small business, 4.3 percent, Peltola said.

The breakdown for residential customers will be determined, in part, by a rate restructuring ordinance pending before the council, said Joseph Ramallo, spokesman for the DWP.

Raj said a series of rate hikes is necessary to meet the DWP’s fiscal and operational targets.

A study conducted by experts from PA Consulting had recommended a series of four rate increases of up to 6.5 percent each, over a year. When pressed by the council, however, PA Consulting said a minimum increase of 4.8 percent might be enough to “tide the DWP over” for a few months.

Szabo said Villaraigosa is determined to meet his renewable energy target of 20 percent by 2010, and 40 percent by 2020. He said the goal is to avoid being fined hundreds of millions of dollars by the state, and have Los Angeles be coal-free by 2020.

“He is committed to that goal and we are going to continue to work with the council to make sure that we can do what we need to do to achieve that goal,” Szabo said. “If it means a future rate adjustment, then that’s what it means.”

Asked how the mayor would defend a rate increase to Angelenos struggling to make ends because of the recession, Szabo responded, “Look, no one wants to make these decisions. This is tough time to raise

rates and we would not be doing it unless we absolutely had to do it, but we’re committed to making sure that the process is as open and transparent as possible.”

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