Electricity rate hikes planned by the Los Angeles Department of Water and Power that lay the groundwork for issuing more than $2 billion in revenue bonds passed a first vote of the City Council Tuesday. The council has to vote on the rate hikes a second time next week for final approval.
The proposal would raise rates by 5.5% increase for residential customers and 11% for commercial customers.
If the council approves the increases, they would take effect later this year.
LADWP plans to price $650 million of power system revenue bonds in two series of $350 million on Oct. 10 and $300 million on Oct. 11, according to department officials.
JPMorgan, Morgan Stanley, and De La Rosa & Co. are the senior managers on the first series.
JPMorgan, Morgan Stanley and Goldman, Sachs & Co. are the senior managers on the second set.
The department will also refund $130 million worth of power system bonds on Oct. 4 with De La Rosa acting as senior manager.
LADWP's board still has to approve $450 million of power system bonds that are part of the $1.1 billion in bonds planned for fiscal 2012-2013, according to Joe Ramallo, the department's spokesman.
The utility also hopes to get LADWP board approval to issue another $1.2 billion in new debt in fiscal 2013-2014 to help it achieve federal and state mandates and achieve its own environmental goals.
The department has $6.3 billion in existing long-term debt on the power side.
The utility issued $414 million of water system revenue bonds in two tranches on Aug. 9.
Wells Fargo Securities priced the $322 million of Series B bonds and Siebert Brandford Shank & Co. priced the $92.7 million Series C.
The water bonds are rated Aa2 by Moody's Investors Service and AA by both Standard & Poor's and Fitch Ratings.
LADWP also plans to issue $557.7 million in long-term debt in fiscal 2013 to pay for water system improvements, which include $162.2 million to replace aging water pipes that have an average age of 100 years, according to the financial plan.
If it does issue that debt, it would increase the department's overall long-term debt to $4.02 billion by fiscal 2014 on the water side.
On the electricity side, LADWP has been working on a variety of efforts aimed at switching the city's power generation to wind, solar and other methods of generating power to meet a goal of 33% renewable energy by 2020, according to officials.
S&P affirmed its AA-minus rating to the department's power revenue bonds Monday ahead of the forthcoming deals.
