The Los Angeles Department of Water and Power nearly brought City Hall to its knees last year, threatening to withhold $73.5 million from the city budget unless the council approved an increase in electricity rates.
That dispute was resolved months ago. But repercussions from the fight live on in the March 8 election campaign, which has two measures on the ballot aimed at reining in the DWP.
Charter Amendment I would result in the hiring of a ratepayer advocate to independently scrutinize the utility’s water and power rates. And Charter Amendment J would keep the DWP from using the surplus it gives each year to the city budget as a bargaining chip – by requiring it to state whether it will send the money earlier in the fiscal year.
“It prevents the DWP from putting a gun to the head of L.A.,” said City Council President Eric Garcetti, who pushed for both measures.
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The more hotly contested of the two proposals is Charter Amendment I, which would create an Office of Public Accountability at the DWP, the nation’s largest municipally owned utility. Backers of that measure say a ratepayer advocate will be needed as the agency carries out a plan for spending billions of dollars on system upgrades and environmental initiatives.
Business leaders strongly disagree, saying a new oversight office would be, at a minimum of $1 million per year, expensive and redundant.
Stuart Waldman, president of the Valley Industry and Commerce Assn., said the DWP’s actions are already reviewed by the council, the city controller and a five-member board whose members are chosen by the mayor to oversee the DWP. The council already showed that it is capable of performing that role by refusing to support three of four rates hikes sought last year by Villaraigosa, who also selects the utility’s top executive, he said.
“The system worked,” Waldman added. “No one can deny that the system worked. And having another layer of bureaucracy won’t change that.”
Councilwoman Jan Perry, who signed the ballot argument for Charter Amendment I, conceded that the council blocked much of the DWP’s rate hike plans last year. But she warned that many of the council members who did so would leave in the next four years because of term limits.
“There is no guarantee you will have a City Council that will be vigilant and aggressive in making sure that information regarding rate increases is fully vetted on the public record,” she said.
The debate over DWP management comes at a time when the utility is trying to determine its energy needs as it complies with state regulations requiring it to embrace more renewable energy, such as wind and solar power. Last year, one utility manager warned that rates could go up by as much as 8% in each of the next five years if the utility’s draft energy proposal is approved.
International Brotherhood of Electrical Workers Local 18, the powerful union that represents DWP workers, has repeatedly criticized the utility’s handling of renewable energy matters. But it is staying neutral on both measures, focusing instead on trying to unseat Councilman Bernard C. Parks – and replace him with one of the DWP’s former board members, Forescee Hogan-Rowles.
Even though the DWP faces rising costs, it continues to send a minimum of $200 million each year to the city’s general fund, which pays for basic services such as public safety and parks.
That transfer became a powerful chess piece in last year’s gamesmanship over rate hikes. When council members refused to back one rate hike backed by Villaraigosa, the mayor’s appointees at the DWP threatened to withhold a $73.5-million payment from the city budget.
That, in turn, threatened the city’s credit rating and left it in danger of running out of cash before the end of its budget year.
If passed, Charter Amendment J would require the DWP to tell the mayor and council by Dec. 31 of each year whether it will make all of its promised transfer. That announcement would come exactly halfway into the city’s budget year.
Under the proposal, the DWP would need to submit a preliminary budget to the City Council by March 31, three weeks before the mayor’s office releases its budget.
Times staff writer Maeve Reston contributed to this report.
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