True Reform at DWP?

When will we see true accountability at DWP?

Recently, the Los Angeles City Council voted for three supposed Department of Water & Power reforms:

  • Creating an Office of Public Accountability with a ratepayer advocate;
  • Requiring DWP’s budget to be submitted earlier, with a guarantee that “surplus” funds will come to the city of L.A. for general fund uses;
  • Granting the City Council the authority to remove the DWP’s  General Manager or DWP Commissioners with a two-thirds council vote.  The council could also override the mayor’s removal of the GM or commissioners with a two-thirds vote.

If the council approves the measures Dec. 7, they will appear on the March 8 ballot.  But here’s the deal: These reforms are hardly bold and they don’t begin to solve the numerous inherent problems at DWP.  In fact, the ballot measures are a cynical and opportunistic attempt to take advantage of near-universal public distrust of DWP.

The original job description for the new ratepayer advocate position promised real reform. It declared “the role of the OPA shall be to (1) promote efficiency and effectiveness of the department; (2) provide a centralized focus on ratepayer protection and consumer complaints; and (3) provide independent analysis of department actions, particularly as they relate to water and electricity rate actions. The OPA shall advocate against excessive rates and shall provide expert advice on rate actions and strategies which most economically accomplish the City’s policy goals and protect the department’s long-term interests.” But the role has been significantly watered down to the point of ambiguity.

From an environmental perspective, the measures almost completely miss the mark.  Of course greater accountability is needed at DWP, but giving the City Council the authority to fire the GM and the commissioners is not a solution.

The DWP needs stability at the GM slot more than anything else, given the turmoil associated with having nine GMs in the last decade.  The Office of Public Accountability with a ratepayer advocate will be yet another layer of bureaucracy. The focus will be on determining if rates are too high, not if DWP is using revenues to overhaul decaying infrastructure and move towards green energy and a sustainable, local water supply.

The mayor has made bold pronouncements on renewable energy (40% renewable by 2020), coal (get rid of polluting coal by 2020), and water management (increased conservation, water recycling, rainwater capture and wellhead treatment).  However, the DWP is not progressing towards meeting these ambitious and admirable goals in a timely manner.

No initiative can mandate the leadership that is needed to ensure that DWP replaces or repairs decaying infrastructure and moves forward aggressively on sustainable local water supplies and a 40% renewable energy portfolio without dirty coal.  The Office of Public Accountability shouldn’t be needed to hold DWP responsible for meeting the city’s goals. That’s the job of the DWP Commission, City Council, and the mayor’s office. They all need to make sure that DWP senior managers meet environmental milestones, provide more complete financial information, and tie rate increases solely to infrastructure replacement, repair and maintenance, green power enhancement, and sustainable local water sourcing.

Mayor Villaraigosa and the City Council could create a culture of accountability through the DWP budget, rate setting, and annual performance reviews based on the achievement of interim milestones, but they haven’t chosen to do so.

Because of the current financial crisis, there is a complete reluctance for the council to raise water and power rates, but what the city truly needs is an investment in sustainable water infrastructure and renewable energy.  This transformation will not come cheaply, but I truly believe that most of the public could support rate increases if there were true DWP reform that included economic transparency and rate increases directly tied to needed green infrastructure.

Funds must be found to wean Los Angeles from coal (approximately half of its current energy is from dirty coal) and start relying on renewable energy.  Funds are needed to replace, repair, and maintain decaying water and power infrastructure.  Does anyone really believe the water conservation caused pipe ruptures?  Or was it the fact that DWP’s water conveyance infrastructure is in dire need of a major overhaul.

Funds are needed to upgrade environmentally damaging once-through-cooling power plants to more energy-efficient, dry cooling facilities that don’t suck the life out of the ocean.  And funds are needed to shift DWP from its growing reliance on MWD water, by shifting the city towards greater self reliance through conservation (which the city has done well on, but there is room for improvement), water recycling, well-head treatment of local groundwater, and rainwater capture and use.

As MWD water rates continue to rise and the future of imported water transfers grows in uncertainty, self reliance becomes critical from both an environmental and economic perspective.  Other than conservation, DWP’s sustainable water programs are an embarrassment and its water recycling program is far behind every other water agency in the region.

Rate increases are needed to fund L.A.’s transformation to green energy and sustainable local water, but they won’t happen without major reform and strict accountability for every penny of the rate increase.

As I’ve stated before, a critical and long overdue reform is to separate water from power.  A true watershed management approach includes sewage, stormwater and drinking water.

The Department of Public Works has responsibility over sewage and stormwater, but DWP is in charge of drinking water.  Public Works has embraced watershed protection and has even reorganized and planned to better manage watershed resources.  Other than water conservation, DWP hasn’t changed much in water management since the days of Mulholland.

(Another benefit could be the creation of a culture that mandates equal pay and benefits for equal work. Currently, an engineer, executive, analyst or administrative staff member working at City Hall makes about 20% less in pay and benefits than someone doing the same work at DWP. )

Separation of water from power can benefit the energy side of the equation too. A single-purpose power agency could be far more efficient and could be held more accountable to meeting the city’s green energy goals and complying with climate change regulations.

The time for true reform is now, but reform does not happen overnight.  An ambitious goal of 2015 to separate water from power is achievable, but only if the mayor and the City Council act now to take the bold measures necessary to modernize L.A.’s infrastructure in order to meet Mayor Villaraigosa’s first stated environmental goal: to make Los Angeles the greenest and cleanest major city in America.

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3 Responses

  1. - Response by Councilmembers Jan Perry and Greig Smith –

    Though we share many environmental goals, we differ from our friend Mark Gold on the issue of reform of the Los Angeles Department of Water and Power.

    The City has extremely ambitious and progressive environmental goals but cannot pursue them blindly without fiscal prudence for our ratepayers. DWP is mandated by the City Charter to provide the lowest water and power rates in the region.

    The Mayor’s monopoly on the governance of this utility has not benefited the DWP or its ratepayers, and has probably forestalled environmental initiatives by violating the public’s trust through complete lack of transparency and accountability.

    It is this very “formula for failure” that doomed the Measure B Solar Initiative. The failure of Measure B actually weakened public support for future environmental ballot initiatives. The public simply has no trust in the DWP, its commissioners, its labor leadership or the revolving door of General Managers. By directly addressing the public’s skepticism about DWP and their demands for change, reforming DWP will begin to restore the public’s trust.

    The Council has been playing an important role in reigning in the DWP, asking the questions that need to be asked and stopping the board from enacting major policy changes without a thorough public vetting. In fact, it is specifically because of Council’s intervention in the past that DWP has been unable to “pass through” suspect increases in rates and the Energy Cost Adjustment Factor (ECAF). In retribution, the General Manager and Commissioners conspired to withhold $63 million in power revenue funds previously promised to the City’s General Fund. When this action became known, the credit rating agencies threatened to lower the City’s credit ratings, which would have made it more expensive to borrow money, and cost the taxpayers millions.

    This same council scrutiny also required the utility to accelerate infrastructure improvements so desperately needed for the aging power and water systems. The Council also passed legislation that now requires DWP to have an independent third-party review of all proposed rate increases.

    The water main breaks of last year prove that rushing ahead with environmental reforms can have adverse and unintended negative consequences for the City and its ratepayers – no matter how worthy the goal. Mr. Gold’s attack on the DWP reform package seems more like sour grapes from a man who wholeheartedly supported the Mayor in his unsuccessful attempt to raise the ECAF for green power. This initiative was rushed and brought before the DWP board and Council with no well thought-out plan. In fact, the initiative did nothing to reduce the City’s dependence on coal.

    The Office of Public Accountability will begin the process of restoring the ratepayer’s faith in the fiscal management of the DWP as it pursues more and more progressive environmental goals. Without the public’s confidence in the DWP’s leadership, integrity, and accountability, how can they ever get behind ambitious and worthy environmental goals? Credibility is everything. Independent review and reporting is crucial to creating a transparent and efficient utility that is responsive and accountable to its ratepayers.

    The ability of the Council to remove or reinstate commissioners frees them from the fear of retribution should they not “toe the Mayoral line” in their service. Likewise, the ability of the Council to remove the General Manager ensures that the person in that position has more accountability to all stakeholders in the DWP. Both instances would happen only with a two-third vote of the City Council. If two-thirds of the Council is unhappy with these individuals, that equates to the elected leadership of more than 2.65 million, over half of the entire population of the City of Los Angles. Shouldn’t those people have a say?

    • It is great to see responses from such respected City leaders. One thing we can all agree on is that lack of trust in DWP on issues other than keeping the lights on and our faucets flowing justifies reform. In light of the ongoing crisis in confidence, creating a culture of accountability is absolutely essential. Respectfully, where we disagree is how to create the new culture.

      I’m reminded that a DWP Commission of Dorothy Green, Mary Nichols and Mike Gage were facing similar DWP accountability issues in the Bradley administration, so this has been going on for far too long.

      Any solution that creates stability at the General Manager position, accountability for the department and progress towards green power and sustainable local water supply is a solution that will benefit Los Angeles.

      As for the Nixon comment from Mr. Vandeventer, i often remind my students in the water class i help teach at UCLA, nearly all of our nation’s environmental laws occurred during the Nixon administration. In know the comment referred to the IBEW’s enormous influence on DWP policy and operations – and i think the separation of water from power and the need to create greater accountability addresses those issues as well.

  2. Mr. Gold:
    You mIss a critical point on the DWP accountability front. DWP has been managed by the self-serving leaders of its key labor union, IBEW, for years. They have worked not for the benefit of ratepayers in Los Angeles, but for the benefit of ever-higher IBEW union member wages, salaries and pensions that are wildly disproportionate in comparison to other utility workers and contributing to breaking the city’s fiscal back even as we speak. DWP has not been managed by the putative DWP general manager for quite some time; the general manager has been managed by the union, with the tacit consent of the Mayor and the DWP commissioners.

    Perhaps the courageous posture to take for you and Heal the Bay — not to mention other environmental groups — would be to investigate the facts of who controls DWP first. Then, consider taking a highly counter-intutive posture to that we’ve normally come to expect from environmental groups, a sort of “Nixon to China” stance. Nixon, a conservative Republican, flew in the face of his party and his own anti-communist credentials by diplomatically facing Chinese communist leaders on their turf and opening China in a significant way to the world. Whatever you think of Nixon, this act that would have made the US look soft if undertaken by a liberal president, instead made America and Nixon look strong and fearless given that it was accomplished by someone from whom such an initiative was almost inconceivable. Sometimes in politics it takes a highly contrarian and out-of-character stance to permanently change the terms of the debate — about our relationship to China or the role of a utility in our city.

    Perhaps by naming and confronting the civic menace that a truly bloated DWP, with its captive management and leadership, has become to the city and its utility ratepayers, Heal the Bay — one of the region’s most respected environmental leadership groups — could accomplish something equally dramatic on the local scene. This would involve Heal the Bay and other environmental groups overcoming some understandable liberal squeamishness about taking on a labor union in the cause of breaking IBEW’s grip on the purse strings of their DWP cash cow. But IBEW has become arrogant, unaccountable to any but its own narrow member interests, and dangerous to our civic integrity and resources. That justifies bringing them to account, firmly and decisively.

    If you succeed with the right campaign and create a constituency that brings IBEW to heel, you will assure rate-increase-rebellious Angelenos that real utility reform — not the masquerade of reform born of a weak ratepayer advocate and those other half-measures — is possible. With a courageous stance, Heal the Bay could fundamentally alter the terms of the debate about who the city’s utility monopoly answers to. I believe that the leaders who mount and master this charge will determine and decide the political future of Los Angeles for decades to come. That, more than your vague calls for accountability, might just open up a new era that would lead to voters cooperating with calls from environmentalists for a green LA.

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