Introduction to LADWPIntroduction to LADWPElectric & Water RatesElectric & Water Rates

Rate Applications GroupRate Applications GroupLADWP Rates & Contracts LADWP Rates & Contracts

July 2014July 2014

Electric and Water Rates - Electric and Water Rates - IntroductionIntroduction

Rates are designed to reflect DWP costsRates are designed to reflect DWP costs Designed to reflect the costs incurred for all aspects Designed to reflect the costs incurred for all aspects

of providing electric and water service for the cityof providing electric and water service for the city Rates are set by ordinanceRates are set by ordinance

Designed by DWP staff, with input from consultantsDesigned by DWP staff, with input from consultants Reviewed thoroughly by the independent Ratepayer Reviewed thoroughly by the independent Ratepayer

AdvocateAdvocate Submitted to the Board of Water and Power Submitted to the Board of Water and Power

CommissionersCommissioners Approved by the Los Angeles City CouncilApproved by the Los Angeles City Council

Rates are applied based on DWP rules and policiesRates are applied based on DWP rules and policies

Electric Rate OverviewElectric Rate Overview

Electric bill line items:Electric bill line items: Service charges or minimum chargesService charges or minimum charges Energy charges (tiered or TOU) – applicability Energy charges (tiered or TOU) – applicability

set by ordinanceset by ordinance Demand charges (commercial only)Demand charges (commercial only) Other line items:Other line items:

capped: ECA, ESA, RCAcapped: ECA, ESA, RCAadjusted quarterly: VEA, CRPSEA, VRPSEAadjusted quarterly: VEA, CRPSEA, VRPSEAadjusted annually: IRCAadjusted annually: IRCA

City and state taxesCity and state taxes

Electric Rate overviewElectric Rate overviewResidentialResidential

Rates are designed to encourage conservationRates are designed to encourage conservation Line items are either fixed by ordinance or Line items are either fixed by ordinance or

adjusted seasonally or quarterlyadjusted seasonally or quarterly Base rates are seasonalBase rates are seasonal

High Season is June 1 – September 30High Season is June 1 – September 30 Low Season is October 1 – May 31Low Season is October 1 – May 31

Bill consists of kwh charges and taxesBill consists of kwh charges and taxes DWP charges are per kwhDWP charges are per kwh Taxes are imposed by governing bodiesTaxes are imposed by governing bodies

• City tax is 10% of the DWP subtotalCity tax is 10% of the DWP subtotal• State tax is per kwhState tax is per kwh

Electric Rate OverviewElectric Rate OverviewResidentialResidential

Standard rate (R-1A) overview:Standard rate (R-1A) overview: Tiered rates are determined based on basic Tiered rates are determined based on basic

usage requirements for residential DWP usage requirements for residential DWP customerscustomers

Tiered rates are in effect year-roundTiered rates are in effect year-round Zone 1 customers receive 350 kwh per month Zone 1 customers receive 350 kwh per month

on Tier 1 and another 700 kwh per month on on Tier 1 and another 700 kwh per month on Tier 2. Excess kwh are billed on Tier 3Tier 2. Excess kwh are billed on Tier 3

Zone 2 customers receive 500 kwh per month Zone 2 customers receive 500 kwh per month on Tier 1 and another 1000 kwh per month on on Tier 1 and another 1000 kwh per month on Tier 2. Excess kwh are billed on Tier 3Tier 2. Excess kwh are billed on Tier 3

Kwh totals are doubled on bi-monthly billsKwh totals are doubled on bi-monthly bills

Electric Rate OverviewElectric Rate OverviewResidentialResidential

Optional rate overview:Optional rate overview: Time of Use (TOU – Rate B) is available when a TOU Time of Use (TOU – Rate B) is available when a TOU

meter is presentmeter is present Low Income Discount (Rate D) and Lifeline (Rate E) Low Income Discount (Rate D) and Lifeline (Rate E)

provide a flat discount from a bill calculated on the provide a flat discount from a bill calculated on the Standard RateStandard Rate

• Low Income for customers who meet income requirementsLow Income for customers who meet income requirements• Lifeline for customers who meet income and other Lifeline for customers who meet income and other

requirementsrequirements Customers are not allowed to be billed on more than Customers are not allowed to be billed on more than

one rate; i.e., a customer cannot be billed on the TOU one rate; i.e., a customer cannot be billed on the TOU rate and on the Lifeline rate at the same timerate and on the Lifeline rate at the same time

Customers on any of the optional rates may opt out at Customers on any of the optional rates may opt out at any timeany time

Electric Rate OverviewElectric Rate OverviewResidentialResidential

Optional TOU rate R-1B:Optional TOU rate R-1B: Peak rates are higher June – SeptemberPeak rates are higher June – September All kwh usage is billed on the base, low peak and All kwh usage is billed on the base, low peak and

high peak effective rateshigh peak effective rates Tiered rate structure is not used under TOUTiered rate structure is not used under TOU Recommended for customers who can control their Recommended for customers who can control their

energy usage, high kwh users and solar customersenergy usage, high kwh users and solar customers Also recommended for customers with electric Also recommended for customers with electric

vehicles. Base kwh usage is discounted when vehicles. Base kwh usage is discounted when charging consumption is metered separatelycharging consumption is metered separately

Not recommended if 2 month consumption averages Not recommended if 2 month consumption averages less than 2000 kwh, or if summer usage is higher due less than 2000 kwh, or if summer usage is higher due to high AC usageto high AC usage

A customer who opts out of TOU may not return to A customer who opts out of TOU may not return to TOU until 12 months have elapsedTOU until 12 months have elapsed

Electric Rate OverviewElectric Rate OverviewResidentialResidential

Residential TOU – some important points to Residential TOU – some important points to remember:remember:Meter availability is limited, and DWP has discretion over Meter availability is limited, and DWP has discretion over which customers will receive themwhich customers will receive them

Not every customer who requests a TOU meter will get oneNot every customer who requests a TOU meter will get one Solar and EV customers have prioritySolar and EV customers have priority

Customers can opt out of the TOU rate at any time, but Customers can opt out of the TOU rate at any time, but they cannot return to the TOU rate until 12 months have they cannot return to the TOU rate until 12 months have elapsedelapsedAfter a TOU meter has been installed, it will remain at the After a TOU meter has been installed, it will remain at the customer’s location on a permanent basis, and the old customer’s location on a permanent basis, and the old meter cannot be returnedmeter cannot be returned

Residential Rates – Q & AResidential Rates – Q & A Q: why are my rates so high?Q: why are my rates so high?

A: DWP residential electric rates are among the A: DWP residential electric rates are among the lowestlowest in CA in CA Q: why is my bill so high?Q: why is my bill so high?

A: The bill is based on consumption as recorded by the electric meter. The usage should A: The bill is based on consumption as recorded by the electric meter. The usage should be analyzed to check for consistency, seasonal variations, or anything that may appear be analyzed to check for consistency, seasonal variations, or anything that may appear unusualunusual

Q: why are there so many line items?Q: why are there so many line items? A: Every line item represents a specific cost that is incurred by DWP as it provides A: Every line item represents a specific cost that is incurred by DWP as it provides

electric serviceelectric service Q: why did my rate go up in the summer?Q: why did my rate go up in the summer?

A: Seasonal rates are in effect June – September. This is not an increase: it is simply a A: Seasonal rates are in effect June – September. This is not an increase: it is simply a seasonal variationseasonal variation

Q: I have solar – why do I still get a bill?Q: I have solar – why do I still get a bill? A: All customers receive an electric bill, even if there is no consumption. Every customer A: All customers receive an electric bill, even if there is no consumption. Every customer

incurs costs of service (for billing, meter reading, etc), even if the usage is low or incurs costs of service (for billing, meter reading, etc), even if the usage is low or negativenegative

Q: why don’t my regular and solar bills agree?Q: why don’t my regular and solar bills agree? A: The solar statement supersedes the regular bill because it shows credits and numbers A: The solar statement supersedes the regular bill because it shows credits and numbers

that the regular bill is unable to displaythat the regular bill is unable to display Q: I have solar, so why am I not on TOU?Q: I have solar, so why am I not on TOU?

A: The TOU rate is optional, not mandatory. Customers must request it in writingA: The TOU rate is optional, not mandatory. Customers must request it in writing

Electric Rate OverviewElectric Rate OverviewCommercialCommercial

Bill consists of kwh and kw componentsBill consists of kwh and kw components Kwh line items refer to Kwh line items refer to energyenergy components components Kw line items refer to Kw line items refer to demanddemand components components

Facilities demand represents the highest Facilities demand represents the highest kw read during the previous 12 monthskw read during the previous 12 months

Customers using more than 250 kw Customers using more than 250 kw demand also pay reactive energy (kvar) demand also pay reactive energy (kvar) chargescharges

City tax is 12.5% of the DWP subtotalCity tax is 12.5% of the DWP subtotal State tax is per kwhState tax is per kwh

Electric Rate OverviewElectric Rate OverviewCommercialCommercial

Rate is determined based on the Facilities kw demand Rate is determined based on the Facilities kw demand and the service voltageand the service voltage A1A1: demand is less than 30 kw: demand is less than 30 kw A2A2: demand is greater than 30 kw, service voltage is 4.8 kv: demand is greater than 30 kw, service voltage is 4.8 kv A3A3: demand is greater than 30 kw, service voltage is 34.5 kv: demand is greater than 30 kw, service voltage is 34.5 kv A4A4: demand is greater than 80 Mw, service voltage is 138 kv: demand is greater than 80 Mw, service voltage is 138 kv CGCG, , XRTXRT eligibility requires separate analysis and special eligibility requires separate analysis and special

DWP approvalDWP approval OAL, LSOAL, LS and and TCTC are unmetered and billed off system are unmetered and billed off system

There is no “clean and show” rateThere is no “clean and show” rate TOU is optional for A1, mandatory for A2 and A3TOU is optional for A1, mandatory for A2 and A3 Demand meters are installed at DWP’s discretionDemand meters are installed at DWP’s discretion There is no separate solar commercial rateThere is no separate solar commercial rate

Commercial Rates - componentsCommercial Rates - components The electric bill consists of service charges, kw charges, kwh The electric bill consists of service charges, kw charges, kwh

(and kvar) charges, and taxes. (Please note: these terms are (and kvar) charges, and taxes. (Please note: these terms are defined and explained in the ordinance, which is posted on the defined and explained in the ordinance, which is posted on the DWP website)DWP website)

Kwh charges:Kwh charges: Energy chargesEnergy charges ECA, ECA, VRPSEA, CRPSEA, VEAVRPSEA, CRPSEA, VEA State taxState tax

Kw charges:Kw charges: FacilitiesFacilities DemandDemand ESA, RCA, ESA, RCA, IRCAIRCA

Reactive (Kvar) charges (only with minimum 250 kw):Reactive (Kvar) charges (only with minimum 250 kw): Nonexistent on Rate A1Nonexistent on Rate A1 Per kvar when kvar is meteredPer kvar when kvar is metered Per kwh when kvar is unmeteredPer kwh when kvar is unmetered

Commercial Rates Q & ACommercial Rates Q & A Q: why is my bill so high?Q: why is my bill so high?

A: The bill is based on kwh usage and kw demand. Billing history should be analyzed to determine if A: The bill is based on kwh usage and kw demand. Billing history should be analyzed to determine if there are any inconsistencies or any other information that may indicate there is a possible errorthere are any inconsistencies or any other information that may indicate there is a possible error

Q: why is the commercial rate so high?Q: why is the commercial rate so high? A: DWP commercial rates are A: DWP commercial rates are competitivecompetitive with those of neighboring utilities with those of neighboring utilities

Q: why is my demand charge so high?Q: why is my demand charge so high? A: Demand is a major component of the bill. A relatively high demand and low kwh usage will have A: Demand is a major component of the bill. A relatively high demand and low kwh usage will have

disproportionally high demand chargesdisproportionally high demand charges Q: why do I have to pay a facilities charge?Q: why do I have to pay a facilities charge?

A: Facilities represents another main component of the bill – it is not optionalA: Facilities represents another main component of the bill – it is not optional Q: why is the facilities charge for a whole year?Q: why is the facilities charge for a whole year?

A: This is a rate ordinance requirement. The kw read helps DWP determine the service size and A: This is a rate ordinance requirement. The kw read helps DWP determine the service size and transformer requirements of equipment that serves multiple customerstransformer requirements of equipment that serves multiple customers

Q: why are my reads multiplied by a k constant?Q: why are my reads multiplied by a k constant? A: A meter with a k multiplier is designed to read higher volumes of kwh and kw. This provides DWP A: A meter with a k multiplier is designed to read higher volumes of kwh and kw. This provides DWP

with an opportunity to bill more accuratelywith an opportunity to bill more accurately Q: why am I being billed on the A2 rate, even though I haven’t exceeded 30 kw?Q: why am I being billed on the A2 rate, even though I haven’t exceeded 30 kw?

A: This can be corrected retroactively by Rate ApplicationsA: This can be corrected retroactively by Rate Applications Q: where are my commercial solar credits?Q: where are my commercial solar credits?

A: These will be present if the net energy kwh total is negative. The primary benefit provided by a A: These will be present if the net energy kwh total is negative. The primary benefit provided by a commercial solar installation is to benefit a customer in a similar manner as any other energy efficiency commercial solar installation is to benefit a customer in a similar manner as any other energy efficiency project – by reducing kwh usageproject – by reducing kwh usage

Electric rates – more general Q & AElectric rates – more general Q & A Q: there is no way this bill is correct. How can I challenge the meter reads?Q: there is no way this bill is correct. How can I challenge the meter reads?

A: The DWP representative should try to help the customer determine why the A: The DWP representative should try to help the customer determine why the reads may be relatively high, as well as check for historical consistency. The reads may be relatively high, as well as check for historical consistency. The customer may also request a field investigationcustomer may also request a field investigation

Q: my bill went up when you replaced my meter. How can I get my old Q: my bill went up when you replaced my meter. How can I get my old meter back?meter back?

A: Meters don’t use energy – they are simply recording devices. In most cases, A: Meters don’t use energy – they are simply recording devices. In most cases, the old meter is no longer availablethe old meter is no longer available

Q: why are my taxes, sewer charges, and trash fees so high?Q: why are my taxes, sewer charges, and trash fees so high? A: These bill components are controlled by the City Bureau of Sanitation. DWP is A: These bill components are controlled by the City Bureau of Sanitation. DWP is

only the billing agentonly the billing agent Q: why do I have to pay a “cost adjustment?”Q: why do I have to pay a “cost adjustment?”

A: The term “adjustment” indicates that this particular billing component may be A: The term “adjustment” indicates that this particular billing component may be adjusted quarterly. The ECA is not a surcharge or a bill correction. It is a main adjusted quarterly. The ECA is not a surcharge or a bill correction. It is a main component of the bill that represents certain variable costs and DWP programscomponent of the bill that represents certain variable costs and DWP programs

Q: my service is a residence. Why am I on the commercial electric rate?Q: my service is a residence. Why am I on the commercial electric rate? A: The A1 rate applies to common area meters serving 2 or more units. This A: The A1 rate applies to common area meters serving 2 or more units. This

determination is made by providing a meter survey in the fielddetermination is made by providing a meter survey in the field Q: why haven’t I received the TOU meter I requested?Q: why haven’t I received the TOU meter I requested?

A: TOU meters are installed based on availability. When TOU is optional and not A: TOU meters are installed based on availability. When TOU is optional and not mandatory, DWP has the discretion to determine meter installation prioritiesmandatory, DWP has the discretion to determine meter installation priorities

Q: how can I lower my electric bill?Q: how can I lower my electric bill? A: By identifying energy usage and demand characteristics in order to manage A: By identifying energy usage and demand characteristics in order to manage

costs, and by using electricity as efficiently as possible. There is a lot of valuable costs, and by using electricity as efficiently as possible. There is a lot of valuable and useful energy efficiency information on the DWP websiteand useful energy efficiency information on the DWP website

Water Rate OverviewWater Rate Overview

Rates are designed to encourage Rates are designed to encourage conservationconservation

Line items are either fixed by ordinance or Line items are either fixed by ordinance or adjusted seasonally or quarterlyadjusted seasonally or quarterly

Bills are based on HCF usageBills are based on HCF usage 1 HCF = 748 gallons1 HCF = 748 gallons

Sewer charges are also present on DWP Sewer charges are also present on DWP bills but are controlled by the City’s Bureau bills but are controlled by the City’s Bureau of Sanitationof Sanitation

Water Rate OverviewWater Rate Overview

Rate A: single family residentialRate A: single family residential Rate B: multi-family residentialRate B: multi-family residential Rate C: commercialRate C: commercial Rate D: recycled/reclaimed waterRate D: recycled/reclaimed water

Rate components set by contractRate components set by contract Rate E: fire serviceRate E: fire service

Bill amounts determined by size of serviceBill amounts determined by size of service Rate F: large turf for public usageRate F: large turf for public usage

Water Rate OverviewWater Rate Overview Residential and commercial water rates are tiered and Residential and commercial water rates are tiered and

designed to encourage conservationdesigned to encourage conservation Currently a two-tiered billing systemCurrently a two-tiered billing system Residential Tier 1 allocation:Residential Tier 1 allocation:

Fixed by ordinance and seasonalFixed by ordinance and seasonal Based on customer lot size and ZIP codeBased on customer lot size and ZIP code Can be increased based on household sizeCan be increased based on household size

Multi-family and Commercial Tier 1 allocation:Multi-family and Commercial Tier 1 allocation: Based on the customer’s own average winter usage (December – Based on the customer’s own average winter usage (December –

March)March)• Original data used by DWP is from 2007-09, but we can also use the most Original data used by DWP is from 2007-09, but we can also use the most

current winter periodcurrent winter period New customers are billed 100% on Tier 1 until a winter average is New customers are billed 100% on Tier 1 until a winter average is

determineddetermined Can be reevaluated on a case-by-case basis if customer Can be reevaluated on a case-by-case basis if customer

circumstances change substantiallycircumstances change substantially

Water Rate OverviewWater Rate Overview

Water bill line items:Water bill line items: Commodity charges – set by ordinanceCommodity charges – set by ordinance General Provisions – adjusted quarterlyGeneral Provisions – adjusted quarterly

• F: Water procurement factor (purchased water)F: Water procurement factor (purchased water)• G: Water quality factorG: Water quality factor• H: Water revenue adjustment factorH: Water revenue adjustment factor• I: Water security adjustmentI: Water security adjustment• K: Owens Valley regulatory adjustmentK: Owens Valley regulatory adjustment• L: Low IncomeL: Low Income

Sewer charges – itemized separately on the “City Sewer charges – itemized separately on the “City Services” portion of the billServices” portion of the bill

Water Rate OverviewWater Rate Overview

““Shortage Year Rates” – introductionShortage Year Rates” – introduction Enacted by ordinance in 2009Enacted by ordinance in 2009 Reduces Tier 1 allocation across all rate Reduces Tier 1 allocation across all rate

classesclasses• We are currently under a 15% declared shortageWe are currently under a 15% declared shortage

Provides for year-round tiered ratesProvides for year-round tiered rates• Normal year: Tier 2 rates in effect in High Season Normal year: Tier 2 rates in effect in High Season

(June 1 – October 31)(June 1 – October 31)• Shortage year: Tier 2 rates in effect year-roundShortage year: Tier 2 rates in effect year-round

Water Rate Overview – some Water Rate Overview – some important points to rememberimportant points to remember

Recent years have seen our pass-through components Recent years have seen our pass-through components continue to continue to riserise DWP cannot control the increasing costs for water DWP cannot control the increasing costs for water

purchased from outside of our systempurchased from outside of our system Residential Tier 1 allocation can Residential Tier 1 allocation can notnot be adjusted be adjusted Commercial and multi-family Tier 1 allocation Commercial and multi-family Tier 1 allocation maymay be be

adjusted based on more recent average winter usage adjusted based on more recent average winter usage (on a case by case basis)(on a case by case basis)

While DWP does not have control over sewer rates, While DWP does not have control over sewer rates, DWP can help customers lower their sewer costs with DWP can help customers lower their sewer costs with the installation of a private water sub-meterthe installation of a private water sub-meter

Water rates Q & AWater rates Q & A Q: Why have water rates been increasing so much?Q: Why have water rates been increasing so much?

A: the current state-wide drought has caused our Purchased Water A: the current state-wide drought has caused our Purchased Water component to increasecomponent to increase

Q: why are we still using Shortage Year rates?Q: why are we still using Shortage Year rates? A: the Shortage Year declaration is made by the Mayor’s officeA: the Shortage Year declaration is made by the Mayor’s office

Q: can I get an adjustment on my Tier 2 charges when I refill my swimming pool?Q: can I get an adjustment on my Tier 2 charges when I refill my swimming pool? A: the Water Rate Ordinance does not allow for adjustments when filling a A: the Water Rate Ordinance does not allow for adjustments when filling a

pool, but the City may grant a credit on sewer chargespool, but the City may grant a credit on sewer charges Q: will I get fined if I water during the middle of the day?Q: will I get fined if I water during the middle of the day?

A: not likely, because our field staff tries to educate and give warnings before A: not likely, because our field staff tries to educate and give warnings before enacting penalties for excessive usageenacting penalties for excessive usage

Q: when my bill has both High Season and Low Season usage, why isn’t the bill Q: when my bill has both High Season and Low Season usage, why isn’t the bill prorated more fairly?prorated more fairly?

A: DWP uses a Daily Average when calculating prorated bills. When a bill has A: DWP uses a Daily Average when calculating prorated bills. When a bill has High and Low Season usage, there is a High Season daily allocation as well High and Low Season usage, there is a High Season daily allocation as well as a Low Season daily allocationas a Low Season daily allocation

Q: can I get a lower water rate when I plant more drought-friendly landscaping?Q: can I get a lower water rate when I plant more drought-friendly landscaping? A: the rate cannot be lowered, but the customer will still save by using lessA: the rate cannot be lowered, but the customer will still save by using less

Electric and Water Rates Electric and Water Rates Overview - ConclusionOverview - Conclusion

In general, DWP’s residential electric rates are In general, DWP’s residential electric rates are competitive with other municipalities and lower than competitive with other municipalities and lower than private utilitiesprivate utilities

In general, DWP’s commercial electric rates are In general, DWP’s commercial electric rates are competitive with neighboring utilitiescompetitive with neighboring utilities

In general, DWP’s residential and commercial water In general, DWP’s residential and commercial water rates are competitive with neighboring utilitiesrates are competitive with neighboring utilities

Like other utilities, DWP rates will probably continue to Like other utilities, DWP rates will probably continue to increase in the futureincrease in the future

DWP will continue to offer efficiency programs to help DWP will continue to offer efficiency programs to help mitigate those future cost increasesmitigate those future cost increases