From the Daily News in Los Angeles:
But after his stint on the Board of Water and Power Commissioners, [Nick Patsaouras] wants to be known as the Howard Jarvis of the DWP.
“I want to put a measure on the ballot that would put a ceiling on DWP rates,” Patsaouras said. “We need to put controls on the rates so that we aren’t pricing ourselves so high that people can’t afford it.
The idea for a rate ceiling came when the commission recently voted to lift the Energy Cost Adjustment Factor, a pass-through to ratepayers to cover the cost of fuel.
“That is the straw that will break the camel’s back,” Patsaouras said. “If that is adopted, the pass-through will exceed the base rates. We have to stop it now.”
This kills me. Dude wants to cap the amount of a pass-through for energy costs. I don’t understand. This fee, the one he wants to cap, is how customers pay for energy to convey and treat water. What does he think will happen if his initiative passes and LA DWP customers can no longer pay the market rate for fuel to move water? Does he think that fuel will magically cost what they want to pay? Does he think that LA DWP will buy as much fuel as they can under the new regulation, and then only convey that much water? There are fuel costs associated with moving and treating water and they impose a burden on the consumers of water. That is all true and sad, especially if those fuel costs are going up rapidly in a time when people don’t have much money. But these are supply costs on an open market, asked by fuel sellers who presumably have other customers. Voting to establish an absolute upper bound that DWP will pay for fuel is meaningless. DWP must have fuel to move and treat water and it must either buy that fuel for the market price or buy less fuel.
You know, I don’t even understand this guy on his own crazy terms. Why is he capping the fuel pass-through fee? That’s the part with no agency discretion. Why not go for the base-rate? The base-rate is some combination of stuff like costs of conveyance and treatment*, paying for their physical capital, staff salaries, and a maintenance reserve. It is perfectly legitimate for the board of a water district to decide to keep the base-rate low and have a shoddy, falling-apart water district. This is one possible choice that constituents might prefer, although City of Placerville is regretting it. But he isn’t proposing to cap the base-rate. He’s proposing to cap the part DWP has no way to change.
This is so staggeringly dumb it makes my head hurt, but I should have known that as soon as I saw that someone aspires to be the Howard Jarvis of something. Please, please, please, voters in Los Angeles. Please see through this, please understand that this proposal is nonsensical. Please can we put an end to thinking that we don’t have to pay for what we use?
*I bet they separated the fuel pass-through from that because the cost of fuel changes a lot and they didn’t want to be tinkering with the water rates all the time.
UPDATE: Edited very slightly a day later.