DWP settlement lets the Los Angeles ratepayer robbery continue

If you don't like illegal taxes, you can just fry in the dark.

That seems to be the message from Los Angeles city officials to Department of Water and Power customers who are tired of being overcharged for the electricity that keeps the lights on and the air conditioners running.

The city has reached a settlement in the lawsuit over the DWP's annual transfer of so-called "surplus" funds to the city treasury. If a judge can be persuaded to approve the settlement, the practice of overcharging DWP customers for electricity may be enshrined permanently as a way to raise tax revenue for the usual expenses of government, like the cost of pay raises for city workers.

As if electricity rates were not high enough in California – 30 percent above the national average – they're 8 percent higher than they need to be in Los Angeles because the DWP transfers 8 percent of the gross revenue from electricity sales, every year, to the city treasury.

That's in addition to the utility tax.

The Los Angeles charter says the city-owned utility may transfer surplus cash to the general fund, but the DWP doesn't have any surplus cash. It's raising rates every year.

City officials say they need the money. That doesn't make it legal. Still, it looks like they're about to get away with it.

The settlement, which city officials have discussed with reporters but not released publicly, would allow the transfer of DWP funds to continue, only slightly reducing the amount that ratepayers are overcharged. The utility would be required to knock 8 percent off its latest rate increase. So you'll only have to pay 92 percent of the scheduled rate hikes for electricity. Feel better?

According to Mayor Eric Garcetti's newly signed budget, the city will still get $242.5 million of transferred revenue from overcharged DWP ratepayers. In 2015, it was $265.5 million.

Reportedly, city officials promised to cap the transfer at its current level of 8 percent of the gross revenue from electricity sales, saying they will not seek to increase the percentage. That's what passes for a concession to the ratepayers in this settlement.

The lawsuit began in 2015 when Patrick Eck, a resident of West Hills, filed a complaint on behalf of all LADWP customers seeking a "refund of excess electric utility fees collected by the city... an order declaring the tax on electric utility customers illegal," and a permanent ban on collecting the tax in the future unless the city obtains voter approval.

He argued that the tax is illegal under Proposition 26, the "Stop Hidden Taxes Initiative," which was passed in 2010 to stop cities from charging more for a service than the cost of providing it. Voters had already passed Proposition 218, the "Right to Vote on Taxes Act," in 1996. It says local taxes, fees and assessments must be approved by voters with only three exceptions: water service, trash service and sewer service.

These state constitutional amendments expressed the will of the voters very clearly: Taxes are to be put on the ballot for approval. Yet politicians continue to look for new ways to extract money from your wallet without the bother of asking you first.

Today the state Assembly Committee on Local Government is scheduled to hold a hearing on Senate Bill 231, which would change the definition of "sewer" to include stormwater.

With that one little change, the cost of constructing and operating billion-dollar stormwater projects could be added to property tax bills without voter approval, because "sewer" is one of the three exceptions under Proposition 218.

How much would it cost? We could see hundreds of dollars in new charges added to property tax bills every year, maybe more. The San Gabriel Valley Council of Governments, a coalition of 33 cities, estimated that the cost of stormwater projects could add $1,400 to a homeowner's annual tax bill.

If you'd like to call your representative in the Assembly about SB 231, this would be a good day to do it. You can find their names and contact information online at findyourrep.legislature.ca.gov.

And if you'd like to call Mayor Garcetti about the DWP settlement, the phone number is 213-978-0600. You can also send an email to mayor.garcetti@lacity.org, or mail a letter to 200 N. Spring St., Los Angeles, CA 90012.

Susan Shelley is a columnist and member of the Editorial Board for the Southern California News Group. Reach her at Susan@SusanShelley.com, or follow her on Twitter: @Susan_Shelley.