Proposed water rate to splash lower bills on most firms; hearings scheduled for this week on new fee structure.

A majority of business owners in the City of Los Angeles, in operations from amusement parks to zoological gardens, will see lower water bills under a proposed new rate structure for buying water, according to a detailed analysis of city's 50,000 businesses provided to the Business Journal last week.

But individual companies within most business groups will pay higher bills to make up the difference. That's in keeping with the "revenue-neutral" proposal made by L.A. Mayor Tom Bradley's Blue Ribbon Committee on Water Rates early this month.

The roll of winners and losers will likely be discussed at two public hearings scheduled this week by the city Department of Water & Power. Hearings on the first major revamping of DWP rates in 15 years are slated for Tuesday (July 21) at DWP headquarters downtown and Thursday (July 23) at the Masonic Hall in Van Nuys, both at 7 p.m.

Also at issue could be the proposal's provision to allow the city council to declare a "shortage" during drought conditions. Up to 440-percent higher rates could be charged for "excess" summer consumption.

Committee members earlier indicated that certain business groups, like hotels, nurseries and golf courses, would be hardest hit. That's because a 64-percent higher per-gallon rate would kick in for heavy consumption during summer months, when tourists flock to hotels and grass can dry up quickly.

But the new study, compiled by a DWP computer and made public last week, gives a more explicit look at how the new burden would be spread within each business group.

For instance, 80 percent of auto dealers and gas station operators would get lower bills. As for printers and publishers, 73 percent would get a break, and most of the 27 percent remaining would see hikes of less than 10 percent.

"Thank you, DWP!" said Bob Lindgren, president of the 2,200-member Printing Industries Association of California, who cautioned that he had not read the proposal. Most printers have more business in the winter, and therefore more water usage then, he noted. "But if we're rearranging the chairs, somebody's paying," he warned.

Particularly clobbered are 163 of the city's 278 agricultural outfits, including gardening services, livestock firms and farmers. All of the city's eight miners, four of the seven social service companies and three of the four industrial gas and electric companies will pay more.

On the upside, more than 40 percent of the city's oil and gas drillers will save 50 percent on their bills.

Typically, savings will come because the DWP would drop its flat charges, like the meter fee, which runs from $3 to $536 a month. For instance, Southern California Gas pays a flat $95 for the six-inch pipe that brings water to its Playa del Rey gas-storage operations, regardless of usage.

To make up for lost revenue, a new rate of $1.78 per billing unit (100 cubic feet) would be charged. That's up from $1.72 today. In addition, a $2.92 rate -- 64 percent higher -- would be charged in the summertime for each unit exceeding 125 percent of the average winter rate.

Who saves? Who pays more?
                   Number of water
                   customers facing        Median annual bill
Business         Decrease   Increase     Current       Proposed
Real estate       2,968      1,780         $692          $407
Restaurants       1,892      2,570         $645          $616
Membership
organizations     2,156      1,177         $432          $331
Retail, misc.     2,182        645         $194          $138
Auto repair
& parking         1,991        778         $215          $177
Source: Analysis of 50,000 businesses in city of Los Angeles
prepared by Mayor Bradley's Blue Ribbon Committee on Water
Rates

That doesn't please certain hoteliers. "We would like a flat rate year around," said Les Benson, president of the 80-member L.A. County Hotel & Motel Group. In tourist-mecca Hollywood, summer rates for hotels averaged exactly 25 percent above winter averages. But in downtown and Culver City, there was little change.

The DWP study does not disclose names of businesses, and with the committee's prediction that 65 percent overall will see lower bills, there apparently is little stir yet among companies.

"With 65 percent of (businesses) winning, and everybody's a gambler, everybody figures 'I'll be one to come out ahead,'" said Jerry Gewe, DWP engineer for water resources.

In fact, some 20 representatives from two loser industries, hotels and golf course owners, met last week with DWP officials to review the proposal, at DWP's request.

The new scheme was intentionally devised to favor the majority, noted Gewe.

"That's politically how you sell a change," he said. "You couldn't beat everybody over the head" with across-the-board hikes.

A random survey of a dozen business managers in L.A. revealed most were unaware of the proposal and surprised at how high their rates might change.

"Sounds like this is gonna hurt us," said Arne Haaland, owner of J&A Tropicals nursery in Van Nuys. His May-June bill totaled $152 and would rise to $200 under the new plan.