To: LA Daily Blog Readers
Re: DWP Oversight Committee BALLOT
Dt: 8/2/09
[ZD: Here is something VERY IMPORTANT from DWP Oversight Committee Chair, Soledad Garcia. PLEASE LOOK AT THE LADWP MOU NOTIFICATION...THEN, fill out the ballot questionnaire below and email it back to Soledad at the email address given. AND SHOW UP TO THE DWP MEETING ON MONDAY (DETAILS BELOW).]
DATE: July 31, 2009 19:59:56 PST
LADWP MOU NOTIFICATION
LADWP PROPOSES MODIFICATIONS TO ENERGY COST ADJUSTMENT FACTOR (ECAF) AND RESIDENTIAL TIERED RATE STRUCTURE
On May 21, 2009, during consideration of the FY 09-10 LADWP Proposed Budget, the Board of Water and Power Commissioners (Board) made a verbal motion requesting LADWP to initiate modifications to the Energy Cost Adjustment Factor (ECAF) cap to ensure LADWP maintains its AA bond rating while meeting rising costs of fuel and purchased power. Additionally, the LADWP management is recommending adjustments in the tiered electric rates to encourage and reinforce the conservation message for customers to curtail excessive energy usage.
LADWP management will present a proposal to the Board August 4, 2009, to increase the cap on the ECAF. In a separate action, LADWP will propose a restructuring of the tiered electric rates to minimize the financial impact on residential customers who use the least energy, and encourage energy conservation among those who use the most energy. LADWP is proposing that both measures become effective October 1, 2009.
The ECAF cap increase is necessary to ensure LADWP maintains its “AA” bond rating while meeting rising costs of fuel and purchased power, as recommended by LADWP’s financial advisors. The increase will provide revenue necessary to meet the following financial criteria:
- Debt service coverage greater than 2.25 times.
- Minimum cash reserves target of $300 million.
- Maintain capitalization factor of less than 60 percent.
The recommendation was supported by an independent strategic assessment (the Industrial, Economic and Administrative Survey) of LADWP conducted by PA Consulting in February 2009. LADWP also seeks to avoid a downgrade of its bond rating similar to that experienced by another utility that failed to remove a similar restriction and was unable to recover its full energy supply costs.
The ECAF is a component of the electric rates that enables LADWP to recover costs of fuel, demand side management (including energy efficiency measures) and purchased power. The ECAF was frozen in April 1998 (at October 1997 levels) and unfrozen under amendments to the electric rates ordinance in 2006 to recover higher costs of fuel and purchased power. At that time, a quarterly cap was set to limit increases in the ECAF at .1 cents ($.001) per kilowatt-hour (kWh).
The proposal being presented on Tuesday seeks to increase the quarterly cap to 2 cents ($0.02) per kWh, but only when revenues fall short of expenditures in increments of $200 million. For example, if revenue is $200 million less than projected for a particular quarter, the ECAF would increase by 2 cents per kWh. Therefore, a customer with an average monthly energy usage of 500 kilowatt-hours per month would see a bill impact of $10.
In addition to increasing the cap on the ECAF, LADWP is simultaneously proposing to restructure the residential tiered electric rates to minimize the impact of this action on residential who stay within their Tier 1 allotment and thus pay the lowest price—while encouraging conservation or switching to time-of-use rates for Tier 2 and Tier 3 customers who use more energy. The goals of the proposed restructuring include:
- Encouraging conservation
- Minimizing rate impact on Tier 1 customers who conserve energy
- Reducing demand on the power system
The following tables indicate rate changes with the rate restructuring and increased ECAF cap:
High Season (June through September)
| Energy Charge per kWh
| Current Base Rate
| Total w/
Current ECAF | Base Rate as of July 1, 2010 with rate restructuring
| Total w/Increased ECAF and as of July 1, 2010
|
| Tier 1-per Zone allocation
| $0.070
| $0.12
| $0.06
| $0.13
|
| Tier 2-per Zone allocation
| $0.085
| $0.14
| $0.11
| $0.18
|
| Tier 3-per Zone allocation
| $0.110
| $0.16
| $0.18
| $0.24
|
Low Season (October through May)
| Energy Charge per kWh
| Current Base Rate as of Oct. 1 2009
| Total rate w/ Current ECAF
| Base rate as of Oct. 1, 2010 with rate restructuring
| Total rate w/Increased ECAF as of Oct. 1, 2010
|
| Tier 1-per Zone allocation
| $0.07
| $0.12
| $0.06
| $0.13
|
| Tier 2-per Zone allocation
| $0.07
| $0.12
| $0.09
| $0.16
|
| Tier 3-per Zone allocation
| $0.07
| $0.12
| $0.09
| $0.16
|
During the Neighborhood Council Budget Workshop this spring, the Chief Financial Officer notified the participants that this type of action would be necessary. This MOU Notification is being sent to advise your neighborhood council that LADWP plans to bring forward to the Board of Water and Power Commissioners the proposed ECAF changes and rate restructuring ordinance on August 4, 2009.
To further protect ratepayers, LADWP proposes to limit the total annual increases of base electric rates and pass-through charges to less than 10 percent, unless unfavorable financial conditions arise that will not allow LADWP to meet the required financial planning criteria.
Please note that the proposed amendments, if approved by the LADWP Board, will then be sent to the City Council for consideration. At that time a Council File Number will be assigned to the item and Neighborhood Councils will have the opportunity to provide input to the Energy and Environment Committee and City Council following the established Council protocols.
[NOW...Copy and paste this ballot into an email...answer the questions on the ballot...then send it back to Soledad at the email address below.]
NC/LADWP MOU OVERSIGHT COMMITTEE (OSC)
MINI BALLOT FOR
We received DWP’s MOU Notification on
You have also received communication from the OSC inviting your participation on Monday for the DWP preview on ECAF and New Tier Rate Structure and for Tuesday at the DWP Board of Commissioners at
On Tuesday, the Energy and Environment Committee will also review the Solar NC outreach at
Before attending any of the meetings, please complete the ballot below, upon receipt today Sunday, return to the sender. Your responses will help to ensure that NCs are on the same page relative to the ratepayers, stakeholders. And, provide a vote that the MOU is being followed.
Answers are Yes or No to the following:
- Does Saturday and Sunday represent “best effort” to inform the NCs of ECAF and Tiered Rate Structures changes which will increase DWP charges?
2. If the
3. Will your NC have the time to agendize the two rate increases and take action before City Council votes on both matters in September?
4. As the Representative to your NC, do you have enough information to help your NC take a position on these increases?
5. Are you in favor of having a quarterly ceiling on ECAF?
6. Are you in favor of going beyond the Governor’s green power percentages without having had any input for
7. Are you in favor of keeping the restructuring power tiering indefinitely?
- Do you believe that power tiering conserves energy throughout the entire year?
- Do you believe ratepayers were provided sufficient outreach on ECAF and the new power tiering?
- Do you believe that conservation is the motivating factor for the ECAF and new power tiering?
- Comments.
Sincerely,
NC/LADWP MOU OSC
SSG15@SBCGLOBAL.NET
Posts
