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Los Angeles Controller Galperin Slams DWP, Cites Influence of Politics on Public Utility

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Los Angeles – City Controller Ron Galperin released the 2015 Industrial, Economic and Administrative Survey (IEA) of the Los Angeles Department of Water and Power, which was completed in collaboration with the Mayor and City Council.

The sweeping, nearly 600-page report found that the department does a good job of consistently supplying competitively priced water and power to the people of Los Angeles. However, the report was critical of the publicly owned utility’s organizational structure, which it said was “an inhibitor to achieving optimal performance. ”

“On balance, this report shows us a department that delivers water and power dependably to the people of Los Angeles, ” said Controller Galperin. “However, insufficient accountability, lack of transparency, and politicization jeopardize the department’s ability to meet the challenges of the future. ”

Unlike other Controller audits, the Los Angeles City Charter requires the Controller, Mayor and City Council to jointly administer a survey of each of the City’s proprietary departments every five years. Navigant Consulting, Inc. prepared the IEA of the DWP as part of a year-long review of the utility’s operations.

In preparing the report, Navigant’s team conducted independent research and interviewed City leaders, union leadership, 71 members of the DWP’s management team about such wide-ranging subjects as water and power infrastructure, physical and cyber security, emergency preparedness, technology infrastructure, customer service, economic development and community outreach, and rate benchmarking. Every one of these stakeholders said he or she was dissatisfied with the status quo.

In advance of a proposed rate increase, which is expected to go before the City Council for consideration in the new year, consultants benchmarked the DWP’s performance against other utilities and best practices, and assessed the DWP’s readiness to meet critical challenges, like reducing its dependence on coal and imported water. The goal of the survey was to provide targeted recommendations for improvement.

For example, in assessing how the department operates within the larger structure of Los Angeles City government, the consultants identified a series of organizational and management challenges. The consultants wrote that the DWP is handicapped because “there is no single outside entity or coordinated group to set policy, provide specific goals and metrics, monitor performance, and hold LADWP accountable. ”

To enable the department to better accomplish its goals, consultants called in the near-term for increased transparency through reporting and for tying future rate increases to financial and performance metrics specified by ordinance.

Additionally, the report found political influences have often led the department to set more ambitious goals than may be reasonably achievable given the department’s resources.

Accordingly, consultants recommended that the City reform the department’s governance structure–which would likely require a ballot measure. The report identified several alternative governance structures and recommended an honest and public debate about the most effective way forward.

Galperin called upon the City Council to begin that process by establish a working group to craft a solution for voters.

“Amidst the challenges presented by climate change, our aging infrastructure, and our need to deliver water and power in more sustainable ways, ” said Controller Galperin, “We must identify the alternative structure for the DWP that will both increase accountability and allow the utility to operate more nimbly and effectively. ”

The consultants praised the Department’s current collection of water resource plans and noted that it is “on track to achieve the City’s and the Department’s shared overarching goals of increasing local water supply and expanding conservation efforts. ”

Controller Galperin previously called for the DWP to upgrade its infrastructure and adopt technologies such as water recycling (for landscaping and industrial uses), and to capture more water during rainstorms so that it can be used to decontaminate and replenish groundwater basins. He endorsed the report’s call for exploring a “unified water approach, ” in which the DWP would work with other City departments and regional agencies to develop a holistic view of the region’s water supplies and a collaborative approach to its management.

Among the other significant areas where the consultants identified deficiencies and offered recommendations for improvement were cyber and physical security, customer service and implementation of infrastructure plans.

In addition to the report, Controller Galperin released an online, interactive dashboard featuring DWP performance metrics and operating indicators. It can be viewed at http://dwp.controlpanel.la

More information about the DWP’s financials, including information about payroll and spending, can be found at UtilityPanel.la