ENERGY COST ADJUSTMENT CARBON REDUCTION
ISSUE BRIEFING FOR THE
HONORABLE MEMBERS OF
THE
LOS ANGELES CITY COUNCIL
./ ./
OFFICE OF MAYOR
ANTONIO R. VILLARAIGOSA
2010
TABLE OF CONTENTS
PAGE
3. Once the City Council
“a~serts jurisdiction” over the DWPBoard’s action
using Charter Section
245, what are the Council’s options?
4. How is the Board of
Water and Power Commission action different from the
PAConsulting
recommendation? What is the difference between the rate
increase recommended
by the DWPBoard / Mayor’s Plan and the plan
recommended by PA
Consulting?
5. The
that the DWPBoard’s proposal will
raise rates between
8.8% and 28%. How are those increases applied?
What does that mean
for the average ratepayer’s bill?
6. We all support
ending our over-dependence on coal, but why must we
act now? Can’t we
simply raise the rates a little bit now to get our head
above water, and
address the carbon issue later?
7. If the Council
approves this increase, how will DWPrates compare to
surrounding Investor
Owned utilities like SCE,PG&Eand SDG&E?
8. How many jobs would
the DWPBoard‘s proposal create?
Would they be
IBEWjobs or private
sector jobs?
9. What is a Green
Doctor? How would they help average residents?
10. What is a Feed-in–Tariff? What are its
benefits and how does it create
jobs?
11. How will these
proposed increases affect business in
Wouldn’t the PA
Consulting proposal be better for business?
12. Councilmember
Koretz is urging the Council to reject the DWP‘s proposal
and instead ask the
Board to “restructure” the ECAFbefore approving any
additional increases
beyond April 1. What impact would that have on the
City’s commitment to
renewables?
13. If affirmed by the
Council, what impact will the DWPBoard’s action have
on the City’s General
Fund?
14. Would Council
rejection of the DWPBoard’s action put the City’s finances
at risk?
ONCE THE CITY
COUNCIL” ASSERTSJURISDICTION” OVER
THE DWP BOARD’S
ACTION USING
CHARTER SECTION 245,
WHAT ARE THE COUNCIL’S
OPTIONS?
Once the City Council
votes to assert jurisdiction over the
DWP Board’s
action, it has
21 calendar days to take one of
. three
basic options:
1. The Council may affirm the Board’s
action with a
majority vote.
2. The
Council may
Receive and File the item, thus
deeming the action
approved.
3. The
Council may veto
the Board action with a 2/3
majority vote, and
remand the item back to the Board
for further
consideration.
The Council may not:
1. Make
any amendments to
the Board action.
2. Require
the Board to
amend its original action in any
way.
BOTTOM LINE: If
the Council asserts
jurisdiction over the
Board action, it has
two options; (1) approve or (2) reject.
The Charter prohibits
any Council-initiated amendments,
negotiations or
compromises even after the Council asserts
jurisdiction over the
Board action.
How IS THE
BOARD OF WATER
AND POWER COMMISSION
ACTION DIFFERENTFROM
THE PA
CONSULTING
RECOMMENDATION?
WHAT IS THE DIFFERENCE
BETWEENTHE RATEINCREASE
RECOMMENDED BY THE DWP BOARD /
MAYOR’S PLAN
AND
THE PLAN RECOMMENDED
BY PA
CONSULTING?
• The only difference
between the DWP’s Board action and
the PA Consulting
recommendations is that the DWP
Board dedicates a
portion of the recommended rate
increase to a
Renewable Energy & Energy Efficiency Trust
Fund.
• There is no
difference between the rate increases
recommended by the
Council-authorized
independent
consultant and the DWP
Board. Both
recommend an
identicaI2.7c/kWh
increase and raising the cap to 0.8
c/kWh per quarter to provide
DWPthe flexibility
to
maintain financial
ratios. Note: Neither report
recommends returning
to a 0.1c/kWh cap.
• The only difference
iswhether the DWPdedicates a
portion of the rate
increase to renewable energy (DWP
action) or whether it
uses the rate increase to perpetuate
the fossil
fuel-dependent status quo (PA Consulting).
THE
TIMES HAS REPORTED
THAT THE DWP
BOARD’S PROPOSAL WILL
RAISE RATES BETWEEN 8.8% AND
28%. How ARE
THOSE INCREASES
APPLIED? WHAT DOES
THAT MEAN FOR THE
AVERAGE RATEPAYER’S BILL?
• The majority of
ratepayers (55% – 60%) will see their
electricity rates increase
by
approximately 8.8%.
• In actual cost, this
translates into an average of a $2.40 –
$3.40 increase in the
monthly bill.
• When the Times
mentions a 28.8% increase, it is referring to
the increase applied
to only the 5%- 7%highest-end
ratepayers (Tier3).
DWP rates are structured to
encourage conservation.
Those who
conserve pay less,
those who use more
energy pay exponentially more.
The chart below
explains the proposed rate increases.
These increases are
identical to the increases proposed by
PA Consulting.
WE ALL SUPPORT ENDING
OUR OVER-DEPENDENCE ON
COAL, BUTWHY MUST WE
ACT NOW? CAN’T WE SIMPLY
RAISE THE RATES A
LITTLEBIT NOW TO GET OUR HEAD ABOVE
WATER, AND ADDRESS THE
CARBON ISSUE LATER?
• Raising
the rates now
only to perpetuate the status quo at
DWPwould only tighten
the noose around the necks of
LA ratepayers.
• Under AB 32 and a
subsequent executive order by
Governor
Schwarzenegger, the City of
be
on the hook for $634
million in carbon fines in 2012 if we
don’t take radical and
immediate action to wean the
DWP off of its
over-dependence on fossilfuels (Based on
$40 per ton of
carbon).
• Establishing a
renewable energy and energy efficiency
trust fund now is
absolutely essential because we will be
able to invest in
projects to reduce our carbon
emissionsand create
good jobs. Doing this now
minimizes
the city’s
contribution to the inevitable state
mandated carbon fines.
IF THE COUNCIL
APPROVES THIS INCREASE, HOW WILL DWP RATES COMPARE TO
SURROUNDING INVESTOR OWNED
UTILITIES LIKE SCE ,
PG&E AND SDG&E?
• Even after this
proposed rate increase, DWP’s
electricity
rates will be
comparable to
surrounding Investor Owned
utilities’
(IOUs) current
rates, and will remain lower than
the IOU’s rates even
after their expected rate increases.
How MANY
JOBS WOULD THE DWP BOARD’S PROPOSAL
CREATE?
WOULD THE JOBS BE IBEW JOBS
OR PRIVATE SECTOR
JOBS?
• The DWP Board’s
proposal will create 18,000 jobs over 10
years.
• Solar Installation
and Manufacturing: 16,500 jobs over 10
years.
• Energy Efficiency:
1,140 jobs over 10 years.
These job creation
estimates refer to private-sector jobs.
The DWP’s current plan
for 400 MW of utility-owned solar
power will also create
an additional 700+ IBEW Local 18
jobs.
WHAT ts A
GREEN DOCTOR? How WOULD GREEN
DOCTORS/ENERGY
EFFICIENCY HELP AVERAGE RESIDENTS?
• Fundsfrom the
Renewable Energy & Energy Efficiency
TrustFund will augment
ARRAfunds to support a GREEN
DOCTORS & EXPANDED
DIRECT
INSTALL PROGRAM.
• Under this program,
the DWP,working in conjunction with
the LA Community
College District, the Community
Development
Department, and the Joint Training Institute,
will recruit
entry-level
workers, train them
and deploy
them in
teams to conduct
energy audits and energy
efficiency retrofits .
•’ These retrofits can
include: lighting
exchange, airconditioning
tune-ups, pool pump
exchange and
refrigerator
exchange.
Energy efficiency has
three advantages:
• First,it is the
cheapest way of fulfilling our energy needs –
at approximately 2.5 cents
per kWh, it is cheaper than
coal.
• Second, it can be a labor-intensive
activity offering
meaningful job
creation potential.
• Third, it offers a
way for residential and commercial
customers to cope with
rising electricity rates.
WHAT IS A
SOLAR FEED-
TARIFF?
WHAT ARE ITS
BENEFITSAND HOW DOES IT CREATE JOBS?
• A solar
Feed-in-Tariff allows residential or commercial
property owners who
install solar panels to sell electricity
directly to DWPat a
guaranteed price (¢ per kWh) for a
set period of time.
• Residential and
commercial customers who participate in
the solar
Feed-in-Tariff program can drastically reduce or
eliminate their electricity
bill, and in some cases
generate
a net profit by
feeding solar energy back to DWP.
• A robust solar
Feed-in-Tariff program contemplated by
the DWPboard’s action
would create approximately
16,500 jobs over ten years .
How WILL
THESE PROPOSED
INCREASES AFFECT BUSINESS IN
WOULDN’T THE PA
CONSULTING PROPOSAL BE BETTERFOR
BUSINESS?
• The DWP Board action
and PA Consulting recommend
identical increases in
electricity rates for LA commercial
customers. There is no
difference in the recommended
rate ·change.
• However, the DWP
Board action provides additional
programs and opportunities
for commercial
customers to
reduce or eliminate
their electricity bill through efficiency
and Feed-in-Tariff programs.
• The PA Consulting
report does not contemplate programs
to assist LA
businesses/commercial customers.
IF AFFIRMED BY THE
COUNCIL, WHAT IMPACT WILL THE DWP
BOARD’S ACTION HAVE ON
THE CITY’S GENERAL FUND?
The DWPBoard action includes
two
significantly positive
.impacts on the City’s
General Fund:
1. Ihe Board
approved a package of cuts and
efficiencies that will
allow the
department to transfer
an additional $20 million
to the City’s
General Fund THIS
FISCAL YEAR.
2. The
Board’s actions
will yield an additional $70
million in
annual transfer to the
City’s General Fund based on the
over increase in
DWPrevenue.
COUNCILMEMBER KORETZ
IS URGING THE COUNCIL TO
REJECTTHE DWP’s PROPOSAL
AND INSTEAD
ASK THE BOARD
TO
“RESTRUCTURE”THE ECAF BEFOREAPPROVING
ANY
ADDITIONAL INCREASES
BEYOND APRIL 1.
WHAT IMPACT WOULD THAT
HAVE ON THE CITY’S
COMMITMENT TO
RENEWABLES?
• Councilmember
Koretz’s proposal (submitted to the DWP
Board on March 18)
would eviscerate LA’s commitment
to renewable energy,
promote over-dependence on
carbon-emitting fossil
fuels and set
up LA
ratepayers for a
crushing rate hike in
2012 (based on carbon fines we will
owe the State of
• Council member
Koretz recommends that the Council
reject the DWPplan to
create a Renewable Energy &
Energy Efficiency
TrustFund, and instead “restructure” the
ECAFin a
manner that limits
the increases to coal and
natural gas only.
• The practical result
of this action would be a massive and
direct pass-through of
the state-sanctioned carbon fines
to the individual LA
ratepayer without any local job
creation or investment
in renewable energy.