The City Council did its best Congress imitation today, hauling up officials and former officials from the L.A. Department of Water and Power. Council members grilled them — and did some grandstanding — on charges that the public utility misled council members about $73.5 million in surplus DWP refused to hand over to the city's general fund in April.
The DWP folks gave it right back, however, and the result was some decent political theater.
Backstory: As DWP fought for a rate hike of up to 28 percent, it was met with significant resistance from the City Council. In the meantime, in early April the public utility refused to hand over $73.5 million in surplus to the city general fund, saying it couldn't without negatively affecting its bond rating. City Hall went into crisis mode — the mayor suggested shutting down government two days a week — and accused the utility of extorting the city council for the rate hike.
City Controller Wendy Greuel released an audit last month asserting that the agency had the money and could have handed it over without risk to its bond rating. And the agency misled the city about the matter, Greuel charged.
At the council meeting this morning, Greuel reiterated her claim, and was backed by testimony from an outside consultant. “DWP has lost the public trust,” she said.
But DWP Interim Chief Financial Officer Mario Ignacio disputed the report, citing “fundamental inaccuracies” and saying it contained “material mistakes.”
Former DWP general manager S. David Freeman, who was in charge but on vacation during the early April dust-up, said he was merely protecting ratepayers and would have done so again. He said if it were a football game, Greuel would get a 15-yard penalty for “piling on.”
Council members were largely unsympathetic. “The department overreached,” said Council President Eric Garcetti. “It misled the people of this city and its democratically elected representatives.”
Austin Beutner, the interim general manager who was appointed after the whole imbroglio took place and comes from the hyper-competitive world of private-equity, said he'd worked to cut costs more than $250 million to prevent further rate increases (a smaller than requested rate increase took effect July 1.)
The council was pleased with that news, though not thrilled that Beutner and his staff were only responding to the Greuel audit this morning.
One thing is clear: DWP will likely be a heavily scrutinized agency for a long time to come.