DWP "Reform" Proposal Will Lead to Higher Rates

The DWP buildingEXPAND
The DWP building
Sam Howzit / via Flickr

Last month, Councilman Felipe Fuentes unveiled a proposal to bring major change to the Department of Water and Power. Angelenos love to hate the DWP. It's big and bloated, and it's always screwing something up, such as the recent fiasco over the new billing system.

Fuentes' proposal, which would require voter approval, calls for DWP reform. Those two words have eye-glazing potential, but it's worth digging into the details. In this case, Fuentes' ideas mirror the wishes of the DWP union, IBEW Local 18.

For those who may need a refresher, IBEW Local 18 played a central role in the 2013 mayor's race. The head of the union, Brian D'Arcy, led a $4 million effort to elect Wendy Greuel. In a bit of campaign jujitsu, Eric Garcetti used that against her, accusing Greuel of being beholden to the union. He took aim at inflated salaries at the DWP, and vowed to reform the utility if elected.

He won, and for a while he did focus on DWP reform. It was clear, at the time, that "reform" meant going after IBEW. Garcetti got a DWP contract that held the union workers to zero raises for three years — an unprecedented achievement. He also argued that wasn't enough, and demanded language that would allow the contract to be reopened to address union work rules, which contribute to the utility's cumbersome bureaucracy.

After that, Garcetti got into a protracted battle with D'Arcy over access to financial records of two DWP training institutes. Following an L.A. Times story, which revived allegations first leveled by the Weekly in 2005, Garcetti vowed to open up the records to public scrutiny. D'Arcy fought back. It took nearly two years, but Garcetti ultimately prevailed.

However, it was a bit of a hollow victory. The records revealed that the training institutes were sloppily run. They also exposed a list of D'Arcy's favorite restaurants to eat at ratepayer expense. But there wasn't much beyond that — no "smoking gun" indicating any criminal behavior. The institutes continue to run at ratepayer expense as they did before. Garcetti's own appointee to run the DWP, Marcie Edwards, even stood up in defense of D'Arcy against his various persecutors.

While City Hall was fixated on the training institutes, which consume about $4 million of a $4 billion budget, the more substantive issues — specifically, union work rules — went by the wayside. According to Mel Levine, Garcetti's appointee as president of the DWP Commission, those issues "never got any traction." "The bulk of those ideas would have required changing the contract," Levine tells the Weekly. "That wasn't gonna happen." In essence, any further efforts to weaken the grip of the IBEW on the utility will have to wait a couple of years until the current contract expires.

Felipe Fuentes now has picked up the fallen standard of DWP reform, and is carrying it in an entirely different direction. When he unveiled his package of reforms last month, Fuentes did not identify union clout as the key problem at the utility. Instead, he took aim at "political interference" from City Hall. 

This happens to be Brian D'Arcy's big complaint as well. In a 2013 interview with the Times, D'Arcy griped about the "political appointees" who serve on the DWP commission. He also accused the City Council of "politically interfer[ing] with every decision."

These concerns were echoed by the L.A. 2020 Commission, of which D'Arcy was a member. In its 2014 report, the commission cited "political interference" as the top concern at the DWP. It also cited the need for overseers to have "utility expertise" — implying that part-time commissioners are not up to the job. The report called for an independent rate-setting panel, with staggered four-year terms. The panel would be insulated from City Hall politics, freeing up the mayor and City Council "to focus on other, larger issues." 

Fuentes' proposal builds on the commission's report. Under his plan, the DWP Commission would be replaced by a full-time board. The members would be experts in the field, and would serve staggered terms, insulating them from City Hall. The most critical provision — which has gotten zero attention so far — relates to rates:

"Board actions — including ratemaking — would no longer require City Council approval unless the City Council asserts jurisdiction." (Emphasis added.)

It's hard to overstate the importance of this provision. Under the current system — the product of more than 100 years of governance reform — the City Council must approve any rate increases. This exerts a downward pressure on rates. No politician wants to approve an increase and face the wrath of voters. (In his first State of the City address, Garcetti made a big deal of delaying any rate increases for a year.)

If you give ratemaking authority to an independent body, you remove that downward pressure. The result: Rates will go up. Fuentes, of course, has no incentive to spell this out, and neither does D'Arcy. (Both declined interview requests.) If you're campaigning for a ballot measure, you wouldn't want to tout the prospect of higher utility bills. It's much better to say, as Fuentes does, that the measure will "take the politics out of the DWP."

If you look at it from the union's point of view, then maybe rates should be higher. The more money the DWP has, the more it can spend on its employees. This also explains why the proposal limits the amount of DWP money that is transferred to the city's general fund each year. If you're the union, then of course you want to keep that money at the DWP. 

If you were the union, you'd probably also be upset about "political" mandates such as renewable power requirements. Why should the utility pay more for renewable energy contracts, and have less to spend on its own employees? Just because some meddling politicians want to appear eco-friendly?

Fuentes' proposal also would eliminate civil service rules at the DWP. According to Fred Pickel, the DWP ratepayer advocate, this change is also supported by D'Arcy.

Fuentes presented his reform proposal at a committee hearing last Friday. The question of how the union felt about the various reforms was barely mentioned. The only time it came up was during the testimony of Andrew Rea, a consultant who noted, almost in a surprised way, that the union was actually very receptive to the proposal. The reforms, he said, had the potential to "change the relationship with the union, to be more of a partner and less of an adversary."

The definition of "reform" has now been flipped on its head. It used to mean punching D'Arcy in the nose. Now it means giving him whatever he wants.


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