MAKING SENSE OF DWP REFORM IN CALIFORNIA

Jun 4, 2016 by

A SUMMARY REPORT:

MAKING SENSE OF
DWP REFORM
A CONFERENCE AND PANEL DISCUSSION
HELD TUESDAY, MARCH 29, 2016
RONALD F. DEATON CIVIC AUDITORIUM
n
LAPD HEADQUARTERS
PRESENTED BY
THE PAT BROWN INSTITUTE FOR PUBLIC AFFAIRS
CAL STATE LA
“These forums can be our city’s
second Mulholland moment when our city
reimagines the kind of DWP our
city needs. This moment needs to be
not only about the
things
we do,
but
how
we do them.”
—Mayor Eric Garcetti
PAT BROWN INSTITUTE FOR PUBLIC AFFAIRS
1
The Los Angeles Department of Water and Power
(DWP) has often been the subject of reform efforts.
DWP reform is once again on the city’s agenda.
Customer service, utility rates, budget transfers,
hiring and other labor issues have all generated
discussion and debate. There is a great deal at stake.
After all, the DWP is the water and power provider
to four million people, and is the largest municipal
utility in the United States.
Would changes to the governance of the DWP
respond to the issues and questions that have been
raised in recent years? City leaders have begun to
explore some possible reforms. On January 22, 2016,
Los Angeles City Councilmember Felipe Fuentes
(7th district), chair of the council’s Energy and
Environmental Committee, submitted a motion to
change the current governance structure at the
DWP.
C
ouncilmember Fuentes’s motion drew support
from City Council President Herb Wesson, Jr. In
mid-February, Mayor Eric Garcetti outlined the key
principles of reform that he considers essential for a
ballot measure in November 2016.
The Pat Brown Institute for Public Affairs at
Cal State LA convened
Making Sense of DWP Reform
to foster dialogue and to help leaders and residents
craft the best possible reforms. This report is a
summary of this event. A complete video recording
of the event is available at:
www.patbrowninstitute.org/pbi-events/making-sense-
of-dwp-reform/
A
SUMMARY REPORT
:
MAKING SENSE OF DWP REFORM
“ You have goals and agendas at
City Hall, but you have to temper
those with the mandates that the
utility has to work with. There’s this
tension between what we want to
do with what we have to do. The
way that we do things now makes
it difficult for the commission and
everyone else.”
Felipe Fuentes
Councilmember 7th District
Los Angeles
Cal State LA Provost and PBI Board Chair Dr. Lynn Mahoney
opens
Making Sense of DWP Reform
PROGRAM
welcome
Dr. Lynn Mahoney
Provost, PBI Board Chair
Cal State LA
opening remarks
Eric Garcetti
Ron Galperin
Felipe Fuentes
Mayor
Controller
Councilmember, 7th District
City of Los Angeles
City of Los Angeles
City of Los Angeles
panel discussion
Marcie Edwards
General Manager, Los Angeles Department of Water and Power
Marcie Edwards is the General Manager of the Los Angeles Department of Water and Power. She
is the first woman to lead this municipal utility. She is a third generation DWPer and first worked
at the utility 24 years ago as a clerk typist. She gained experience in several Power System positions
and then moved up as the energy control center manager and assistant general manager for the
marketing and customer service business units. Currently, she leads the nation’s largest municipal
utility and oversees a $5.5 billion budget, 8,800 employees and provides water and power to four
million residents of Los Angeles.
George Kieffer
Chair, Civic Alliance and Appointed Charter Reform Commission
George Kieffer led the first full revision of the Los Angeles City Charter in 75 years, chairing the
City of Los Angeles Appointed Commission. The revision was adopted in 1999. He is the chair of
the Los Angeles Civic Alliance. Kieffer is also a partner at Manatt, Phelps & Phillips, LLP and has
been named one of the “Top 100” attorneys in California by the Los Angeles and San Francisco
Daily Journals. He is the co-founder of FuturePorts and also serves on the Board of Regents of the
University of California. Kieffer is a former chair of the Los Angeles Area Chamber of Commerce.
Tony Wilkinson
Chair, Neighborhood Council DWP MOU Oversight Committee
Tony Wilkinson heads the committee that oversees the formal information sharing and transparency
agreement between the city’s Neighborhood Councils and the Department of Water and Power.
He is a member of both the Panorama City and the North Hills East Neighborhood Councils. He
is also active in the First 5 LA tobacco tax money for kids program and in police and gang issues
work in his community. Wilkinson retired from a business career that included experience as a
business economist, marketing services manager, and information technology manager for a
national land title insurance company.
moderator
Dr. Raphael J. Sonenshein
Executive Director
Pat Brown Institute for Public Affairs
MAKING SENSE OF DWP REFORM
TUESDAY, MARCH 29, 2016
n
RONALD F. DEATON CIVIC AUDITORIUM
n
LAPD HEADQUARTERS
2
CAL STATE LA
PAT BROWN INSTITUTE FOR PUBLIC AFFAIRS
5
Mayor Eric Garcetti
The L.A. Department of Water and Power has
accomplished great things in its nearly 100 year
history, particularly its phenomenal engineering
success. However, the Department of Water and
Power today needs to get “back to the basics.”
There is much that needs to be done because the
DWP currently is the department that most
embodies how disempowered people feel. We
need to keep reforming the DWP. We are doing a
lot of things better than competing utilities, but
because of the marketing outreach and customer
service of other utilities, they have better reviews.
We need to clean up the internal inefficiencies at
the DWP that waste time and money, rethink the
engineering of water in the wake of L.A.’s drought,
update old infrastructure, make it possible for
ratepayers to trust that they are looking at an
honest bill, facilitate a hiring process that allows
for the next generation of workers, and give the
board more time to serve the public while
increasing their accountability to the ratepayers.
We can move these agenda items forward and
can bring a ballot measure before the voters of
Los Angeles in November 2016.
City Controller Ron Galperin
In 1902, when DWP began as a water provider,
the department faced similar issues to the ones we
hear about in 2016: rising rates, underinvestment in
infrastructure and lack of accountability. In terms
of governance reform, we need to focus on the
unchaining of bureaucracy at the DWP, especially
with personnel and contracts. Unchaining of
bureaucracy, however, does not mean that politics
leave the DWP both because that’s impractical
and because there still needs to be accountability.
We need to strengthen the role of management by
giving authorities the tools and power that they
need to govern effectively. The most important
thing going forward is to have an open process that
includes the general public and the neighborhood
councils. We also need to keep ratepayers informed
and help them understand their bills in order for
them to make good decisions on their own water
and power usage. We can overcome the current
obstacles and will see change at the DWP.
SUMMARY OF COMMENTS
BY ELECTED OFFICIALS
Mayor Eric Garcetti
City Controller Ron Galperin
6
CAL STATE LA
Councilmember Felipe Fuentes
We need to have a system in place where every
decision we make is in the interest of the utility.
The utility has a fiduciary obligation to convey its
responsibility in a way that enhances and protects
the rate base. The motion I introduced in January
2016 initially kicked off the conversation on how
to reform the Department of Water and Power.
There are five different areas that must be addressed:
1) We need to professionalize the Department of
Water and Power Commission and free it from
the threat of removal by political leaders. This can
be done by making them a full-time board so
that they can serve the public to the best of their
capabilities. 2) We need to divorce the utility’s
personnel functions from the city. 3) There needs
to be a streamlined process between L.A. City Hall
and the utility. 4) We need to remove politics
between City Hall and the Department of Water
and Power. Increasing transparency and
accountability is crucial. 5) Lastly, there needs to
be a focus on customer service to ensure a good
experience for the ratepayers.
Comments by Elected Officials (continued)
n
Dr. Sonenshein:
No good charter reform can
be conducted without first asking: what is
the problem to be solved? Otherwise we have
battles over solutions but do not know which
will be best. So what are the biggest governance
problems you see at DWP?
Marcie Edwards, General Manager of the
DWP
:
There is a lack of ability to make productivity
enhancements. DWP is too bureaucratized as it
relates to procurements (purchase of goods) and
hiring personnel and industry experts.
Tony Wilkinson, Chair of the Neighborhood
Council DWP MOU Oversight Committee:
There are too many parts of city government
that have interaction and control over this
public utility, but they do not bear a direct
responsibility for the results.
George Kieffer, Chair of both the Civic Alliance
and the 1999 Appointed Charter Reform
Commission
:
There is a disconnect between the responsibilities
that management such as the bard and general
manager are given versus the authority that they
actually have. If the goal of the board and general
manager is to provide reliable and quality water
and power and run these utilities efficiently, we
have to give them more authority to do so.
PANEL DISCUSSION
A Summary of Questions and Responses
L.A. City Councilmember Felipe Fuentes
PAT BROWN INSTITUTE FOR PUBLIC AFFAIRS
7
n
Dr. Sonenshein:
If any change is made, what
is the essential oversight function? Who at city
hall would have oversight?
George Kieffer:
City Hall should maintain oversight of rates with
some limitations. Instead of approval of rates, the
council should have the power to disapprove.
Councilmembers should not have to approve
everything, but can still maintain accountability.
There should be a longer term limit of seven
years for the board of commissioners, but the
board should not become full-time.
Tony Wilkinson:
Elected officials should have a veto power
on rates. The board should have primary
responsibility in setting rates; this is a way
to depoliticize rate-setting.
Marcie Edwards:
Elected officials should maintain the ability to
reach in and redirect the utility if they think
something will not work. There needs to be
oversight by City Hall to maintain control and
transparency, and to enforce accountability on
the board and on the general manager.
n
Dr. Sonenshein:
What do you think is the
most important step moving forward?
Tony Wilkinson:
Expand outreach and maintain the public process
that this event, hosted by the Pat Brown Institute,
started.
Marcie Edwards:
Continue speaking with the public, but a better job
needs to be done of including the Neighborhood
Councils in the discussion about DWP reform.
The authority of the ratepayer advocate should be
expanded to further protect the interests of the
ratepayers (a sentiment echoed by Tony
Wilkinson).
George Kieffer:
Communication between the public and City
Hall needs to be facilitated. The public should
be able to know where and to whom they can
go if they think something is not being handled
correctly. Board members should be empowered
to increase both their responsibilities and their
accountability for what happens with L.A.’s
water and power. City Hall and elected officials
must take a “leap of faith” in the executives and
managers who they themselves appoint and
confirm in the first place.
n
Dr. Sonenshein:
If a new mayor ran on a
platform of policy change at DWP, and all the
commissioners had fixed terms, what would
stop them from blocking his or her changes?
What would that new elected mayor be able to
do if the board, for example, said that such a
policy change didn’t fit with its basic mission of
water and power, or that it would be too costly?
George Kieffer:
The mayor would use the City Council to make
those desired changes. In the mayor’s four-year
term, he or she could turn the board over
completely if they have terms. Similar issues are
faced at the federal level when appointing a
Supreme Court Justice, or a member of the
Federal Communications Commission (FCC).
Panel Discussion (continued)
8
CAL STATE LA
n
Dr. Sonenshein:
Running the DWP has been
like pulling a sword from the stone. What will
make it work?
Marcie Edwards:
There have been a lot of general managers in recent
years (11 in 15 years). One of the things that makes
the job difficult is that the GM has to serve so
many masters, and is forced to compromise to
accomplish a portion of what she would like to
achieve. The board needs to keep in mind that
GM’s are not necessarily given the funding or
resources required to execute a goal or decision.
For example, to be able to state to the general
public, “LADWP is going to give you 100%
renewable power,” the appropriate funding
consistent with managing rate pressures and
technology needs to be acquired. Fortunately,
she has received the help of flexible people to
manage a dysfunctional customer service
department.
Panel Discussion (continued)
Ms. Edwards, you discussed the procurement process
and mentioned how currently you need to go through
one hundred people to purchase a box of pencils.
Additionally, you spoke about the $125,000 inflation.
In regards to the procurement process and the
$125,000 inflation, who makes those policies and
who has the authority to change them? Is this
something the city council can quickly change?
Watts, Los Angeles is 2.12 square-miles and has
been underserved for half a century today. How
do we get DWP to support solar energy in Watts?
What is being done or what can be done about the
disabled and elderly’s rates?
The water and power rates have gradually
increased, and they continue to rise. We are forced
to pay those inflated/excessive rates because we
need water and power. Why do rates continue to
rise during this recession?
Recently, I became aware of the DWP’s involvement
in the selling of power with Sun Edison which may
merge financially with another company. Is the
DWP making provisions for the possible collapse
of this house of cards due to the selling of energy?
Do you favor the proposal that rates should be set by
the board and subject to override by the council or do
you think they should continue to have the council
and the mayor have ordinance power to set rates?
I am aware that there has not been any mention of
privatization in this proposal for reform. However,
I am concerned about the mayor’s initial comments
in which he said an executive can make snap
decisions but that is because they are not accountable.
Can you tell us about whether you can turn back
some of the privatization of the DWP?
AUDIENCE QUESTIONS
STAY UP-TO-DATE ON
DWP REFORM
Visit the L.A. DWP Reform website:
www.dwpreform.lacity.org
and for further reading* about the DWP:
City of Los Angeles Inter-Department
Correspondence
2015 Industrial, Economic and Administrative
Survey of the Los Angeles Department of
Water and Power
*see links on p. 9
PAT BROWN INSTITUTE FOR PUBLIC AFFAIRS
9
AS SEEN ON SOCIAL MEDIA
MEDIA COVERAGE
Is DWP Change Really Possible? What They Said at the
Reform Forum
by Julie Butcher (
City Watch
)
www.citywatchla.com/index.php/the-la-beat/10815-is-
dwp-change-really-possible-here-s-what-they-said-at-the-
reform-forum
My Reform Forum Takeaway: DWP Reform Not Ready
for Prime Time
by Tony Butka (
City Watch
)
www.citywatchla.com/index.php/the-la-beat/10819-my-
reform-forum-takeaway-dwp-reform-not-ready-for-prime-
time
One Angry Bus Driver Tries to Put the Brakes on DWP
Rate Hikes
by Gene Maddaus (
LA Weekly
)
www.laweekly.com/news/one-angry-bus-driver-tries-to-
put-the-brakes-on-dwp-rate-hikes-6772263
Links to additional readings about the DWP:
http://cao.lacity.org/DWP/20160405 DWP DEPARTMENT OF WATER & POWER – GOVERNANCE REFORM (FUENTES –
WESSON – O’FARRELL – CF 16-0093.pdf
http://cao.lacity.org/DWP/2015 IEA Survey Summary 12-08-2015.pdf

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