Press Release
            

"Valley VOTE endorses the formation and appointment of a Rate Payers Advocate to work on behalf of, and to report to, the ratepayers of the Los Angeles Department of Water and Power [LADWP]."

Arguments in Favor of Having a LADWP Rate Payers Advocate:

1. The LADWP is not subject to regulation by the California Public Utilities Commission (CPUC) or by the Division of Rate Payer Advocate, the independent consumer advocacy division of the CPUC.
Most LADWP rate payers are not aware that the CPUC's Division of Ratepayer Advocate exists. The CPUC-DRA provides rate payer protection for a majority of Californians, which is the same kind of protection that LADWP ratepayers should have and that we are proposing. The fact that the DRA addresses only investor owned utilities does not change the fact that LADWP rate payers are not getting the rate protection they need.
A recent example of the protection that the CPUC- DRA provides can be found on its web site (www.dra.ca.gov) in an article dated July 17, 2009. The DRA recommended that the CPUC deny PG&E's application for a $2.1 billion capital improvement program because "PG&E analysis is outdated and unreliable" The following paragraph is from that article:

"Based on DRA's review of the utility's testimony and workpapers, PG&E has failed to justify its requested CIP expenditures of $2.051 billion. PG&E's analysis is outdated and unreliable. PG&E failed to provide any meaningful updated information and account for current data. PG&E relies upon 2006 load growth data and has not factored current economic conditions into its analysis. The substantial costs for Distribution Capacity portion of the CIP are not justified by the small forecasted reliability improvements."

LADWP rate payers should have substantially similar protections that customers of California's regulated public utilities have, such as full vetting of proposals for rate changes, capital improvement projects including verification of assumptions and validation of supporting data.

2. The LADWP's rate payers have lost confidence in the ability and willingness of the City government and the Board of Water and Power Commissioners to manage the LADWP effectively, as evidenced by voters' rejection of Measure B (the Solar Initiative). The defeat of this measure saved the ratepayers of L.A. capital expenditures of between 2-3 billion dollars. It was placed on the ballot without any review by the LADWP Commission, the L.A.City Council, the Chief Legislative Analyst, Neighborhood Councils, the Business community and the public. A Rate Payer Advocate would provide review of all programs of this type before they are approved for implementation. The Rate Payers Advocate would monitor and provide transparency to rate payers of all major projects and project proposals of management.

3. The management of the LADWP, the Board of Water and Power Commissioners, the City Council, and other overseers do not have the expertise to timely and effectively review proposals that may adversely affect LADWP's rate payers.

4. LADWP has failed to fully inform the rate payers about recent rate increases, rate restructuring, Short Year Water Rates, the elimination of caps on the electricity Energy Cost Adjustment Factor ("ECAF"�), and the overall efficiency of its operations.

5. LADWP has failed to maintain its infrastructure for delivering water and power to customers and to invest in necessary information technology.

Role of the Rate Payers Advocate

The Rate Payers Advocate (RPA) must be trusted by all stakeholders, legislators, and business leaders in the city; therefore, the RPA must function outside of the LADWP organization. However, the RPA must be assured of full access to any and all data and information from the LADWP that would be needed to accomplish its goals.

We recommend that funding of the RPA, its staff, and office come from the LADWP. These are funds that are paid by all rate payers.The selection and appointment process for creating the RPA must be accomplished with the utmost care to assure every interested party in the city of the independence and integrity of the RPA's organization and recommendations.
1. The Rate Payers Advocate will have a staff of competent, qualified analysts and experts in the electric and water utility industries who will evaluate all significant proposals and monitor and advise management, when warranted, of any proposed or actual actions or omissions that may adversely affect the LADWP's rate payers.
2. The Rate Payers Advocate would monitor and provide transparency to rate payers of all major projects and project proposals of management.
3.The Rate Payers Advocate will monitor and publicize where necessary efforts by the LADWP to increase rates.
4. The Rate Payers Advocate will monitor and publicize the status of the infrastructure and technology necessary to run LADWP effectively and efficiently.
5. The Rate Payers Advocate shall review and analyze on a timely and continuous basis the operations, finances, and management of the LADWP.
6. The Rate Payers Advocate shall be beholden only to LADWP Rate Payers, although it may advise the City Council, the Mayor, and other interested parties.
7. The Rate Payers Advocate will have a place at the table at meetings of the Board of Water and Power Commissioners and at the City Council when LADWP affairs are being discussed.
8. The Rate Payers Advocate must be completely independent of the governments of the City, County, and State and any of their suppliers or unions.
9. The Rate Payers Advocate shall have the necessary education, experience and skills to perform its duties, including an understanding of the operations and finances of public utilities.
10. The Rate Payers Advocate will not set rates or make management decisions.