In recent years, Los Angeles and California have committed to grid decarbonization, electrification is reshaping household and vehicle usage patterns, and the proliferation of distributed energy solutions have made modern rate options more important than ever. While LADWP has maintained rates that are competitive with California's investor-owned utilities, incremental adjustments to an aging rate structure cannot substitute for an examination of what is possible when looking at the technology of today. Much of what customers described to OPA — confusing tiers, bill shock, conservation efforts that don't show up in bills, and discounts that haven't kept pace with rising costs — can be traced upstream to rate design. Rate reform is also where several other recommendations converge: AMI investment delivers its full customer value only when paired with rate options that incentivize customers for when and how they use power. OPA recognizes that legal considerations may dictate retention of LADWP’s existing rate structure at least temporarily but urges consideration of rate reform as soon as possible.
Opportunities for LADWP to consider:
- Reforming and modernizing time-of-use (TOU) rate offerings to reflect today's grid conditions and LA100's trajectory (including midday solar abundance and evening peaks) with customer protections during the transition,
- Updates to low-income and other discount rates, if possible, so discount levels and structures address current and future energy burdens, electrification-driven cost increases, and the realities of fixed- and low-income families, renters, households with disabilities, older adults, and other vulnerable customer segments
- Simplify and clarify the rate structure itself, so that tiers, charges, and incentives are explainable on a bill and customers can see an actionable path connecting behavior, usage, and costs, supported by a transparent multi-year rate outlook