Pay, power and the DWP

Labor negotiations take place behind closed doors, and appropriately so. To reach mutually beneficial results, representatives of both management and employee unions must feel free to put their positions and proposals on the table and to discuss them in confidence. That’s as true for labor talks in the public sector, such as those currently underway between the city of Los Angeles and the Department of Water and Power, as for those in private business.

But there’s a point at which discussions move from being merely quiet to being plain sneaky. The DWP talks are very close to that point, and that should be a cause of deep concern for those involved in the negotiations: for the department, the employee union, the City Council and Mayor Eric Garcetti. And, of course, it is of concern to the city’s residents and ratepayers because they are the party not at the table — the one that will require the services and pay the rates that are being negotiated for the four or five years of the next labor contract. They need sufficient notice that a deal is afoot and enough time to debate the terms.

Public confidence in the city’s water and power utility — and in City Hall’s oversight — is quite low, and it’s not merely because all ratepayers everywhere get grumpy when they see their bills. DWP workers are well paid, and there are arguments — and more than a little evidence — that their pay is far out of scale with their counterparts who do similar jobs in other cities, in private utilities and in other Los Angeles city departments. Rates may be affected most directly by the cost of the goods provided — the wholesale costs of the water imported from the Colorado River and from Northern California and the costs of the coal, gas and other means needed to produce electricity — but they are affected as well by the costs of labor. So the public part of the process, which necessarily occurs only after the negotiations are concluded, is crucial and should not be short-circuited. It should come as no surprise to either city management or labor that the public would be unnerved by deviations from the expected timetable.

DATABASE: Explore DWP salaries

And in this case there is a significant deviation. The current contract with the International Brotherhood of Electrical Workers, Local 18, is not due to expire for more than a year, so contract negotiations would normally begin sometime in 2014. But they’re underway now. That’s important for two reasons.

First, interested members of the public with facts to share and arguments to make are pacing and plotting their approach based on the expectation that talks will take place next year. If those talks are instead happening now, and are about to be concluded, the public’s opportunity to participate in a dialogue not just about pay and benefits, but also about rates, management, governance and any rethinking of the utility’s relationship with the city, is abbreviated. It is as though the public were a party to a lawsuit and arrived in court only to find out that the other parties have already made their closing arguments to the jury.

Second, the ongoing pay disparity between DWP workers and other city workers with parallel jobs — not line workers or water engineers but custodians, dispatchers and secretaries, among others — has long subverted the public interest as well as the interests of those city employees who are miffed that their DWP counterparts get more than they do. In past years, the union representatives of employees of, say, the Bureau of Sanitation or the Planning Department would come to the table insisting that their pay be raised to match DWP salaries because, after all, they do the same work and are all part of the same “city family,” and city management would comply; and then a year or two later DWP union representatives would argue that they needed to match the increases just given out to other departments. City Hall in recent years decided to finally get some control over the situation by ensuring that all city labor contracts expire at the same time, so that all negotiations for new pay and benefit terms go on simultaneously. But now, DWP contract talks have jumped ahead.

Neither of these points is sufficient to scuttle a deal for DWP pay if indeed the terms are good for the city. And they may be. The labor deal is actually part of a broader agreement to settle a lawsuit brought by several union appointees to the DWP’s retirement board, who allege that the City Council (including Garcetti, who was then its president) undermined the integrity of the retirement fund by demanding that the utility hire, and assume the pension obligations of, more than 1,000 city workers who otherwise might have been laid off to keep the city budget balanced. The settlement may save taxpayers from having to foot the bill for that liability. And the new contract itself would, reportedly, nix this fall’s scheduled raise for DWP workers and follow it up with two more raise-free years.

But the bottom line to the city budget, while crucial, is only part of the story.

This labor contract, and the lawsuit, are intimately bound up in the city’s sometimes unclear relationship with its utility. Is the DWP merely a company that city residents and ratepayers own? If so, perhaps City Hall’s role should be limited to appointing the department’s board, which should in turn select management that engages in contract talks with little interference from politicians over salaries. Or is it a city department like any other? If so, there is little reason not to move employees around, and perhaps the separation between the DWP and other city pensions should be eliminated, saving millions of dollars in otherwise duplicated administrative costs, as was recommended (but never pursued) in a 2009 city controller audit.

It will take a broader discussion of the DWP’s relationship with the rest of the city to address the ongoing concerns about labor costs. That’s the public portion of the contract negotiation process, and it requires adequate notice. There have been previous contracts that were presented to the City Council together with assertions from both sides of the table that the deal was done and ratified, and that it was too late to change any terms, but perhaps there could be a deeper conversation “next time.”

“Next time” is now.