DWP increases rates on 'excess water use' even as drought ends.

Water hogs in the city of Los Angeles may soon be in for a surprise when their bills from the L.A. Department of Water & Power show rate increases of 29 percent to 66 percent on a portion of their water use.

To discourage waste, a new rate structure goes into effect next week that will employ two basic prices for water. A cheaper price will be charged for base usage, and a more expensive one will kick in for any excess.

Beginning Feb. 16, the new rate structure will appear on the bills of all 177,000 thousand businesses within city boundaries, plus all homes and apartment buildings. It will raise bills for about one-third of commercial and industrial customers, and the remainder will see savings, DWP officials estimate.

"The intent is to encourage conservation, not penalize people," explained Jerry Gewe, DWP engineer for water resources. "But I won't claim that everyone who looks at it will view it this way."

"I don't know (if it will work). But I'm hoping (conservation) will be the end result," said L.A. City Councilwoman Joan Milke Flores. As chairwoman of the council's Commerce, Energy and Natural Resources Committee, she voted against the new rates when the council approved them in December because she said she believed renters were not justly treated.

The new rates are not directly related to the DWP's declaration last week that ample recent snowfall in the eastern Sierras -- the city's main supply source -- has essentially ended the drought for city residents.

Rather the changes evolved from recommendations of a "blue ribbon" citizens commission created by Mayor Tom Bradley following a public outcry over proposed rate increases in 1991.

Testy business and residential customers have pressured the L.A. City Council sporadically in the 1990s to minimize rate hikes. Conservation-minded DWP customers are using less water than prior to the drought, and they don't want to pay more for less.

Ironically, the new rates will spike upwards during the warmer months, when sprinklers and air conditioners are hungrier. But DWP officials said their costs to acquire water in the summertime are higher, so "price signals" must be sent to customers.

Overall, the plan will be "revenue neutral" only for the first year. That means revenue collected above last year's $277 million will be returned to customers, but in future years the DWP would keep surpluses.

The two-tier plan is the first major revamping of DWP rates in 15 years. For businesses:

* The basic rate will be $1.80 for each "billing unit" (which equals 748 gallons). That's up from $1.51 currently. But the DWP will kill the sliding "service availability" charge, which varied according to the gauge of pipe brought to the property.

* Whenever a business consumes more than 125 percent of its average wintertime usage, the excess is billed at a higher rate. That will be $2.98 during the hotter months of June through October, and $2.33 during the other months -- hikes of 66 percent and 29 percent, respectively.

* There are exceptions: Some 3,000-5,000 businesses that have exceptionally high summertime needs may apply for a break. If they have seasonal variation of 200 percent or more, no more than 5 percent of usage will get socked with the higher-rate block.

These are organizations with five or more acres of lawn, such as golf courses and schools; most nurseries; and many other businesses that are nearly dead in the winter, such as Dodger Stadium or a fastfood restaurant at the beach, said Gewe.

A second exception goes to customers with service pipes 2 inches or larger in diameter. From November to May, their bills are capped at 10 percent above what they would have totaled under the previous rate regime. Gewe said about 40 percent of commercial and industrial customers are potentially affected here.

Both exceptions apply only to companies that prove to the DWP they are practicing water-conservation equal or better to their industry average.

Also, the bills will be simplified. Currently the DWP itemizes its charges for buying wholesale water, subsidizing low-income customers and installing better quality-control equipment. These will be included in the basic rates now.

Rates, however, are not fixed. "The $1.80 is a starting price," Gewe warned. "It will fluctuate up and down."