The Los Angeles City Council rejected a proposal Tuesday for a water rate increase from the Department of Water and Power (DWP).
The proposed increase, which would add about 3.4 cents a month for the average water customer, is needed to pay for pipe maintenance and other facility improvements, DWP officials said.
“This is essential to the department to have the revenue adjusted,” said Winifred Yancy, manager of government and neighborhood relations for the DWP.
The city council sent back the request, asking the utility to address any financial revenue discrepancies from years of surplus. Also, the council asked the DWP to look at the impact of rate adjustments on customers and how this might create disincentives for people to conserve water.
Jim McDaniel, assistant senior general manager at the DWP, told the city council that revenues collected from the rate increase would be used for pipe replacement and water quality improvements.
“We’re not replacing main lines as we should be in our system,” McDaniel said. “But without additional funds we can’t accelerate the program.”
DWP officials will review the concerns and return to the city council possibly in November. DWP is currently asking for the water rate increase of $0.097 per billing unit, and would become effective Jan. 1 through Dec. 31, 2011.
DWP has identified a $21.6 million shortage in actual revenue from water sales this year, and identifies $379.9 million as the target revenue for fiscal year 2011.
According to Yusef Robb, a spokesman for City Council President Eric Garcettu, 13th District, part of the concern is that DWP officials came to the city council earlier this year, asking for a necessary rate increase for electricity. An audit revealed the utility company was misleading the public, Robb said.
“The DWP has once again demonstrated a capacity of unwillingness to make it clear as to why a rate increase is needed at this time,” Robb said.
McDaniel said that the increase, or water rate adjustment, is part of a rate structure that changes, depending on water consumption. DWP uses several components to calculate the rate, but as water use decreases, so does the cost of using the water.
McDaniel said the water rate adjustment is a key component of a rate structure in the City of Los Angeles, which allows customers to have no fixed fee in water rates, and customers only pay for the water they use, McDaniel said.
“We felt at the time rates were developed that a fixed fee would be counter to the message of conservation we were trying to send,” McDaniel said.
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