A rate hike citizens love? What LA discovered about clean energy

Wed, 2016-01-27 06:00 -- Kevin Ebi

It's an old bromide that electric power customers will always resist a rate hike. But as I travel around, I'm seeing pockets of change, especially in Europe and on both coasts of the United States. In Europe, cities already have aggressive carbon reduction and clean energy mandates. In the U.S., more and more cities are setting their own strong targets. They increasingly realize the environmental AND the economic development benefits of clean energy.

On the west coast, the conversation is often about renewables, especially distributed solar. On the east coast, resilience and microgrids are often part of the motivators. Either way, more and more people are open to paying a few more dollars per year to bring clean energy and a modern grid to their own regions. — Jesse Berst

Nobody will go for a rate hike, right? Wrong. When Los Angeles asked residents if they would be willing to pay more to put an end to dirty energy sources, like coal, the response was a nearly unanimous “yes.”

The city’s approach can be an inspiring story for others that want to make an investment in cleaner energy but aren’t sure where they are going to get the money.

Nearly all say “yes”
The rate hike isn’t quite a done deal yet, but it’s getting close. When the Los Angeles Department of Water and Power held a public meeting to discuss the proposal, only one speaker spoke in opposition. And his opposition wasn’t so much to the overall goal as it was to the transfer of some of the utility’s funds to the city’s general fund, a transfer he says violates a citizens’ initiative.

The other speakers — business leaders, neighborhood and community groups, environmental organizations — all urged the board to raise rates. And it ultimately did by a unanimous vote.

Lessons from the proposal
The plan had two primary elements that seemed to resonate with the public. First, the rate hike itself seems to be modest.

Overall, rates will climb 3.86% on average, although residents will see less than half that increase. The typical homeowner’s monthly bill will climb only about $4 per month in the first year. Over five years, monthly rates will climb a total of about $12.

Second, there’s no question of why the money is needed and what it will be paying for. The state of California has aggressive mandates to reduce carbon emissions, which means more energy will have to come from clean, renewable sources. More than one-fifth of the utility’s power comes from those sources now.

Some 80% of the rate hike will go toward new clean energy sources. The balance will help the utility upgrade its infrastructure, including replacing old power poles, some of which are more than 60 year old.

And the public won’t have to take the utility’s word on any of this. The rate hike comes with detailed performance metrics, which will be shared with the public.

Support from the top… and bottom
Los Angeles Mayor Eric Garcetti says the hike is “critical to modernizing our aging electricity grid and bringing our power system into the 21st century.” Even the ratepayer advocate, who had some complaints about the utility’s higher-than-average overtime expenses, said the investment was worth it.

The overall lesson seems to indicate that if the public believes in the goal and the price seems fair, they may not put up much of a fight — if any — if you need more money.

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