Expanding Tiers from 2 to 4
Under the new water rates, LADWP's tiered rate structure has been expanded from two to four for single-family residential customers. The expanded tiers reflect the increasing cost of supplying more water to customers who use higher amounts of water. The tiered rates allow LADWP to recover the costs of providing water to high users while also encouraging customers to conserve. Over half of all water customers will fall under the "basic use" Tier 1 rate.
Infrastructure Reliability: LADWP must accelerate and expand its infrastructure reliability program. This pass-through factor would cover the cost of increasing mainline repairs and replacements, trunk line improvements, and other critical infrastructure reliability efforts. To protect customers, this factor includes an annual cap and only collects for expenses that have been incurred.
Base Rate Revenue Target (BRRTP): The BRRT uses a standard industry practice called decoupling to encourage conservation while covering LADWP’s fixed costs of providing reliable water and electricity service. Revenues above the sales target will be returned to customers while revenues below the sales target are recovered through charges over the next calendar year.
Securitization: Under AB 850, LADWP formed a Joint Powers Authority (JPA) with the city of Burbank to receive low interest financing for mandated and local water supply projects. This pass-through adjustment, which will appear as a line item on customer bills, will reduce the water revenue requirement by $45 million over five years, which represents a 2.9% savings on future rates.