LA WATCHDOG - The most significant issue facing our Department of Water and Power is the absolute need for Transparency, especially as it relates to the political interference from the all knowing Elected Elite that occupy City Hall.
That is not to say that Ratepayers are overjoyed at a two year, 11.2% increase in our power rates, even if it has been approved by the independent Ratepayers Advocate.
Unfortunately, this $300 million plus increase in our electricity rates appears to be reasonable given the bad hand that was dealt to the current management: unfunded environmental mandates that will cost billions and billions, a deteriorating infrastructure, a high cost labor agreement with exceptionally restrictive work rules, a large unfunded pension liability, and significant costs associated with feeding the voracious appetite of City Hall.
Of course, the appearance of reasonableness could change if the DWP decides to structure rates where homeowners are stuck with a disproportionate share of the increase.
At the March ground breaking of the Headworks Reservoir Project, Council Member Tom LaBonge declared that the “People’s Money” was financing this $319 million pet project, which along with the $500 million River Supply Conduit, was designed, after considerable political pressure over the years, to protect the million dollar views of Eric Garcetti’s constituents in Silver Lake.
While the DWP is a proprietary department of the City of Los Angeles, its funds are to be used to make sure the water in running and the lights are on, all at an affordable price, and not for the City’s General Fund.
There are numerous other pet projects, including, but certainly not limited to, the Los Angeles River (an Ed Reyes favorite), City Hall Park, Griffith Park, Elysian Park, and the Fiber Optic Network.
The City has also abused the DWP and its Ratepayers by forcing the Department to hire 1,600 surplus City employees and absorb $200 million of their unfunded pension liabilities, all of which contributed to higher rates.
And the City is also charging outrageous rates for “services” it provides to the DWP, while more than likely having DWP perform jobs for which it is not properly reimbursed.
We also need Transparency on what our power rates are going to be in 2020 as a result of the State’s unfunded environmental mandate that 33% of our energy be from renewable resources by 2020.
But the possible doubling of rates by 2020 is a politically sensitive topic, especially when combined with the impact of AB 32, the 2006 Global Warming Solutions Act, which is expected to cost each California household at least $2,500 (substantially more if you are a homeowner) and increase the cost of gasoline by a buck or two.
We also have the contentious issue of whether the beloved 8% Transfer Fee from the Power System to the City’s General Fund is legal as a result of the passage of Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) in November of 2010.
And over the years, as the City has increased the transfer fee from 5% to 8%, extracting an extra $100 million a year from Ratepayers, the Department’s infrastructure has been deteriorating because of the lack of adequate funding.
But as we all know, the City’s General Fund needs this money to fund the out of control increases in salaries, benefits, and pension contributions for City workers.
The major battle of Transparency will involve campaign funding Union Bo$$ Brian d’Arcy, the imperious business manager of the IBEW, the DWP’s domineering union. But Ratepayers have a right to have a better understanding of the IBEW Labor Premium that is estimated to cost Ratepayers $250 million a year.
And Ratepayers have a right to know about the financial impact of this union’s restrictive work rules and the cost and effectiveness of the Joint Training and Safety Institutes.
Furthermore, all future labor negotiations must be conducted in an open and transparent manner, and not behind closed doors with politicians who have been the beneficiaries of IBEW campaign contributions. Rather, these negotiations should be conducted by DWP management without any interference from City Hall or the politically appointed DWP Commissioners.
While the approval process for the rate increases are expected to be completed within the next three months, the issue of Transparency will be front and center during the City’s March elections.
Our Elected Elite, especially those that are candidates for City wide offices, need to realize that Ratepayers, especially those that are homeowners, vote. And this was evident in 2009 when voters rejected Measure B, the Mayor’s well financed Solar Initiative that was a political payoff to Union Bo$$ d’Arcy for his campaign contributions.
It is very simple. DWP’s money is not the “People’s Money.” It is the Ratepayers money. And Ratepayers demand Transparency in return for their votes.
(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
CityWatch
Vol 10 Issue 68
Pub: Aug 24, 2012