Ron Nichols, the general manager of the Department of Water and Power, announced today that he is stepping down at the end of the month.
The DWP is perhaps the city's least popular agency, and DWP reform became a central issue in last year's mayoral campaign. But in three years at the helm, Nichols earned respect from the utility's harshest critics.
In a letter to the mayor, city council and DWP commission, he said he had decided to leave for “personal reasons,” and for once, that appears to be true. There is no indication that he was forced to go.
His departure leaves a vacancy at the top of utility just as it prepares to ask the council for a significant rate increase.
“Ron did a lot of transformative work at the DWP,” said Fred Pickel, the utility's ratepayer advocate. “It needed to go further… (but) I'd say he did better than most in recent history.”
In recent months, Nichols faced controversy over two non-profit training programs – the Joint Training Institute and Joint Safety Institute – which have refused to account for the expenditure of $4 million per year in ratepayer money. On Wednesday, the city controller filed a subpoena on Brian D'Arcy, the head of the union that represents most DWP workers, in an effort to account for the funds.
But while that issue has generated headlines, it was not the cause of Nichols' departure, according to Mel Levine, the chair of the DWP commission.
“I'm quite confident that had nothing to do with it,” Levine said. “The inference is understandable, but he told me quite a while ago that he was determined to leave for personal reasons.”
In the context of a $4 billion-a-year utility, the training institutes are small-ticket items.
Jack Humphreville, a well-known DWP watchdog, credited Nichols for doing “a marvelous job in terms of transparency.”
“He's developed a huge level of credibility,” Humphreville said, who added that he not fault Nichols for being unable to provide information on the training institutes.
“I don't blame him at all on that,” he said. “He's in a very tough position.”
Mayor Eric Garcetti ran last year on a platform of reforming the DWP, and will now have the opportunity to pick its leader. However, Garcetti has struggled to recruit top talent from the private sector in the past, and may face that problem again.
At a salary of $345,000 a year, the DWP general manager is among the city's highest paid positions. But private sector executives can expect to make substantially more, and without facing the bureaucratic challenges inherent in running a publicly owned utility.
Among the greatest challenges will be wresting control from D'Arcy. After 20 years at the head of the DWP union, D'Arcy has more institutional knowledge about the utility – and often has had more influence over its operations – than the general managers who have cycled in and out of the job.
The next general manager will also have to work to achieve mandates for renewable power and sustainable water supplies, which will lead to rate increases.
“We need somebody with some vision with regard to the core transition” to sustainable sources, said Levine. “It's a real challenge. It requires unique skills that are probably not widely available, in a difficult and challenging position.”
In his letter, Nichols said he does not have another job lined up. Executives with his background are somewhat rare, which makes him potentially an attractive candidate for other utilities.
“Ron Nichols is well known and well respected in the industry,” said Michael Picker, the vice president of the board of the Sacramento Municipal Utility District. The SMUD board is now searching for a new general manager, and has hired an executive search firm to come up with a list of candidates.
“He'd be a catch,” Picker said. “It's a shame for L.A. they're losing his talents.”