City Council Approves Water Rate Action.

Average Residential Water Bill to Increase by 1.6%

LOS ANGELES -- The Los Angeles City Council gave final approval today to a proposed Los Angeles Department of Water and Power (LADWP) water rate action designed to increase revenues by 2.75 percent over each of the next two years and strengthen the Water System's financial position. The measure goes into effect 30 days after being signed by the Mayor and published in the Daily Journal.

LADWP General Manager Ron Deaton said that the additional revenues will be used to fund worthwhile projects and programs designed to further improve the quality of Los Angeles' drinking water, upgrade and maintain the City's aging water system, and follow through on its environmental commitments in the Owens Valley.

The additional revenues will be collected through a combination of changes that include: phasing out a subsidy, known as the "Test Bill," for large-volume commercial customers; establishing an Owens Valley Regulatory Adjustment Factor, introducing a Low-Income and Lifeline Subsidy Adjustment; and raising the base rates.

"I am confident that LADWP has truly done its due diligence prior to taking these actions," said H. David Nahai, president of the Board of Water and Power Commissioners. "Over the past year, the LADWP has done everything possible to minimize this rate action, and has thoroughly discussed the proposal with communities and commercial customers around Los Angeles. Furthermore, the need for the rate action is supported by an independent, third-party review, and by our various constituencies, including many Neighborhood Councils."

Under the new water rate structure, residential customers will see increases in their bills ranging from 1.6 percent to 1.9 percent in 2006-07, depending on their level of water usage. This change represents about 42 cents to $2.16 per month. For 2007-08, the increase will vary from 2.1 percent to 2.3 percent, or 58 cents to $2.91 cents per month. The 2006-07 rate adjustment will go into effect 30 days after the ordinance is signed by the Mayor, and the 2007-08 rate adjustment will be effective on July 1, 2007.

For commercial customers, the rate increase will be about 1.5 percent (approximately 50 cents per month) for a store with a 1-inch meter during the first year, and 2.4 percent (about 83 cents per month) beginning July 1, 2007. Large customers that have been receiving the "Test Bill" subsidy will see a higher impact the first year and then smaller increases as the subsidy is phased out. For example, the water rate for a hotel with a 6-inch meter will increase by 11.5 percent annually during 2006-07 and by 5.1 percent during 2007-08.

The water rate action was approved by the Board of Water and Power Commissioners on July 25, 2006, following many months of public workshops and presentations to Neighborhood Councils, large commercial customers, business groups and other stakeholders. In addition, an independent audit, conducted by the Barrington-Wellesley Group, Inc. (BGW), recommended water revenue increases of 3.9 percent in 2006 and 3.5 percent in 2007.

In an effort to ensure that the need for additional revenues was minimized, the Board of Water and Power Commissioners and Department management held several public hearings to scrutinize the proposed Water System budget on a line-by-line basis. As a result of these intensive budget reviews, the proposed water revenue increases were reduced to 2.75 percent in each of the next two fiscal years.

The Los Angeles Department of Water and Power, the nation's largest municipal utility, provides reliable, low-cost water and power services to Los Angeles residents and businesses in an environmentally responsible manner. LADWP services about 1.4 million electric customers and 680,000 water customers in Los Angeles.