Say It Ain’t So, Ron

LA WATCHDOG-Ron Nichols, the General Manager of our Department of Water and Power for the last three years, unexpectedly announced that he is hanging up his spikes on January 31 for personal reasons.  This is not only bad news for the Department, its management team, and its 8,800 employees, but for the Ratepayers and Ratepayer elected Mayor Eric Garcetti as Nichols is one of the very few City officials (including our Elected Elite) who has earned the public’s respect, trust and confidence.  

Over the last three years, Nichols has stabilized the internal operations of the City’s largest department, creating a more decentralized and flexible management structure that allowed the empowered employees to better meet their operational and financial goals. At the same time, DWP has developed better management information systems to track its finances and the efficiency of its operations.  

He instituted a rigorous long term planning process that resulted in more realistic operating budgets, capital expenditure programs, and staffing levels.  This resulted in savings for Ratepayers of over $1 billion while, at the same time, meeting numerous unfunded environmental mandates for both the Water and Power Systems. 

He developed a strong relationship with the City’s chief financial officer Miguel Santana that allowed DWP and the City to negotiate a favorable contract with IBEW Union Bo$$ d’Arcy that froze compensation levels for three years, created a new pension tier for rookie employees, and established a joint labor management process to review the DWP’s highly restrictive and expensive work rules.  

Needless to say, there are some open issues, including the controversy surrounding the unaccounted for $40 million of Ratepayer money that was funneled to the IBEW dominated Joint Safety and Training Institutes.  But in Nichols’ defense, these two nonprofits were sacred cows, protected by Mayor Villaraigosa and Union Bo$$ d’Arcy’s paid acolytes on the City Council and its Energy and Environment Committee. 

The Ratepayers also trust Nichols despite significant increases in our water and power rates in 2012.  Over the last three years, Nichols has made the DWP more open and transparent.  The Department has reached out to the Ratepayers through numerous public meetings throughout the City which allowed direct contact with operating and executive management.  His team answered numerous questions and provided unprecedented amounts of information to the Ratepayers and our elected officials. 

Nichols and his team have also worked well with the Ratepayers Advocate, although it does not hurt that 78% of the voters approved of its formation in 2011. 

But Nichols departure is also a major league problem for Ratepayer elected Mayor Eric Garcetti as it comes at a very inopportune time.  

For openers, Garcetti and his office are in the early stages of eliminating next year’s projected budget deficit of $250 million.  This process is further complicated by demands for increased funding for the Fire and Police Departments and Recreation and Parks. 

At the same time, the City is waiting for the recommendations from the Los Angeles 2020 Commission whose recent report, “A Time for Truth,” was a “lacerating” expose that was a “stark reality check” on the City’s gimmicky finances and struggling economy.  

Based on a recent interview, Eric will be promoting the $4.5 billion tax increase that is needed to finance the repair of the one-third of our streets that are failed or near failure.  

The DWP is also considering a four year, 25%, $1 billion increase in our water and power rates, although the status of the increase our electricity rates is somewhat clouded by issues involving the Power Reliability Program.  

With the departure of the trusted Nichols, Garcetti is now charged with finding a qualified replacement, not an easy task given the trust Ratepayers had in Nichols, the messy politics surrounding DWP, the plundering of DWP by City Hall and its cronies, and the rumor that Garcetti failed to develop a strong working relationship with Nichols. 

Garcetti has touted his “Back to Basics” policy which would obviously endorse KISS, Keep It Simple Stupid. 

Rather than trying to do too much, Garcetti should postpone the $1 billion DWP rate increase until a new General Manager has been selected and flush the $4.5 billion Street Repair Tax that needs the approval of two-thirds of the voters.  Rather, he should focus on the $250 million budget deficit; the upcoming recommendations of Mickey Kantor, Austin Beutner and the LA 2020 Commission on how to put the City on a “path to a sustainable financial position and a truly balanced budget;” and recruiting an experienced and trustworthy General Manager for our Department of Water and Power. 

Eric, swinging for the fences is a very risky strategy, especially in the early innings when singles and doubles produce runs that help you build an early lead and ultimately win ball games and the pennant. 


(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee,  The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  lajack@gmail.com. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.) 






Vol 12 Issue 5

 Pub: Jan 17, 2014