If you thought the massive electricity rate hike about to be rubber-stamped next week by the DWP Commission is bad news, think again.
There is even worse news today in the New York Times: The DWP “is losing about $6 million a week or an estimated $500 million by the
end of the 2011 fiscal year.”
Who knew? The DWP losing money? How is that possible?
Of course, it isn’t, The DWP just sent $147 million in “surplus” power revenue to the city general fund, part of its 8 percent annual revenue donation that comes on top of the 10 percent electricity tax. It just gave checks for 3.25 percent of their salaries to its 8,000 employees with some getting back pay raises for two years of up to nearly 6 percent and granted raises of up to 4 percent for each of the next four years.
But Jennifer Steinhauer — the NYT’s Los Angeles Bureau chief who’s heading to Washington to cover Congress — knows all about the DWP losing money along with other facts nobody in this left coast town has heard.
Nobody at least except Chief Deputy Mayor Jay Carson, who appears to the only source for Steinhauer’s exclusive report under the headline “Los Angeles Electric Rate Linked to Solar Power.”
Undoubtedly, Steinhauer and Carson crossed paths when she was covering the 2008 presidential race and he was Hillary Clinton’s spokesman so his word is as good as gold.
She reports that the DWP “is poised to pass a roughly 5 percent rate increase on electricity use…(the DWP Commission)
is expected to vote next week to increase by seven-tenths of 1 cent the
current user rate of 12 cents per kilowatt hour.”
That doesn’t sound so bad. But then it isn’t what the DWP is seeking unless Carson has shared with her insider information that none of us know. The 5 percent rate hike hardly would begin to cover the DWP supposed deficit and the provide for “renewable energy purchases and programs, including one that would repay people or businesses that use solar panels to contribute to the power grid.”
To Steinhauer, the rate hike “is equivalent to a carbon tax because all consumers will see rates fall
as the city becomes less reliant on coal-powered energy.”
I get it now: Rate hikes mean lower rates. No wonder she is best known for her obsession with rattlesnakes that are plaguing all of LA and even brings them into this story’s opening with the observation that in LA “environmentalists outnumber rattlesnakes in many parts of the sprawling
city.”
In contrast to Steinhauer’s report, the cost of going green runs into the billions of dollars and a 5 percent rate hike doesn’t come close to paying the bill. The DWP’s own consultant’s report calls for a rate hike of 2.7 cents per kilowatt hour — four times what Steinhauer reports — and Carson’s boss wants an additional surcharge as well with even higher rates coming year after year..
In Steinhauer’s math, the modest 5 percent rate hike will somehow “shore up the (DWP) budget shortfall, in the hope of protecting the utility’s
bond rating … (and) go to renewable energy sources, like wind farms, and to help subsidize a program that would essentially repay
solar-panel users for feeding energy into the power grid.”
Even beyond all those costs to be covered by the rate hike, “Mayor Antonio Villaraigosa and his staff are billing the increase as a move
that will bring jobs to the city. Los Angeles has never embraced the
idea of solar energy, largely because of the high cost of the programs.”
“There are so few solar panel manufacturing companies in the city,
mayoral aides have had to scramble to find an appropriate place to
announce the new plan later this week.”
“A well-crafted carbon surcharge achieves two goals,” Los Angeles’s
chief deputy mayor, Jay Carson, said. “The first is a drastic reduction
in fossil fuel usage for energy, but the second, and more important for
Los Angeles, is the creation of thousands of green-collar jobs.”
Finally, the dashing Jay Carson appears after having so successfully spun a New York Times star reporter who clearly made no effort to check the “facts” she was being spoon-fed.
The question arises then: What was Carson trying to achieve? A test drive of how the LA press corps and populace are going to be spun? Deluding Wall Street to somehow believe DWP actually has a solar plan so it will lend the utility money without lowering its bond rating?
I don’t know. I just thought you ought to know how the spinmeisters like Carson operate and how even star reporters like Steinhauer and newspapers like the NYT can’t be trusted any more than your ordinary citizen blogger without checking the facts yourself.
You can do that by going to OurLA.org, which broke the rate hike plan story on Feb. 26, and read the DWP report on rate hikes prepared by PA Consulting.
The New York Times and Jennifer Steinhauser were snookered.
The claim that DWP is losing $5 million a week. Baloney. Well maybe the City is, but not DWP.
Last year, DWP made close to $1 billion before interest and depreciation, and that was after the outrageous IBEW Labor Premium, the increased staffing, public beneifts, pet projects, the 8% transfer fee, and the 10% City Utility Tax.
The DWP Money Train is probably north of $1 billion.
The New York Times and Jennifer Steinhauser were snookered.
The claim that DWP is losing $5 million a week. Baloney. Well maybe the City is, but not DWP.
Last year, DWP made close to $1 billion before interest and depreciation, and that was after the outrageous IBEW Labor Premium, the increased staffing, public beneifts, pet projects, the 8% transfer fee, and the 10% City Utility Tax.
The DWP Money Train is probably north of $1 billion.
Ron, you spin as well (most of your articles persuade by using a logical fallacy called “appeal to emotion”) and also have fact-checking problems. IE Not paying attention to the dates on that DWP salary table you posted is one example.
Szabo, the Mayor`s economic srategist, and spinmeister Carson, should hold a town hall meeting with DWP ratepayers. CAUTION! They should bring the LAPD with riot gear. Don`t laugh. It`s coming.
The body that`s chartered to oversee the DWP Dpt, the Commission, is unbelieavably a bystander, a spectator in the ECAF saga. We have allowed two kids, Szabo and Carson, to plan the destruction of the City. Hopefully the Council will not allow this to happen.
For those who may know, I have a question. Is the 8% transfer fee part of the $30 million that DWP was ordered to return to it’s customers? What exactly is the “transfer fee”. Thanks.
Background:
“A Superior Court judge has issued a tentative ruling ordering the Los Angeles Department of Water and Power to repay its customers nearly $30 million that city officials had hoped to spend on other services.
The tentative ruling, which was issued last week, said the DWP’s long-standing practice of moving money from its water fund into the city’s general fund — which pays for such services as police, fire protection, street maintenance and libraries — violates provisions of the anti-tax measure Proposition 218.
The ruling calls on the city to recalculate its water rates for the 2006-07 fiscal year — when the money was collected — and give customers either refunds or credits on future bills.”
Link to decision:
http://www.scribd.com/doc/14048447/LADWP-Decision
Ron, D. Zahniser “spun” by the spinmeister Carson? Never. We are lucky David has brains and he is using them.
Not only is no one being anywhere near straight, apparently hardly anybody is actually listening.
Any wonder why things that don’t change just stay the same?
Staying in the weeds on a big money issue just might make sure it gets worse.
David, functionally, the DWP is 2 utilities: a water utility and an electrical utility, each has its own revenue fund.
Humphreville coined the term “transfer fee” so you’ll never hear anybody else use the term, but he’s referring to revenue on top of the utility tax that is transferred from each revenue fund into the general fund. You can split the “transfer fee” into money that comes in from the water fund and money that comes in from the power fund.
The $30 million was from a court judgement that declared transfering money from the water fund to the general fund was illegal.
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To March 11, 2010 9:15 AM: You make accusations about the accuracy of the article, but don’t tell us what isn’t accurate in THIS article. What part of this article is wrong?
5:23, I didn’t make any accusations about the article’s accuracy. Ron’s main argument is that Steinhauer is guilty of bad journalism, which she is. But considering Ron is guilty of it too, the glaring hypocrisy deserved a mention. It’s like Tiger Woods writing an article that slams another man for cheating.
Decades ago the DWP secured coal fired power from a plant in Utah. A sound decision it was too. recently, the “green people” downtown decided to cut ties with that coal fired power from Utah. After all, we were going to get cheap power from wind and sun and… But the people didn’t get to vote on that. Nor did DWP’s ratepayers. never mind that the UK’s experiment with such green power methods had been a failure. When Goodness calls, there is no time for facts. Now DWP realizes it has to raise rates to everyone. I wonder why? Is the wind power not doing it? Is oil going up again? Thank goodness we don’t have electricity from that coal fired plant!
“Thank Goodness DWP”, the push toward green energy isn’t fueled by severed ties to coal plants. It’s fueled by the State mandated RPS of 33% green energy by 2020.
The penalty of failing to meet the State RPS is 5 cents/KWH fine. Compare this to the consultant’s estimate of 2.7 cents/KWH for developing the green infrastructure that will meet the RPS. Unless ratepayers want to absorb the State penalty into their rates in 2020, going back to coal makes no sense.