Business owners throughout Los Angeles got a reprieve last week from a power rate increase as the result of squabbling between the City Council and the Department of Water & Power Board. When the council and utility do come to some agreement on how much to raise the cost of electricity the new price would not take effect until July 1, giving time to ratepayers to budget for the increase. It would also give time to neighboring cities to devise strategies for encouraging L.A. businesses to relocate to their cities. The failure to approve a rate change before April 1 created broader financial implications for a city already struggling under a massive budget deficit when the DWP reversed a decision to make a $73 million payment to the city’s general fund. Without the money the city will go broke on May 5. Mayor Antonio Villaraigosa, in turn, proposed shutting down city agencies for two days a week as a way to save money but later backed off on taking such action. As a response to no increase, Moody’s downgraded the city’s credit rating. “We can remove all those issues by approving the smallest increase,” Councilman Richard Alarcon said. When the council did approve an increase of 0.06 per kilowatt hour on March 31, Alarcon voted no because the motion lacked protections he had sought, including exemptions for residents and businesses for whom the increase would create a hardship. That same day the DWP board approved an increase of 0.07 per kilowatt hour that the council immediately vetoed. That would have been the first of four increases planned by the utility that would have totaled 2.7 cents per kilowatt. In the week leading up to those votes, business advocacy groups were vocal with their opposition, stating that companies already struggling from the poor economy couldn’t absorb a high spike in their electric bills. The Valley Industry & Commerce Association opposed the rate hike over the amount to be set aside to meet a goal of using more renewable energy sources as replacements for coal and natural gas. That spending would have been controlled by Villaraigosa and DWP and there were doubts over the number of jobs it would create, said President Stuart Waldman. Effect on businesses Had the four increases gone through, the Beverly Garland Holiday Inn in North Hollywood would have been paying an additional $100,000 a year, Waldman said, while California State University, Northridge would have incurred an additional $1.2 million in energy costs. “It was too much too soon,” Waldman said The Anheuser Busch brewery in Van Nuys was another business that balked at any power bill increase. The rate change voted on by the DWP board would have cost that business $900,000 more a year. The extra energy costs would have been $2.3 million with all four increases, Waldman said. Anheuser Busch made a compelling argument against any increase, including moving jobs out of the city, Councilman Greig Smith said “They can bottle beer anywhere,” Smith said. Vic Viereck owns four apartment buildings including two in North Hollywood. As his buildings fall under rent control, he is limited as to how much he can charge existing tenants. “When (DWP) raises their fees we cannot recoup that,” Viereck said.. Whatever the final rate increase may be Valley Recycling Center CEO Sepand Samzadeh cannot budget for it as he deals in commodities – paper, glass, plastic and metal – that fluctuate in price. The recycling center, which also includes a document shredding side business, already has alternating shifts so as to use equipment when electricity prices are lower. Depending on the action of the city council and the utility, Samzadeh would consider moving the business from the Valley, where it has been located for 30 years. “There comes a point where it does not make sense to do business in Los Angeles,” Samzadeh said. Luring businesses away A statement like that is welcomed by cities looking to lure away business from Los Angeles. Power costs is one of the topics discussed when businesses are interested in relocating to Simi Valley. Palmdale is in the planning stages for a city-owned power plant, and neighboring Lancaster is willing to do whatever it has to get a business to come there, including subsidizing power bills, said Mayor R. Rex Parris. If Villaraigosa is intent on DWP moving toward renewable energy sources he is welcome to get that power from the Antelope Valley, which has the best sun in the world, Parris said. “We have alternative energy that can be used sooner and it is cheaper,” Parris said. That businesses would leave the city due to an increase is a concern to the council, which is why Alarcon sought hardship exemptions for residences and companies, prioritizing energy efficiency programs for commercial customers who have made previous efficiency investments, and considering thermal energy storage rebates for those businesses that cannot take part in the solar feed-in-tariff program.