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Power to the People 

Why David Freeman is smarter than Dick Riordan

Wednesday, Jan 24 2001
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I haven‘t heard back from the mayor yet about whether he’s going to fire David Freeman, the head of L.A.‘s Department of Water and Power (DWP) and the man most responsible for Los Angeles’ preposterously fortunate position during the California electrical debacle. But I read and hear that Mayor Richard Riordan is surprisingly upset with Freeman, even though Los Angeles has inexpensive power to spare, while the fair cities on the Bay are browning out like Djibouti in the monsoon.

Now, there are accidental and historical factors at play here for which no one alive can take credit. Yet it was Freeman who had the vision to make this good fortune possible, in part by outmaneuvering the mayor who appointed him three years ago. Freeman headed off Riordan‘s notions of privatizing the utility when he acted quickly to shrink the DWP’s debt and payroll. He could have failed: Just imagine how fun it would be if the near-bankrupt Edison company owned our power stations, and Los Angeles was browning out too.

The other great thing Freeman did was to say no to participating in the state-deregulation plan after he and his agency had spent months trying to cope with it.

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But Riordan the Mayor still doesn‘t understand. This is probably because Riordan the Businessman had been a short-term venture capitalist who made hundreds of millions by getting rapidly in and out of deals with the maximum profit. This is generally legal, but it gives one the quick-buck instinct of the street-corner three-card monte dealer: You fold your table and run the moment before the cops arrive.

Freeman, on the other hand, is institutional; he’s virtually the last living public-utility visionary. Although he knows how to trim bureaucracy, he‘s never swerved from the New Deal ideal that public power means public benefit, not private profits.

So here we are, year 2001: 20 years since the Reagan revolution supposedly proved public ownership a wasteful drag on the market system -- and an ugly heirloom to be scrapped and sold off. And what do we have here in power-rich Los Angeles? A validation of public ownership that would have brought Eugene V. Debs to his knees in tears.

The state’s crisis proves that, when it comes to public utilities, the profit motive works against the public interest. Except, of course, in the view of President Boy George, whose response was, “Let ‘em burn soft coal.” And Mayor Dick Riordan, who groused that the city utility should emulate the Houston energy barons -- who are riding the crisis -- by gouging the private utilities and the state on the sale of surplus DWP power. Nor was the agency sending out thugs to collect what PG&E and Edison supposedly owe us already for that power.

In the 1980s, DWP management might have done just that. Back then, the top-floor wonks called the utility “the corporation.” (I, who had a small job there, used to twitch when I heard them say this.) The agency even ponied up some 5 million ratepayer bucks a year to belong to the Electric Power Research Institute -- the national cabal of the stockholder-owned electric corporations. This was like a black businessman squandering the family savings to join the White Citizens’ Council.

Dave Freeman doesn‘t do things like that. The opposite of a robber baron, he’s a public steward who knows how to navigate national- and state-level politics. And unlike Riordan, he‘s shrewd enough to consider the negative fallout from price gouging at the expense of Californians outside L.A. State agencies could take revenge against the DWP, for example, by invoking strict environmental regulations throughout Los Angeles’ northern watershed. The Legislature could retaliate by seizing property-tax dollars, just as it did nine years ago for other reasons. (One would think that Riordan, just faced with a $62 million overdue bill for funds he lifted from the Harbor Department, would be alert to this potential.)

As Councilman Mike Feuer put it, “The city isn‘t popular in Sacramento. The state has hundreds of ways of dealing with this.” Feuer has floated a compromise, asking that the Legislature allow Los Angeles to sell power directly to nearby institutions outside L.A. proper at the same rate (or slightly more) than it charges its city customers. The users could include county hospitals and other county facilities. The result would be a net savings to the hospitals, and for the city, a decent profit above the minimum it now earns for putting current on the state grid. It also would avoid for Los Angeles the stigma of profiteering.

Then again, Riordan may simply be jealous. Freeman is to Riordan what the former police commissioner William Bratton was to New York’s flip-top Mayor Rudy Giuliani -- an appointee who gets better press. Even if the mayor doesn‘t push him out, though, the Man in the Hat could soon move on. There’s a bigger job for him in Sacramento -- the state power czarship that Freeman has been outlining for Governor Gray Davis. And which Davis announced last weekend that he‘s going to set up. At age 75, Freeman may be ready for new horizons.

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