LA WATCHDOG – Two weeks ago yesterday, on Tuesday, Jan. 22, the Herb Wesson-led Los Angeles City Council refused to assert jurisdiction over the Dept. of Water and Power’s Feed-in-Tariff Program despite the findings by the Ratepayers Advocate – on one day’ notice – that over the next 20 years, the proposed pricing scheme would overcharge ratepayers by $234 million.
This is not an issue involving global warming, climate change or greenhouse gases.
The issue is not solar power or the state’s requirement that 33 percent of our energy be from renewable resources by 2020.
Nor is it an issue about Feed-in-Tariffs, local sources of clean energy, the investment of $500 million by private investors, or the creation local jobs.
The real issue is why the City Council is allowing ratepayers to be fleeced for an additional $234 million over the next 20 years, especially since our water and power rates are expected to quadruple (4 x) over the same period. And that is if we are lucky.
The Background
Under the Feed-in-Tariff Set Pricing Program, DWP is offering to enter into 20-year fixed price contracts at prices starting at 17 cents a kilowatt for the first 20 megawatts and declining by 1 cent for each additional 20 megawatt block, eventually reaching 13 cents within two years.
There also is a time of day adjustment so that on hot summer days the rates will increase by 2.25 times to an average of 34 cents a kilowatt during peak hours when commercial and residential air conditioners are working at full capacity.
But these contractual rates are significantly higher than the existing market of 9 cents for renewable power, resulting in the $234 million gift to the solar development community.
As a result of this overly generous pricing structure, coupled with significant federal tax credits and financial leverage, the slick solar operators and their investors will reap rich rates of return of over 20 percent on their equity investments.
But the Feed-in-Tariff pricing scheme is just another example of the systematic looting of DWP that now costs ratepayers over $750 million a year, increasing our bills by about 25 percent.
Remember the Payback?
We have the $250 million International Brotherhood of Electrical Workers Labor Premium that is a payback for generous campaign contributions by Union Bo$$ d’Arcy, the public-be-damned business manager of the IBEW, DWP’s domineering union.
We are still footing the bill for the 1,600 city employees who were dumped on DWP by the Eric Garcetti-led City Council, along with their unfunded pension liabilities of over $200 million.
There is the legally questionable $250 million Power Transfer Fee that never has been justified with facts or figures, where the transfer tax has been increased from 5 percent to 8 percent during the Mayor Villaraigosa reign.
There are the substantial capital costs associated with the Garcetti/Tom LaBonge pet projects to protect the million dollar views of Silver Lake residents and to construct the Griffith Park water system.
For good measure, we also are getting soaked for numerous other pet projects – the Children’s Museum, the L.A. River, the Elysian Park Reservoir, the $8 million LAUSD solar program, the recent assessments by the Fire Dept., the LED “loans” to Street Services, and numerous other goodies buried deep in the DWP financials.
Note: This $750 million tribute does n-o-t include the $300 million that the city receives from the 10 percent City Utility Tax on power revenues.
No wonder Angelenos do not trust the City Council.
And now, the City Council has the audacity to ask us to approve a permanent half-cent increase on our sales tax to a job killing 9.5 percent, one of the highest rates in the country, without engaging in any meaningful budget and pension reform.
Now ask yourself: Do you trust the Wesson-led City Council?
That is why we need to vote No on Prop. A.
Mr. Humphreville, who writes LA Watchdog for CityWatch, is the President of the DWP Advocacy Committee, the Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He is the publisher of the Recycler Classifieds, www.recycler.com, and he may be contacted at lajack@gmail.com
