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January 20, 2012

Los Angeles City Council City Hall, Room 395 200 N. Spring Street Los Angeles, CA 90012

RE: Proposed Los Angeles Department of Water and Power (LAD WI') Water Qnality Rate Factor Increases

To the Honorable Los Angeles City Council:

Established in 1924, Central City Association (CCA) is L.A.'s premier business advocacy association whose 450 members employ over 350,000 people in the Los Angeles region. We submit this letter in response to the proposed LADWP Water Quality Rate Factor increases, tentatively scheduled to be considered by the Los Angeles City Council on January 25,2012.

LADWP General Manager Ron Nichols and his staff have been incredibly generous with their time and expe1tise during this process, and we would like to commend them for bringing this important issue to our attention at an early stage. CCA represents the largest prope1ty owners in Los Angeles and modest rate increases equate to millions of dollars in increased costs for our members. As the business community's steward on water and power issues, we are tasked with finding that delicate balance between managing the financial hardship that rate increases impose, and also giving LADWP the means to continue providing quality services to our communities.

We recognize that without sufficient funding to meet water system compliance requirements, LADWP will be faced with government-imposed fines, ultimately resulting in higher rates. After reviewing the proposal, we suppott the structural change to the water quality rate factor cap, subject to the following conditions: a) PA Consulting must review LADWP's proposal and concur with the rate adjustment; b) LADWP must not move forward with a larger increase than what is recommended by PA Consulting; and c) the rate increase must be subject to review and adjustment by the Ratepayer Advocate.

Current rates cannot support the investment needed to improve LADWP's water distribution system. Despite the additional costs the increase will impose on CCA's members, this is necessa1y in order for LADWP to remain in compliance with all state and federal laws. Please feel free to contact CCA's Senior Director of Legislative & Legal Affairs, Anh Nguyen, at 213-624-1213 for further discussion or any questions you may have. Thank you for your consideration.

Sincerely,

Cam! E. Schatz President & CEO Central City Association of Los Angeles

Headquarters

634 South Spring Street, 10'" Floor Los Angeles, CA 90014

Founded 1983

january 30, 2012

The Honorable City Council c/o City Clerk, Room 395 City Hall, 200 North Spring Street Los Angeles, CA 90012-4801

RE: Support Water Quality Factor Proposal

Honorable Members:

Phone: (213) 688-2802 Fax: (213) 688-2942

www.ypiusa.org

The Youth Policy Institute, an anti-poverty non-profit focused on education, technology and training, urges you to support the one-time rate increase to the Water Quality Factor rate factor to ensure for the safety of our water quality, as proposed by the Los Angeles Department of Water and Power (LADWP). Our communities understand this increase is necessary to meet strict safe drinking water standards set by the State of California and federal government. This rate increase will go towards much needed capital improvements in our communities.

YPI is currently working on a place-based approach to revitalizing communities. In the numerous meetings we have had with community stakeholders, safe drinking water is a key factor in our public health discussions. We look forward to working with the City and LADWP to ensure that the most underserved areas understand the benefits of this proposal.

In addition, YPI encourages the City and LADWP to work with community organizations to ensure all neighborhoods are able to participate in this decision-making process. Far too often, low income and other vulnerable communities are not represented.

Overall, this one-time increase will allow the LADWP to keep drinking water safe for customers, while meeting all state and federal laws. We hope that you will consider these points and vote in favor of the Water Quality Factor increase.

Sincerely,

Dixon Slingerland Executive Director

c: Ronald 0. Nichols, General Manager, Los Angeles Department of Water and Power

San Fernando Valley Office: 13630 Van Nuys Boulevard, Suite 101, Pacoima, CA 91331 • Phone: (818) 899-5550 • Fax: (818) 899-5588

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February 1, 2012

Los Angeles City Council

c/o City Clerk, Room 395

City Hall, 200 N. Spring St.

Los Angeles, CA 90012-4801

Subject: Amendment of Water Rates to Meet Slate Mandated Water Quality Standards

Item #1 on February 1, 2012 City Council Agenda- Council File #11-2098

Dear President Wesson and Honorable Council Members:

The Southern California Golf Association (SCGA) is a 113-year old non-profit organization

comprised of 1,300 golf clubs and 163,000 Individual members. While domiciled In the City of Los

Angeles (Studio City), SCGA is a regional organization that stretches from Santa Barbara and Kern

Counties In the North to Imperial and San Diego Counties in the South.

Despite the fact that water is the second largest item on the expense ledger of virtually every golf

course In Southern California- nay, perhaps because of that fact- we would encourage you to

support the one-time rate increase to the "Water Quality Factor" rate of 35 cents per billing unit,

as described in the recommendation of the Water and Power Department.

The SCGA and the other supra-organizations that constitute the golf community/industry in

Southern California meet regularly with LADWP, particularly its Water Conservation Unit. As a

result of that close collaboration, the 35 golf courses under LADWP's jurisdiction have managed

to accomplish In excess of 25% water savings in the three years since the passage of the

Emergency Water Conservation Ordinance.

The industry understands the value of investing in the Infrastructure necessary to maintain these

water conservation programs and Initiatives, and it understands the necessity of investing in the improvements necessary to comply with state/federal safe drinking water standards. The two are

inextricably intertwined.

This one-time increase allows. LADWP to maintain a safe water supply while complying with

applicable state/federal laws, Additional water rate adjustments can be evaluated on a more

measured, less urgent schedule.

Thank you for considering our views on the narrow question before you today.

Sincerely,

17 . '7 r!e ViA; ~. Craig Kessler

Director of Governmental Affairs

cc: Ron Nichols, General Manager LADWP

VaUey AIUance of

Neighborhood Councils

December 24, 2011

TO: Ron.Nichols(a)LADWP.com , James.McDaniel@LADWP.com

RE: V ANC MOTION TO SUPPORT LADWP'S WATER RATE ACTION

On December 6, 2011 the "Emergency Water Quality Rate Action" (EWQRA) was approved by the LADWP Board of Commissioners.

At VANC's December meeting, the Valley Alliance of Neighborhood Councils (V ANC) approved a motion to SUPPORT the EWQRA with the following restrictions:

1) The additional funds generated by this rate action shall only be used to support water quality improvement projects that are mandated by state or federal law.

2) If analysis by the Ratepayer Advocate or D.P. Consulting determines that this rate increase is not needed, the increase shall be immediately eliminated or reduced as justified.

3) This rate increase shall be considered part of the currently proposed future rate increases. Thus, any future rate increase shall be reduced by the amount of this approved rate increase.

We hope you will give every consideration to our recommendations. Thank you.

Sincerely,

Jill Banks Barad Founder and Chair, V ANC

cc: Mayor Antonio Villaraigosa Members of the City Council

Los Angeles Area Chamber of Commerce

December 8, 2011

Ron Nichols, General Manager Los Angeles Depattment of Water & Power 111 Hope St. Los Angeles, CA 90012

RE: Support Water Quality Factor Proposal

Dear Mr. Nichols:

On behalf of the Los Angeles Area Chatnber of Commerce, I write to express our supp01t for the one-time rate increase to the Water Quality Factor cap of35 cents per billing unit (HCF), as described in the water quality factor proposal by the Department of Water & Power (DWP). We believe this increase is necessary provide adequate funding to complete the water storage improvements which will allow DWP to meet the federal water quality standards set by the U.S. Enviromnental Protection Agency and applied by the California Department of Public Health.

We w1derstand that to meet impending mandate deadlines, the next four years of water quality investments require the largest capital expenditure in the history of the DWP's Water System. This rate increase will go towm·ds the $600 million in major new contracts that must be awarded in the nextyear, and $1.1 billion in capital costs over the next five years. Compliance requirements mandate the bypassing, coverage or removal of five reservoirs, converting the LA River to ultraviolet light treatment and converting and reducing chemicals.

As an organization dedicated to improving business conditions and quality of life for Los Angeles residents, supporting a rate increase is never an eaily call. How~verl'\'e understand that without adequate funds to meet water system compliance requirements, the D WP will .be faced with fmes and ratepayers will have to absorb even higher costs in the future. Due to a higher than !lV.erage snow melt last year and residents successfully heeding the call to conserve, water system revenue will decrease by $75 million in FY 2011/2012. With the decrease in overalhvater rates, incte!!Sfilgth:e Water Quality Factor at this point in tinle will still keep rates lower tha11 last year, hopefully allowing l:i;tepayers _time to absorb the costs !111d budget for future years. · · ·

Maintaining our infrastructure is key to a vl~tapl, competitiv~ cit5f fo!i)usiness and residents. This one­time increase will allow the Deparlulent to )f.~~,Pdrinking w~~!l~~~f~~or ~ustomers, while meeting allstate aud federal laws. However, we ho~e that all.~ fUture proposedie~~~l!~~Will be subject to revi¢w by the Rate Payer Advocate so that ratepayers can )lay(! a cleat· underS(!rpdfilg;?f~osts and benefits. If you have any questions, please feel free to gontact Jessr¢a Duboff at 213.589.7*?& or jduboff@lachatnber.com.

Sincerely,

Gary Toebben President & CEO

350 S. Bixel St. I Los Angeles, CA 9Qdfl' I P: 213.580.7500 f F: ~1~,5~0.7511 I WWW.Iachamber.cpm

Los Angeles ~~~ Department of Water & Power

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Recent Media Coverage

DWP board set to vote on increase in water bill rates

By Melissa Pamer December 6, 2011

The Department of Water and Power board today will weigh a water rate hike that officials say is urgently needed to comply with federal and state drinking water quality mandates.

The vote comes as the utility awaits the stalled appointment - not expected till mid­January -- of a ratepayer advocate who would be a consumer watchdog for such mcreases.

At City Council direction, the DWP has held off requesting water and power rate increases until the position is filled. But with the utility's most expensive construction effort ever on the line in 2012, a partial water rate increase is needed now, General Manager Ron Nichols said.

"This is the only thing we are looking to undertake on this schedule. We put everything else in abeyance in accordance with the council's wishes," Nichols said.

The adjustment is needed to pay for more than $500 million in improvements to open-air reservoirs, which must be covered, shut down or bypassed, per federal standards. Deadlines for the work are looming.

The action before the Board of Water and Power Cmmnissioners would allow a one-time 35-cent increase to a portion of the water rate called the Water Quality Improvement Adjustment Factor. A cap on quarterly adjustments to the factor would be eliminated.

The increase would come as water rates are lower than normal because of last year's wet winter. With the new rate, a typical household would see its monthly water bill at about $40, averaged over the course of the year. That's up from about $38.50 this year but down more than 9 percent from last year. In 2012-13, that average monthly bill would go up to nearly $46.

Nichols said he expects the board to approve the rate hike but anticipates lots of debate when the matter moves on for council approval, possibly on Jan. 25

###

OP-ED

DWP rate hike can't wait

L.A. voters approved the creation of a ratepayer advocate in March. There still isn't one. So the City Council should make the decision now on a proposed rate hike.

By Jim Newton December 5, 2011

L.A. voters approved the creation of a ratepayer advocate in March. There still isn't one. So the City Council should make the decision now on a proposed rate hike.

For Los Angeles to meet its legal obligations and provide for a more sustainable energy and water future, rates must go up. Soon.

The City Council doesn't like to acknowledge that because it knows there are few more predictable ways to raise the ire of Angelenos than to tinker with power and water rates. That's why the council, after its last dust-up with the Department of Water and Power, put a measure before voters to establish a city ratepayer advocate. Voters overwhelmingly approved that measure in March.

That's when the dawdling began. It took months for the council and the city attorney to put together language structuring the office; months more to appoint a commission to screen candidates. Eric Garcetti, who was president of the City Council at the time the advocate position was approved, said he expected the advocate to be in place by September, but now we're into December and the job is still vacant (the deadline for applications ended last week). Realistically, no one will be named to that position before next year, and only then can he or she begin to study rates and prepare to report on them to the council and the public.

Meanwhile, the DWP faces deadlines established by law and unbendable to politics. To meet state and federal safe-drinking-water standards, the DWP is having to cover 10 Los Angeles reservoirs and implement other clean water measures. These fixes will cost upward of$1 billion over the next five years and will represent the largest investment in water infrastructure in the DWP's history.

In early March, the agency is set to enter into a $220-million contract as part of that upgrade.

Here's where politics bumps up against responsible leadership. Council members say they

won't approve a rate increase until the new ratepayer advocate is in place. This is no surprise, because the advocate exists in large part to give the council cover to back a hike. But the DWP can't enter into its contract without a rate increase, and at this pace, the advocate won't be in position to bless that increase.

Ron Nichols, the DWP's still relatively new chief, is a fairly laconic guy. He doesn't seem easily upended by petty politics, but you can hear his patience wearing thin on this topic. The agency has held more than 30 public meetings on rates, and he's explained this issue more times than he can recall. And yet, time and again, politics intrudes.

"I've been working with council ... around this issue," he told me last week on a break from a visit to the Owens Valley, site ofDWP's crowning achievement. "We've pushed things back as far as we can."

Not all council members are the same, of course, and some do, at least privately, recognize the need for action. New Council President Herb Wesson is shrewd enough to recognize that the council can't stall forever, and others, including Garcetti, will certainly do the right thing when they have to. Some, however, are more prone to pandering. They'll shriek about the unfaimess of it all, and won't budge until they can hide behind a fee-hike recommendation from the ratepayer advocate.

What's particularly craven about this debate is that it comes at a time when rates are actually dropping- the result of last year's wet winter- so residents wonld barely notice this increase. If it were approved, residents who last year were paying about $44.50 a month for water would, next year, pay a little less than $46 a month. The price for safe drinking water and compliance with federal and state laws would be little more than a buck-and-a-half a month. See how far that will get you at Starbucks.

Yes, the DWP has a history of cutting sweet deals with its unions, and the International Brotherhood of Electrical Workers is among the city's most bare-knuckled employee groups. But this isn't about union politics. DWP users pay far less for their water and power than customers in other California jurisdictions. Even with this hike, they'd still pay less. As a result, some ofthe DWP's most reliable critics are on board with this increase.

None of this is terribly surprising, of course, from a political culture as skittish and risk averse as Los Angeles'. But it should continue to offend when elected leaders duck their responsibilities. As Nichols put it: "Our board has to act."

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EDITORIAL

Watchdog delay-- Naming a DWP ratepayer advocate is becoming more and more urgent

November 17,2011

One day over the summer, an editorial in this space noted that City Hall was moving so slowly in picking an official watchdog for the Department of Water and Power, the job probably would be filled sometime in 2012. It was a joke.

No longer.

The Los Angeles City Council now expects the L.A. DWP ratepayer advocate, demanded by voters in a charter amendment last March, to be named in January. While it's good to know the independent analyst is in the pipeline, it's hard to believe the council and the selection committee are taking this long to choose the new man or woman. This inaction is holding up a full public sorting-out of the latest rate-hike proposals and the complicated utility issues involved.

Since Measure I was approved overwhelmingly on March 8, a baseball season was played, the U.S. military intervention in Libya began and ended, Kim Kardashian married and divorced, at least a dozen vampire and zombie movies debuted, and a radio preacher predicted the world would end -- twice. Meanwhile, no ratepayer advocate.

In September, the selection committee appointed by the mayor and council was given a 60-day timetable to choose the first director of the DWP Office of Public Accountability. This, after council President Eric Garcetti said he wanted the advocate in place by September. And after DWP General Manager Ron Nichols began campaigning for a rate increase on the assumption the advocate would be in place by August.

The five-member selection panel finally posted the job opening Oct. 27, set an application deadline of Dec. 2, and announced plans for interviews in December. A recruiting brochure is online, talking up the region's charms by pointing out, "Los Angeles has been called the 'Venice of the 21st century."' Let's hope not to end up with someone influencing DWP policy who envisions L.A. thoroughfares like the Venice canals, 15 feet deep in water.

Seriously, the absence of a ratepayer advocate is a problem. City Council members are vowing not to approve rate hikes before the advocate can give the proposals a fine-tooth rev1ew.

This has cost the DWP its Nov. 1 target date for rate increases of 4.2 percent for water and 5.9 percent for power. Now this is delaying a fair hearing on the department's new bid for rate hikes of 5 percent for water and 7.5 percent for electricity to meet environmental mandates and modernization needs, and a separate increase meant specifically to allow it to meet federal water-quality compliance deadlines.

Although the DWP's requests never should be taken at face value, they shouldn't be automatically distrusted either. In fact, even some veteran critics of the nation's largest city-owned utility are backing the agency on this one.

There are serious arguments from both sides -- and maybe more sides -- and an urgent need for a credible analyst to smi them out.

To repeat what we began saying in June, Los Angeles needs its ratepayer advocate as soon as possible.

###

ito_sl\nQrd~e_s m;tnlle$ EDITORIAL

A loose rein on the DWP

L.A. voted nine months ago for an independent advocate on rate hikes. But we still don't have one.

December 2, 2011

The Department of Water and Power wanted to raise rates, supposedly to cover the higher costs of buying water, generating electricity, updating rapidly aging equipment and complying with new environmental regulations. Many Los Angeles residents believed that rates were really rising to cover increasingly extravagant utility employee salaries and benefits and flabby management overhead. Elected officials and DWP managers were in thrall to the union, and their word could not be trusted.

So ratepayers planned to get themselves an independent advocate to check into rate hike requests and tell us whether they are legitimate. Voters adopted Chmter Amendment I in March- nine months ago- by an overwhelming 77.9%. So now we have an independent advocate mulling the latest rate hike request, right?

Wrong. The ballot measure was not, after all, put together by citizens. It was wrapped in a veneer of community demand but was crafted by members of the City Council to be ce1tain that it met their goals: to shield them from accountability to both the public, which does not like rate increases, and the International Brotherhood of Electrical Workers Local 18, which funds campaigns and does not like elected officials or anyone else tinkering in depmtment affairs that the union has mastered. The result was predictable. The council has avoided approving rate hikes until the ratepayer advocate is in place, but has dragged its collective feet in setting up an appointment process and has yet to fully define the job. The ultimate loser: DWP customers, who will be stuck with even bigger bills if incremental hikes aren't approved now.

An advocate should have been in place this summer to study requests by DWP General Manager Ron Nichols for a 15.3% increase in water rates and a 16.8% increase in electricity rates, phased in over three years, beginning in November. Meanwhile, even more pressing is the need for a separate 5% increase in water rates to meet drinking water standards imposed by state and federal law. Failure to put those increases in place soon will mean the utility will face huge fines, which would ultimately cost ratepayers more than the proposed hikes would.

In addition to being badly needed, this water quality increase would have a negligible impact on consumers -because water rates are lower than they have been in quite a

while thanks to last year's large snowpack and the relative abundance now of cheaper water.

The Board of Water and Power Commissioners meets next week to consider the emergency water increase and a similar electricity rate hike. The commissioners would be wise to approve the increases, which have been vetted and agreed to even by some of the utility's most vocal critics. With luck, council members will then overcome their fear of their own shadows and will accept the increases, and step up the process for getting the voters' oversight reforms in place for the heftier rate hikes the utility has requested.

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