Opinion: Taking the politics out of the DWP

For years now, critics and good government advocates have been calling for an overhaul at the Los Angeles Department of Water and Power. The nation’s largest municipal utility lurches from controversy to controversy, and attempts to modernize its operations have been weighed down by bureaucracy and political meddling.

Now, City Councilman Felipe Fuentes wants to put a measure before city voters this year that would dramatically change the utility’s governance structure. Under his proposed charter amendment, the volunteer, mayor-appointed Board of Water and Power Commissioners would be replaced by a full-time board, whose members have expertise and serve set terms. The goal is to manage the utility with less interference from the City Council and mayor.

This isn’t exactly a new proposal. As Fuentes points out in his news release, this is how the DWP originally was set up under the 1925 City Charter.

But L.A. politics and public opinion shifted over the years, as The Times Editorial Board explained in a 2010 editorial:

“The DWP was never devoid of politics during the 20th century when it built Los Angeles, but it operated under a balanced system in which engineers were allowed to use their expertise without undue tinkering by elected officials. As with most city commissions, the mayor appointed and the council confirmed the five members of the Board of Water and Power Commissioners. Each served a five-year term and was subject to reappointment. Terms were staggered, so that no one mayor or council could sweep out and replace a whole board. The board would then hire — and oversee — a general manager to run the department.

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As the decades passed, residents began to place more faith in their elected leaders or — perhaps a better way to say it — less faith in non-elected commissioners. The mayor won the power to appoint (and the council to confirm) the general manager. But the commissioners continued to be in charge, and no general manager who wanted to keep his job could afford to hide data, reports or policies from the board.”

The shift was completed in 1999 when voters changed the charter, yet again, to give the mayor even more power over the DWP. That continues today. The mayor picks the Board of Water and Power Commissioners, and the members have as much authority as the mayor chooses to give them. He hires and fires the utility’s chief executive, which has led to a succession of general managers. The City Council has oversight authority as well.

In theory, all this political oversight is supposed to make the DWP more accountable. In practice, however, the utility is paralyzed by lots of bosses with no real responsibility, overlapping lines of authority and competing political interests. The result is an agency that is slow to respond to crisis (like the billing system debacle from 2013), can’t raise the money needed to upgrade aging pipes and power lines and can’t hire the workers needed to keep the systems running.

There have been five separate recommendations in the past 16 years to fix the DWP’s governance structure. A report released in December urged Mayor Eric Garcetti and the City Council to appoint a committee to come up with solutions for the 2017 ballot.

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Fuentes, who chairs the council’s Energy and Environment committee and who already was studying governance reform, said another committee wasn’t necessary. His motion calls for putting a charter amendment on the June or November 2016 ballot that would:

• Replace the volunteer Board of Water and Power Commissioners with full-time, professional board members with expertise in utility management, environmental policy, consumer advocacy or finance. The board could hire legal and analytical staff.
• Give the board power to decide rate increases, contracts and hire the general manager without requiring City Council approval. (The council still could — and presumably would — assert jurisdiction over major decisions.)
• Eliminate civil service protections for DWP workers and give the DWP, rather than the city’s personnel department, responsibility for hiring and firing workers. The DWP still would have union rules over hiring.
• Cap the annual transfer of “surplus” utility revenue to City Hall at 2010 levels. The DWP pays 8% of electrical operating revenue to the city’s general fund, which pays for police, fire and other basic city services. The transfer was $266 million last year. There are lawsuits challenging the legality of the transfer so it’s possible the city may lose all of the revenue, not just a portion of the revenue, as Fuentes has proposed.

A few years ago, DWP governance reform on the scale that Fuentes has proposed would have been politically impossible. There wasn’t the appetite among city leaders to loosen their authority over the utility. And there was considerable squabbling in City Hall, even over whether to create a Ratepayer Advocate, which was pretty minor in comparison.

Of course, governance reform is all about the details, and how much power the City Council and mayor are willing to give up. Fuentes has put forth an intriguing idea. Now there ought to be a robust public discussion and debate before any charter proposal gets put on the ballot.

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