DWP PROPOSES 1-YEAR 11 PERCENT RATE HIKE FUTURE INCREASE REQUESTS WOULD NEED ANALYSIS.

Byline: James Nash Staff Writer

Stung by widespread criticism of its two-year plan to raise water rates by 18 percent, the Los Angeles Department of Water and Power now wants city officials to approve only the first year's 11 percent hike now and look at another increase later.

The move doesn't preclude future rate increases, even the 7 percent increase that the DWP had sought in 2005. But it would force the department to get separate approval for future rate hikes after an outside consultant determines the need for the increase.

The DWP's retreat drew a mixed reaction from a growing number of critics who said the utility had failed to make the case for a two-year increase estimated to cost the average resident about $50 a year.

Jim Alger of Porter Ranch, who has spearheaded opposition to the hike among the city's network of neighborhood councils, called the DWP's decision to revisit the rate a victory for the advisory panels.

But Alger noted that the amount of money generated by the 11 percent increase over a year - roughly $25 million - is similar to the $28 million in water revenue the city-owned utility transfers into the municipal general fund.

``One hundred percent of their rate increase is really a hidden tax,'' Alger said. ``What I'm looking to see is whether the DWP or the City Council is at least going to be honest about that.''

The appointed commission that oversees the DWP approved the two-year, 18 percent water rate increase in December, precipitating a groundswell of community opposition that reached the City Council in March. On March 30, the council voted to require an outside financial justification of rate increases.

On Tuesday, the DWP commission is scheduled to consider the 11 percent, one-year increase.

City Council members who rejected the 18 percent hike said they were willing to accept the smaller increase now and tie future rate hikes to the outside analysis.

The DWP faces additional costs to comply with new environmental regulations and deserves a one-time increase to meet its bond obligations, said Councilman Tony Cardenas, who chairs a council committee that deals with the utility.

``I anticipate that the DWP will have to catch up with those expenses,'' Cardenas said. ``Realistically, we may do more damage than good by delaying the increase by more than the next couple of months.''

Councilman Greig Smith, who introduced the motion to require an outside analysis, hadn't seen documents about the 11 percent proposal and couldn't comment, said Mitchell Englander, Smith's chief of staff.

Councilman Bernard C. Parks, chairman of the council budget committee, said elected officials need to rely at least in part on the DWP's own analysis. Parks also noted that the DWP's most recent rate increase came in the early 1990s.

``None of us has the ability to analyze the numbers to that level,'' Parks said. ``I don't know of many things that have held static for 10 years and have had no increases in cost.''

Gerald Gewe, the DWP's assistant general manager for water, said he hopes the rate increase will take effect in June after the City Council approves it by the end of this month.

A quick resolution by the council will ensure that the city gets the full $28 million transfer of proceeds from water sales to its general fund, Gewe said.

Gewe said the DWP's continuing need to upgrade water quality and protect against terrorism will make future rate increases inevitable.

``This rate increase will ultimately be needed,'' Gewe said of the 11 percent. ``I believe the transfer is a legitimate way of returning dividends to our shareholders, which is the people of this city.''

James Nash, [phone]

james.nash(at)dailynews.com