LAWATCHDOG - The Ratepayers of the DWP’s Power System are the largest single source of cash for the City’s General Fund, providing over $550 million, or 12% of the total budget.
Of this amount, $300 million is funded by City’s 10% Utility Tax, while the remaining $250 million is from the less than transparent and legally questionable 8% Power Transfer Fee.
But unfortunately, the Ratepayers of our Department of Water are financing much more than the General Fund, including City Hall’s pet projects that are not subject to the scrutiny of the Ratepayers or the general public.
Pet projects include, but are not certainly limited to, the Los Angeles River, Griffith Park, the Fiber Optic Network, and the increasing troubled $500 million plus Headworks Reservoir and River Supply Conduit Projects.
Ratepayers are also on the hook for the IBEW Labor Premium that has been estimated to be in the range of $250 million a year by DWP and City Hall insiders as well as knowledgeable industry professionals. And that does not even include the vast inefficiencies associated with restrictive work rules.
Of course, the IBEW Labor Premium - negotiated behind closed doors by the Executive Employee Relations Committee (led at the time by Mayor Villaraigosa and former City Council President Eric Garcetti) - is justifiable political expense given the millions in contributions by campaign funding Union Bo$$ Brian d’Arcy, the business manager of DWP’s domineering union.
At the same time, Union Bo$$ d’Arcy’s political clout has allowed him to stymie any efforts to “benchmark” the efficiency of DWP’s operations, contrary to the recommendations of the last two charter mandated Industrial, Economic, and Administrative Surveys.
The DWP has also been forced to absorb surplus City employees and their unfunded pension liabilities (estimated to be about $200 million) as the City downsized its work force in order to fund the increases in salaries, benefits, and pension contributions that have outstripped the growth in General Fund revenues.
And Ratepayers are also being tagged for increasingly expensive environmental initiatives, ranging from the $800 million early phase out of the Navajo Generating Station, the covering of all of our open reservoirs, the accelerated Once Thru Cooling program, AB 32, and the requirement that 33% of our energy be from renewable resources by 2020.
And just recently, Councilmen Koretz and Garcetti introduced a resolution to oppose the expansion of the Utah based Coal Hollow strip mine located near the coal fired Intermountain Power Plant without even having the basic common sense to consult with DWP about the operational and financial consequences on this largest source of dependable power for the City of Los Angeles.
At the present time, the DWP Power System is requesting a two year increase in our electricity rates of 10% to 15%, subject to the review of the independent Ratepayers Advocate, Neighborhood Councils, commercial and industrial Ratepayers, and the not so independent City Council.
This will give us the opportunity to demand answers and details on the components of the rate increase, the impact on base rates, the status of the infrastructure, the legality of the $250 million 8% Transfer Fee, the details on numerous pet projects, the IBEW Labor Premium and related work rules, the efficiency of DWP’s operations, and the impact of all the environmental rules and regulations.
Importantly, Ratepayers have a right to know what the rates are anticipated to be in 2021 and a thorough understanding of the underlying components, including the impact of capital expenditures, labor rates and work rules, and the requirement that 33% of DWP’s power will be from expensive renewable resources.
Over the next two or three months, DWP will be pressuring the independent Ratepayers Advocate, the Neighborhood Councils, and the City Council to implement the requested rate increases on an expedited basis. However, without the detailed answers and solutions to numerous issues, any rate increase would be premature and unwarranted.
(Jack Humphreville writes LA Watchdog for CityWatch He is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com. He can be reached at: [email protected]) –cw
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CityWatch
Vol 10 Issue 52
Pub: June 29, 2012
