DWP gears up to sell skeptical customers on its proposed rate hikes

Since it was created more than 100 years ago, the Department of Water and Power has been a titan of Los Angeles, controlling not just the city’s access to vital resources but billions of dollars in revenue that has helped gain influence at City Hall.

But as leaders of the nation’s largest municipal utility embark on a new push for rate increases, they face an unprecedented level of public scrutiny. And that is going to require a substantial public outreach as it seeks to significantly increase water and power bills.

The agency is facing a skeptical city after a series of embarrassing events. There was the botched rollout of a $181-million computer system that led to thousands of incorrect bills and hundreds of millions of dollars in unpaid tabs. City Controller Ron Galperin audited two secretive nonprofits funded by the DWP to promote worker safety and training and found trustees spent $660,000 on meals and travel over five years. This summer, a technician for the utility was charged with misappropriating more than $4 million in public funds.

Then there are the regular TV images of exploding water mains. The most high-profile one was last July when a break under Sunset Boulevard sent 20 million gallons gushing through Westwood and onto the UCLA campus.

In some ways, the DWP finds itself in the same position as another once-struggling institution, the Los Angeles Police Department, said Raphael Sonenshein, executive director of the Pat Brown Institute at Cal State L.A. He noted that the LAPD had to reach out to the community and become more transparent after being tarnished by the Rodney King beating and weak response to the L.A. riots in 1992.

“Now, it becomes a department that, like the LAPD, in order to achieve its goals and be successful, has to have a very strong connection to the public beyond its basic mission and I think that’s a change,” Sonenshein said.

DWP Chief Financial Officer Jeff Peltola said the agency knows it needs to sell the rate increase, noting the utility’s senior management team briefed Valley Alliance of Neighborhood Councils just one day after releasing the rate proposal last week.

“In the past, it’s been a lot less formal in how we’ve done it,” he said.

The DWP’s rate proposal would bring in an additional $1.13 billion in revenue over the next five years. Typical residential water and power customers would see their bill increase $24, from $132 a month to $156. High-use customers would see their monthly charges increase from $292 to $381. Even with those increases, the typical monthly bill would be lower than utility bills in neighboring Burbank, Santa Monica and Long Beach.

“We know from experience that investing in the city’s critical pipes, poles and other water and power infrastructure pays off in reducing main breaks and power outages,” said Marcie Edwards, DWP general manager.

Revenue from the higher rates would also be used to expand the local water supply, making Los Angeles less reliant on imported water from Northern California and the Colorado River. That water is more expensive and could prove to be unreliable in the event of a major earthquake. The DWP is also under a legal mandate to move off of coal and onto cleaner but more expensive renewable energy sources.

That’s likely what residents can expect to hear at more than 50 community meetings the utility has scheduled through the end of the year. The focus on seeking community involvement is a response to a savvy customer base that cares where its renewable energy comes from and how it can conserve water in a drought.

Utility officials will also reach out to neighborhood councils, which were created more than 15 years ago in 1999. Their purpose was to increase engagement and help Angelenos feel more connected to a city government that’s responsible for nearly 4 million residents. Since their creation, the 96 councils have taken on a larger, more formal role when it comes to the DWP. An agreement between the utility and the local groups gives them 120 days to review any multiyear rate increase before it is considered by the city’s Water and Power Commission.

“The neighborhood councils are far more developed now. We have the DWP Oversight Committee. It just gets more input. We work along with them to make sure we come out with the best proposal,” said Peltola, the utility finance chief.

That much was evident in Mayor Eric Garcetti’s statement on the proposed higher rates.

“Before I agree on an exact amount of an increase, I want to hear what our customers have to say and get the analysis from our [independent] ratepayer advocate,” he said.

As they communicate with those customers, utility officials know they have a credibility gap to overcome, given the recent public relations blunders. It’s something that the mayor acknowledged in his 2014 State of the City address.

“We can’t ask you to pay more for your water and power when the DWP screws up your bill,” Garcetti said. “This department must earn back your trust.”

To do that, Jack Humphreville, chair of the DWP Advocacy Committee, expects to see a “dog and pony show” from utility officials.

“That’s going to be a big thing. They’re going to go around to all the neighborhood councils, the environmental guys, the homeowners groups — they’ll go to anyone who will have them,” Humphreville said.

The DWP’s chief of staff says that’s true.

“We go to anyone, whether a neighborhood council or a specific interest group that wants us to come to them and present,” said Guy Lipa, noting that DWP staff members were trained to present the utility’s rate case at community meetings.

If the rates are approved by the DWP commission, they go next to the Los Angeles City Council and the mayor. If all approve, the soonest the new rates could take effect would be January.

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