Introduction to LADWP
Electric & Water Rates
Rate Applications Group
LADWP Rates & Contracts
July 2014
Electric and Water Rates Introduction
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Rates are designed to reflect DWP costs
 Designed to reflect the costs incurred for all aspects
of providing electric and water service for the city
Rates are set by ordinance
 Designed by DWP staff, with input from consultants
 Reviewed thoroughly by the independent Ratepayer
Advocate
 Submitted to the Board of Water and Power
Commissioners
 Approved by the Los Angeles City Council
Rates are applied based on DWP rules and policies
Electric Rate Overview
 Electric
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bill line items:
Service charges or minimum charges
Energy charges (tiered or TOU) – applicability
set by ordinance
Demand charges (commercial only)
Other line items:
capped: ECA, ESA, RCA
adjusted quarterly: VEA, CRPSEA, VRPSEA
adjusted annually: IRCA
City and state taxes
Electric Rate overview
Residential
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Rates are designed to encourage conservation
 Line items are either fixed by ordinance or
adjusted seasonally or quarterly
 Base rates are seasonal
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High Season is June 1 – September 30
Low Season is October 1 – May 31
Bill consists of kwh charges and taxes
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DWP charges are per kwh
Taxes are imposed by governing bodies
• City tax is 10% of the DWP subtotal
• State tax is per kwh
Electric Rate Overview
Residential
 Standard
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rate (R-1A) overview:
Tiered rates are determined based on basic
usage requirements for residential DWP
customers
Tiered rates are in effect year-round
Zone 1 customers receive 350 kwh per month
on Tier 1 and another 700 kwh per month on
Tier 2. Excess kwh are billed on Tier 3
Zone 2 customers receive 500 kwh per month
on Tier 1 and another 1000 kwh per month on
Tier 2. Excess kwh are billed on Tier 3
Kwh totals are doubled on bi-monthly bills
Electric Rate Overview
Residential
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Optional rate overview:
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Time of Use (TOU – Rate B) is available when a TOU
meter is present
Low Income Discount (Rate D) and Lifeline (Rate E)
provide a flat discount from a bill calculated on the
Standard Rate
• Low Income for customers who meet income requirements
• Lifeline for customers who meet income and other
requirements
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Customers are not allowed to be billed on more than
one rate; i.e., a customer cannot be billed on the TOU
rate and on the Lifeline rate at the same time
Customers on any of the optional rates may opt out at
any time
Electric Rate Overview
Residential
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Optional TOU rate R-1B:
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Peak rates are higher June – September
All kwh usage is billed on the base, low peak and
high peak effective rates
Tiered rate structure is not used under TOU
Recommended for customers who can control their
energy usage, high kwh users and solar customers
Also recommended for customers with electric
vehicles. Base kwh usage is discounted when
charging consumption is metered separately
Not recommended if 2 month consumption averages
less than 2000 kwh, or if summer usage is higher due
to high AC usage
A customer who opts out of TOU may not return to
TOU until 12 months have elapsed
Electric Rate Overview
Residential
Residential TOU – some important points to
remember:
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Meter availability is limited, and DWP has discretion over
which customers will receive them
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Not every customer who requests a TOU meter will get one
Solar and EV customers have priority
Customers can opt out of the TOU rate at any time, but
they cannot return to the TOU rate until 12 months have
elapsed
After a TOU meter has been installed, it will remain at
the customer’s location on a permanent basis, and the
old meter cannot be returned
Residential Rates – Q & A
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Q: why are my rates so high?
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Q: why is my bill so high?
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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 negative
Q: why don’t my regular and solar bills agree?
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A: Seasonal rates are in effect June – September. This is not an
increase: it is simply a seasonal variation
Q: I have solar – why do I still get a bill?
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A: Every line item represents a specific cost that is incurred by DWP as
it provides electric service
Q: why did my rate go up in the summer?
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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 unusual
Q: why are there so many line items?
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A: DWP residential electric rates are among the lowest in CA
A: The solar statement supersedes the regular bill because it shows
credits and numbers that the regular bill is unable to display
Q: I have solar, so why am I not on TOU?
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A: The TOU rate is optional, not mandatory. Customers must request it
in writing
Electric Rate Overview
Commercial
 Bill
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consists of kwh and kw components
Kwh line items refer to energy components
Kw line items refer to demand components
 Facilities
demand represents the highest
kw read during the previous 12 months
 Customers using more than 250 kw
demand also pay reactive energy (kvar)
charges
 City tax is 12.5% of the DWP subtotal
 State tax is per kwh
Electric Rate Overview
Commercial
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Rate is determined based on the Facilities kw demand
and the service voltage
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A1: demand is less than 30 kw
A2: demand is greater than 30 kw, service voltage is 4.8 kv
A3: demand is greater than 30 kw, service voltage is 34.5 kv
A4: demand is greater than 80 Mw, service voltage is 138 kv
CG, XRT eligibility requires separate analysis and special
DWP approval
OAL, LS and TC are unmetered and billed off system
There is no “clean and show” rate
TOU is optional for A1, mandatory for A2 and A3
Demand meters are installed at DWP’s discretion
There is no separate solar commercial rate
Commercial Rates - components
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The electric bill consists of service charges, kw charges,
kwh (and kvar) charges, and taxes. (Please note: these
terms are defined and explained in the ordinance, which
is posted on the DWP website)
Kwh charges:
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Kw charges:
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Energy charges
ECA, VRPSEA, CRPSEA, VEA
State tax
Facilities
Demand
ESA, RCA, IRCA
Reactive (Kvar) charges (only with minimum 250 kw):
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Nonexistent on Rate A1
Per kvar when kvar is metered
Per kwh when kvar is unmetered
Commercial Rates Q & A
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Q: why is my bill so high?
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Q: why is the commercial rate so high?
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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 accurately
Q: why am I being billed on the A2 rate, even though I haven’t exceeded 30 kw?
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A: This is a rate ordinance requirement. The kw read helps DWP determine the service
size and transformer requirements of equipment that serves multiple customers
Q: why are my reads multiplied by a k constant?
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A: Facilities represents another main component of the bill – it is not optional
Q: why is the facilities charge for a whole year?
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A: Demand is a major component of the bill. A relatively high demand and low kwh
usage will have disproportionally high demand charges
Q: why do I have to pay a facilities charge?
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A: DWP commercial rates are competitive with those of neighboring utilities
Q: why is my demand charge so high?
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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 error
A: This can be corrected retroactively by Rate Applications
Q: where are my commercial solar credits?
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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 project – by reducing kwh usage
Electric rates – more general Q & A
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Q: there is no way this bill is correct. How can I challenge the meter reads?
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Q: my bill went up when you replaced my meter. How can I get my old
meter back?
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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 field
Q: why haven’t I received the TOU meter I requested?
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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
component 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?
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A: These bill components are controlled by the City Bureau of Sanitation. DWP is
only the billing agent
Q: why do I have to pay a “cost adjustment?”
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A: Meters don’t use energy – they are simply recording devices. In most cases,
the old meter is no longer available
Q: why are my taxes, sewer charges, and trash fees so high?
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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
customer may also request a field investigation
A: TOU meters are installed based on availability. When TOU is optional and not
mandatory, DWP has the discretion to determine meter installation priorities
Q: how can I lower my electric bill?
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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
and useful energy efficiency information on the DWP website
Water Rate Overview
 Rates
are designed to encourage
conservation
 Line items are either fixed by ordinance or
adjusted seasonally or quarterly
 Bills are based on HCF usage
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1 HCF = 748 gallons
 Sewer
charges are also present on DWP
bills but are controlled by the City’s Bureau
of Sanitation
Water Rate Overview
 Rate
A: single family residential
 Rate B: multi-family residential
 Rate C: commercial
 Rate D: recycled/reclaimed water
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Rate components set by contract
 Rate
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E: fire service
Bill amounts determined by size of service
 Rate
F: large turf for public usage
Water Rate Overview
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Residential and commercial water rates are tiered and
designed to encourage conservation
Currently a two-tiered billing system
Residential Tier 1 allocation:
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Fixed by ordinance and seasonal
Based on customer lot size and ZIP code
Can be increased based on household size
Multi-family and Commercial Tier 1 allocation:
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Based on the customer’s own average winter usage (December
– March)
• Original data used by DWP is from 2007-09, but we can also use the most
current winter period
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New customers are billed 100% on Tier 1 until a winter average
is determined
Can be reevaluated on a case-by-case basis if customer
circumstances change substantially
Water Rate Overview
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Water bill line items:
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Commodity charges – set by ordinance
General Provisions – adjusted quarterly
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F: Water procurement factor (purchased water)
G: Water quality factor
H: Water revenue adjustment factor
I: Water security adjustment
K: Owens Valley regulatory adjustment
L: Low Income
Sewer charges – itemized separately on the “City
Services” portion of the bill
Water Rate Overview
 “Shortage
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Year Rates” – introduction
Enacted by ordinance in 2009
Reduces Tier 1 allocation across all rate
classes
• We are currently under a 15% declared shortage
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Provides for year-round tiered rates
• Normal year: Tier 2 rates in effect in High Season
(June 1 – October 31)
• Shortage year: Tier 2 rates in effect year-round
Water Rate Overview – some
important points to remember
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Recent years have seen our pass-through components
continue to rise
 DWP cannot control the increasing costs for water
purchased from outside of our system
Residential Tier 1 allocation can not be adjusted
Commercial and multi-family Tier 1 allocation may be
adjusted based on more recent average winter usage
(on a case by case basis)
While DWP does not have control over sewer rates,
DWP can help customers lower their sewer costs with
the installation of a private water sub-meter
Water rates Q & A
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Q: Why have water rates been increasing so much?
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A: the current state-wide drought has caused our Purchased Water
component to increase
Q: why are we still using Shortage Year rates?
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A: 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?
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A: the Water Rate Ordinance does not allow for adjustments when filling a
pool, but the City may grant a credit on sewer charges
Q: will I get fined if I water during the middle of the day?
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A: not likely, because our field staff tries to educate and give warnings before
enacting penalties for excessive usage
Q: when my bill has both High Season and Low Season usage, why isn’t the bill
prorated more fairly?
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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
as a Low Season daily allocation
Q: can I get a lower water rate when I plant more drought-friendly landscaping?
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A: the rate cannot be lowered, but the customer will still save by using less
Electric and Water Rates
Overview - Conclusion
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In general, DWP’s residential electric rates are
competitive with other municipalities and lower than
private utilities
In general, DWP’s commercial electric rates are
competitive with neighboring utilities
In general, DWP’s residential and commercial water
rates are competitive with neighboring utilities
Like other utilities, DWP rates will probably continue to
increase in the future
DWP will continue to offer efficiency programs to help
mitigate those future cost increases