The Los Angeles City Council late Wednesday vetoed an electricity rate hike imposed by the Department of Water and Power, effectively putting off any power-bill increases for city utility customers until at least July. The move was a major rejection of Mayor Antonio Villaraigosa's attempts to milk captive DWP customers for cash that the city desperately needs.
The council's 13 members present Tuesday put an end for now to the the mayor's and DWP's plans to charge customers an extra .8 cents more per kilowatt hour. When the DWP board on Wednesday rejected the council's own, more-modest .6 cent increase and imposed one of .7 cents instead, the council vetoed the department's move and closed the door on rate increases for the next three months.
Because April 1 is the deadline under state law for any quarterly increases to take effect, the DWP is out of luck until July.
The dramatic power struggle between the council and Villaraigosa's DWP -- its board is appointed by, and beholden to, the mayor -- capped nearly a month of debate over planned rate hikes for the utility's customers. The mayor put forth a four-tiered "carbon surcharge" plan that would have increased bills by as much as 28.4 percent, according to an analysis by the Los Angeles Times.
Villaraigosa argued that the increases, starting with one at .8 cents per kilowatt hour, would help the city decrease dependence on coal-based power, subsidize solar retrofitting in homes and businesses, and create thousands of jobs.
Later, however, he acknowledged that the deficit-plagued city needed the extra cash to stay afloat. In essence, his plan would become a tax increase for the city's electricity customers. They would have been subsidizing a government that has yet to take serious steps to deal with an impending, nearly $700 million deficit.
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It was a shortcut for the L.A.'s budget woes and a shameless grab for cash from the city's captive utility customers.
The council, citing high unemployment and a stagnant economy, rebelled and called for a smaller, one-time increase. The DWP board wasn't having that, but the council had the last word.
The department, however, has threatened not to transfer $73.5 million it had promised for the city's underwater general fund. It'll be interesting to see if the DWP follows through on its threat -- if this cash-rich tail can continue to wag the dog that is the City Council.
-With reporting from LA Weekly's wire services.