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Mayor Villaraigosa is directing the Board of Water and Power Commissioners to create a Carbon Reduction Surcharge and a related Renewable Energy & Energy Efficiency Trust Fund.
This action is an unprecedented step towards creating thousands of green-collar jobs and turning Los Angeles into the greenest big city in America.
Here's what you need to know about the plan:
Read about the announcement of the Carbon Reduction Surcharge here.
How much will rates increase?
For the vast majority of ratepayers, the monthly bill will only increase by roughly $2.50 - $3.50 a month.
Rates will go up 2.7¢ per kWh. Of that increase, 0.7¢ per kWh will go to a dedicated fund for renewables and energy efficiency. Most ratepayers are in the Tier 1 category, based on their power usage, which translates into a $2.50 - $3.50 increase on their monthly bills. Customers who use more energy--falling into Tier 2 and 3--will pay proportionally more.
For small businesses, this increase would mean a monthly increase of approximately $54.00, or 20%.
However, the objective of this initiative is not to charge more, it is to use less. So we are dedicating 100% of the Carbon Reduction Surcharge to renewable energy and energy efficiency.
To mitigate the impact of the increase, LA residents will have access to the Green Doctor program, where the DWP will conduct house-calls for energy audits and offer free energy efficiency improvements, and other energy efficiency programs. And small businesses will qualify for up to $2500 in free energy-efficiency lighting upgrades – which could lower your energy costs by up to 25%.
Even more importantly, the DWP will institute a Solar Power Feed in Tariff program
(FiT), to allow users to sell solar power back to the DWP. The FiT program will not only enable users to drastically cut their rates, but it will also incentivize the installation of solar panels, creating good, green-collar local jobs.
When will rates go up?
Beginning April 1, 2010. However, the increases will be implemented gradually over four quarters (ending January 2011).
Selling power back to the DWP
In addition to energy efficiency programs, businesses and residents will have the opportunity to participate in a Solar Feed-in Tariff (FiT).
A solar feed-in tariff allows the owner of an in-basin solar facility (i.e., businesses who install solar panels on their rooftops) to sell electricity directly to the LADWP at a guaranteed price for a set period of time.
In most cases, under the FiT program, both businesses and residents can dramatically reduce or even eliminate your power bills. In some cases, businesses can even use the Feed-in Tariff to turn a profit.
Here's a great story that shows how FiT could work--it shows how a Pasadena family cut their energy bill from hundreds of dollars a month to zero:
Creating local, green collar jobs.
The Carbon Reduction Surcharge will create as many as 18,000 local jobs over the next 10 years.
Using US Department of Energy methodology, the $168 million that the DWP will be investing in renewable energy sources will create 1,826 jobs per year. That translates into 18,260 jobs over 10 years.
We will use the solar feed-in tariff program to turn Los Angeles, with our bountiful sunshine, into a captial of solar power. According to a Berkeley study, approximately 13 installation jobs and 20 manufacturing jobs are created for every megawatt of solar energy installed. And the DWP will be incentivizing the use of local manufacturing to make sure those jobs go to Angelenos.
Why raise rates now?
Now is exactly the time we should be investing in our economic future and creating jobs. We know that our economic future lies in the green sector, but until now the benefits, opportunity and prosperity associated with renewable energy has largely been reserved for the wealthy elite.
Under California's Cap and Trade law (AB 32), unless we take action to cut our dependence on fossil fuels, we will end up paying huge fines to Sacramento, with no local benefit. These fines could total up to $300 million in 2011-2012, and more than $600 milliion the next year.
Or we can make these investments now and go green on our own terms, in a way that will maximize local jobs. With collective investment now, we can ensure collective benefit for the long term.