The president of the Los Angeles Water & Power Commission is pushing for the public utility to fast-track its transition to open competition within five months, by Jan. 1, 1998, the same day investor-owned utilities are to be opened up to competition.

“The push is on. We must open up by Jan. 1 or we will fall behind Southern California Edison and other utilities in our ability to lower rates,” said Commission President Richard Caruso.

As of late last week, the Department of Water & Power itself had not committed to the fast-track approach. “It’s not my understanding that the DWP is going to go to open competition on Jan. 1,” said Karen Daniez, assistant to incoming general manager David Freeman. A veteran power utility manager who has guided two other public utilities toward deregulation, Freeman is expected to release his recommendation on how fast the DWP should move toward open competition within four to six weeks after he assumes his post on Sept. 4.

Freeman could not be reached for comment late last week.

Los Angeles City Councilwoman Ruth Galanter, who heads up the council’s Commerce, Energy and Natural Resources Committee, said she wants to bring a plan for opening the DWP to competition to the full city council by this fall.

“We’ve been asking the DWP for a plan to address open competition for two years now,” Galanter said. “I’m glad we now are about to have someone at the top of the agency who has promised to address these issues in short order. If we don’t, the DWP will be out of business in a couple of years.”

Galanter said she has not had pressure from either of the two unions representing DWP workers to slow down or stop the process of opening to competition.

“In fact, the Engineers and Architects Association, which stands to lose the most in terms of jobs, came to me and said they recognize that the DWP must cut its overhead. They were asking how their members could still be of use to the city in other areas outside of the DWP,” Galanter said.

Bob Duncan, executive director of the union, which represents about 1,900 DWP workers, said the union will go along with any time frame the DWP decides as long as an acceptable separation pay provision is made for the 300 union members who are expected to lose their jobs in the process.

A representative from the other union, Local 18 of the International Brotherhood of Electrical Workers, which represents the bulk of DWP field workers, conceded that they too recognize that the DWP’s current staff is bloated and needs to be cut.

If the City Council decides to allow the DWP to retain its monopoly or delays opening the agency to outside competition, any home, office or factory within Los Angeles city limits would not be able to take advantage of potentially cheaper rates offered by investor-owned utilities or other power providers as of Jan. 1.

A potential tax-exemption dispute could slow the rush to open competition, Galanter said. The city is waiting for a ruling from the Internal Revenue Service in the next couple of weeks on whether the DWP will be able to keep its tax-exempt status, a privilege not enjoyed by its private-sector competitors.

There is an even larger liability looming over the DWP’s head: an estimated $4 billion in debt incurred over the last 20 years by building alternative power generation facilities, referred to in the industry as “stranded costs.”

Municipal utilities such as the DWP must declare they will be open to competition by Jan. 1, 2000 to be eligible to pass an extra charge onto power users to recover those stranded costs. If the council does not meet that deadline, then the debt could hobble the utility in its effort to compete.