DWP UNVEILS PLAN TO INCREASE RATES FOR 2004, 2005.

Byline: Harrison Sheppard Staff Writer

Los Angeles Department of Water and Power officials announced on Monday plans to hike water rates 11 percent next year and 7 percent more in 2005, costing the average homeowner $50 a year.

The rate hikes, backed by Mayor James Hahn, are justified to pay for heightened security since 9-11 and improved water quality required by new regulations, officials said. The increases would be the first in 11 years.

General Manager David Wiggs said rising operating costs also were a factor, but that a rate hike could have been put off for a year without the other issues.

``Those are the two primary areas forcing us to move now,'' Wiggs said. ``If we don't, we will jeopardize our bond rating, which will cost us more money, and that is not in the customer's best interest.''

The increases require approval from the City Council and the DWP board.

Some homeowners groups criticized the plan, saying the agency should do more to control costs.

```Security' and 'water quality' are great buzzwords,'' said Richard Close, president of the Sherman Oaks Homeowners Association. ``But the central question for the City Council, the mayor and the city controller is: Is this organization run efficiently? And do they need to increase their revenue at a time of economic trouble in Los Angeles?''

Close said the agency had historically been inefficient, but that most officials ignored that as long as it wasn't raising rates.

Gerald Silver, president of Homeowners of Encino, said he recognized that the agency has additional costs for security and water quality, but thinks they are excuses for raising rates to pay for new users added to the system. He believes the agency should charge new users higher rates to pay for the infrastructure improvements made to the system to accommodate new buildings and housing developments.

``The Porter Ranches and Warner Centers of the worlds are the ones who should bear the costs, not the ones who've been on-line for decades,'' Silver said. ``New users should pay for growth is what it boils down to. As long as they allow the new user to pay no differently than the old user, there's going to be unlimited demand.''

Wiggs said any agency that has held off on rate increases for 11 years has proved its efficiency. If it were not for the new federal requirements on water quality and security, he said, the DWP would have been able to hold off an increase for another year.

He added that the agency does not charge new users more because the older users also have substantial capital costs because of repairs and replacement to older pipes and other infrastructure.

``I've been in this utility business a long time. The problem with that argument is it assumes all the people who have current infrastructure are fine. Some of these pipes have been in the ground since Cy Young was pitching in 1911.''

The DWP's current operating budget is $2.3 billion for electricity and $600 million for water. The water side is increasing by $24 million in 2004 and $65 million in 2005. The first year's increase is smaller in total dollar amounts because it would not take effect until March.

In the first year, the increase amounts to about $2.40 on the average homeowner's monthly bill and $1.75 a month in 2005.

Hahn said the city needs to do what it can to protect the water system.

``Los Angeles' water system is one of our most valuable assets, and we must do everything we can to ensure its safety and reliability,'' Hahn said in a written statement.''

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com