A budget-cutting plan for the Department of Water and Power that includes deep staff reductions will be presented within 60 to 90 days, the DWP’s new chief, David Freeman, said in an interview last week.
Freeman, who officially assumed the DWP post last week, said he is also considering forming alliances with other public power utilities, as well as telecommunications companies.
A folksy Tennessean who has piloted other major public utilities including the New York Power Authority, the Tennessee Valley Authority and the Sacramento Municipal Utility District Freeman said he wanted to see the DWP open to competition within a year.
“We need to move quickly. The wolf is not at the door. It’s in the kitchen eating our lunch,” he said, referring to the efforts of other power companies and utilities to lure away DWP customers in the run-up to open competition.
But ultimately, the L.A. City Council must decide whether and when the DWP opens up to competition. Freeman said he would not present a plan to the council until it has been aired before area business groups, labor unions and the media and he is sure he has the votes to pass it. That process is expected to take several months.
“I’m looking at cuts in the hundreds of millions of dollars,” he said. The DWP’s total annual budget is $2.5 billion.
Freeman’s timetable is not fast enough for some parties, who want to see the DWP open to competition on Jan. 1, the date investor-owned utilities begin competing for customers under the state’s landmark utility deregulation law. Major DWP customers who want to see lower rates have been pushing for the Jan. 1 start date, along with DWP Commission President Richard Caruso, who wants the DWP to start paying down its debts.
Staff cuts are high on Freeman’s priority list. Currently, the DWP has a staff of 8,700, including 869 engineers and 292 managers.
“I told our employees that this agency never met a consultant we didn’t hire,” Freeman said. “There will have to be some cutbacks in the number of engineers and the number of managers.”
Officials with the Engineers and Architects Association, which represents DWP engineers, have said that the union will agree to the cuts as long as an acceptable separation pay provision is made for those who are laid off. They estimate that 300 of their members will be cut from DWP rolls.
Among Freeman’s other cost-cutting targets is real estate. On the power side, the DWP owns dozens of generating stations and substations, as well as office buildings now vacant as the result of past consolidations. On the water side, the city owns 300,000 acres of land in Owens Valley along with several reservoirs, including the Chatsworth Reservoir, which has been dry since the 1960s.
“We’ve got to get rid of our surplus property,” Freeman said.
Freeman said he is also looking at reducing the DWP’s investment in the Intermountain Power Project in Utah and the Palo Verde Power Project.
He said he is also considering plans to sell or eliminate some of the agency’s perks that have come under scrutiny in the past, such as the six agency-owned helicopters.
One area not on the chopping block: routine maintenance of the power and water infrastructure.
“I am concerned that routine maintenance has been neglected for too long here,” Freeman said. “Things like replacing old poles. It’s easy to cut out maintenance and no one notices until a windstorm comes and knocks them down.”
On the water side, Freeman said he wants to step up the agency’s presence at the bargaining table in Sacramento and settle the remaining disputes over the DWP’s Owens Valley water supply.
“There is a clear and present danger of our water supply being inadequate for the future,” he said. “My most important job is to protect the quantity and the quality of the water supply.”
He said that with the DWP’s main outside supplier, the Metropolitan Water District, not able to draw as much from the Colorado River and the continued growth of the region, shortages loom unless water is used more efficiently by farmers in the Central Valley.
