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What is LADWP Tier System, and How Does it Work?

The Los Angeles Department of Water and Power is one of the two major municipal utility corporations operating within the State of California in the United States. Around 15 million people are directly dependent on the services of LADWP in California’s southern region. LAPD has a unique tiered system of utility bills to serve its customers efficiently.

How Does LADWP Calculate the Monthly Electricity Bill?

There are mainly two variables determining how the LADWP utility corporation calculates your monthly utility bill. In this article, you will find the factors that decide how your electricity bill is calculated.

Consumption of Power

The amount of power you use in a month is one of the vital determinative factors of how much you will be charged for your electricity usage. The unit that LADWP uses to measure the amount of power used per month is Kilowatt-hours (kWh). Usually, homeowners tend to use a more significant amount of electricity during summer. Operating an air conditioning generally ends up costing the consumer more than what they need to pay during the winter.

LADWP implements a tier system that determines the quantity of kWh you consume before moving up a tier. As a result, the higher you are on the tier, the more you pay for electricity usage per month. The tier and baseline allowances tend to differ by season and region. But if you are a user looking to cut down on your electricity cost, you must increase your chances of being in Tier 1 to pay as minimal a rate as possible.

Rate Plan

The second variable that determines the electricity bills of LADWP consumers is the rate plan. In general, most consumers are not aware of the rate plan you are on for their utility services. In most cases, the providers tend to offer a default rate option to the customers unless asked for a different plan or method.

If you are a recipient of a tiered-rate utility plan, you will be charged a fixed rate for each kWh of power you will use. You will gradually reach a higher tier after going to the allotted power, thus paying more for each kWh of electricity.

LADWAP also offers a time-of-use (TIO) plan, offering different rates based on the day, time, and seasons. As a result, the time-varying nature of this plan allows you to get electricity at a cheap rate when the power is low, while on the other hand, the bill rises high when you use the utility during peak hours.

Types of Electricity Bill Charges LADWP Offers

Due to the complexities of the number of lines on a bill, it becomes harder to decipher what your all-in rate is. In general, LADWP rates are easy to break down as you can estimate the cost by dividing the cost of electricity into three main categories. The categories are as follows, supply, distribution, and miscellaneous.

The utility price can vary depending on the source of your electricity supply. There is usually a disparity of charges if your provider uses fuel or natural gas as a source of utility supply rather than a renewable energy source. Nuclear power plants are also an essential source of utility supply that can alter the cost of electricity bill charges.

Likewise, distribution and transmission costs are essential parts of your overall utility bills as the money required to supply energy to you is usually high. Companies use the delivery charge to construct new poles and maintain the health of the old ones.


The tiered system of bills that LADWP offers to its customers is intended to provide utility facilities that suit their convenience and purpose. Therefore, the tiered design allows people to plan the consumers’ usage to help them keep the electricity cost to a minimum. It also ensures that the average consumer does not carry the burden of the high cost of electricity.

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