Local Taxes:
Los Angeles Tentatively Approves Electricity Rate Hike, While New Study Finds Utility Workers Receive Generous Pay

After reviewing a new study that found that salaries at the Los Angeles Department of Water and Power (DWP) are "significantly" higher than those paid by other public and private utilities, city leaders tentatively approved an electricity rate hike totaling 11 percent. The proposed rate hike will return to the City Council for a second vote next week.

The study prepared for the council noted: "The most immediate way to reduce the size of future rate increases will be to address the costs of running the system. And to reduce these costs, the department needs to focus on the building block costs that drive them: labor costs, benefits and productivity."

DWP dismissed the findings of the report, contending that the most effective way to save ratepayers money is to improve energy efficiency and negotiate with new sources of renewable energy. A DWP spokesman said: "Right now I've got a bunch of other things that have a lot higher priority in terms of saving hundreds of millions of dollars at Water and Power."

Among the findings of the report:

• DWP employees at "contact centers" are paid on average 20 percent more than their counterparts at 13 comparable utilities.
• The average top salary for DWP workers is 41 percent higher than top salaries at comparable utilities.
• DWP cable slicers receive a salary that on average is 43 percent higher than workers at comparable utilities.
• DWP meter readers receive pay that on average is 46 percent higher than workers at comparable utilities.

DWP employees received pay raises in 2010 (2 percent), 2011 (4 percent), and 2012 (2 percent).

Despite the report's findings, the council voted 10-4 to tentatively approve back-to-back rate hikes (4.9 percent this year and 6 percent next year) to generate a projected $321 million by June 2014.

Mayor Antonio Villaraigosa said: "The DWP rate increase approved by City Council minimizes the impact on ratepayers while improving reliability, funding cost-saving conservation measures and strengthening LA's position as an environmental leader." (Source: Los Angeles Times, September 25.)

September 28, 2012
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