By Steve Gorman

LOS ANGELES, Feb 17 (Reuters) - With a recent flurry of winter storms doing little to dampen California's latest drought, the nation's biggest public utility voted on Tuesday to impose water rationing in Los Angeles for the first time in nearly two decades.

Under the plan adopted in principle by the governing board of the L.A. Department of Water and Power, homes and businesses would pay a penalty rate -- nearly double normal prices -- for any water they use in excess of a reduced monthly allowance.

The five-member board plans to formally vote on details of the measure next month.

The rationing scheme is expected to take effect in May unless the City Council acts before then to reject it -- a move seen as unlikely since Mayor Antonio Villaraigosa called for the measure under a water-shortage plan last week.

The only other time such penalty pricing was imposed to force conservation in the nation's second biggest city was a rationing system put into effect for a year starting in March 1991, at the height of California's last statewide drought.

That measure cut citywide water use by about 25 percent, DWP spokesman Joseph Ramallo said.

The DWP board also voted unanimously to restrict lawn sprinkler use to two days a week, as urged by the mayor. Outdoor irrigation accounts for 40 percent of residential water use in the city, DWP officials say.

The agency is the largest municipal utility in the United States, supplying water and electricity to some 3.8 million households and businesses in Los Angeles.