Port of Los Angeles

Recommendations 18

• R1

  Page 149
  The governance of the Department of Water and Power is distributed among several different groups including the Board of Water and Power Commissioners, the Mayor, the City Council, the City attorney and IBEW.
• R2

  Page 149
  There has been a significant turnover in both Commissioners and General Managers for the LADWP, especially in recent years, which diminishes the overall governance continuity.
• R3

  Page 149
  There is a perception that political contributions rather than specialized skills or experience may play a primary part in the decision to appoint personnel to the Commission or other governance positions.
• R4

  Page 149
  There are a variety of governance structures in place at other municipal utilities; there is no one structure that meets all needs.
• R5

  Page 149
  Although there was originally some concern that personnel were taking higher paying jobs at LADWP for only a short time (pension spiking) in order to increase lifetime pensions, such does not appear to be the case. However, the number of transfers from the City to the Department may have a negative impact on the pensions for the Department.
• R6

  Page 149
  Succession planning does not take place within LADWP to any meaningful extent.
• R7

  Page 149
  The IBEW is very active in local and state elections, local and state legislation and in ongoing City politics. It also contributes substantial time and money to the election of City politicians, including various Council members, the Mayor and the City Attorney which potentially allows for a substantial amount of power in the day-to-day governance of the Department.
• R8

  Page 149
  There is considerable belief that the unions are increasingly involved in the operations and management of the Department.
• R9

  Page 149
  The public sector unions, especially IBEW, have been successful for their members by accomplishing a higher level of salary and benefits than other employee unions. This information is of concern to many ratepayers since it will increase the rates developed to pay for services.
• R10

  Page 149
  The IBEW represents about 88% of all LADWP employees which is an unusually high percentage for utilities.
• R11

  Page 149
  Although the LADWP and the IBEW engage in “mutual gains bargaining” through a Joint Labor Management Resolution Board (JRB), the bargaining results are reportedly more in favor of the Union. The number of grievances filed by the Union has not materially changed as a result of this process.
• R12

  Page 149
  Ensure that the Ratepayers function is clearly defined and that the function is not captured by politicians or a bureaucracy that will stagnate their independence and ability. It is important to identify what the function will be focused on and, as importantly, what it will not be focused on. The Ratepayer Advocate will have enough work to do without taking on the “savior of LADWP operations and public perception” role. The position should not be involved in the management of the Department or have the right to veto management decisions or set rates. The OPA should not be involved in holding LADWP accountable for meeting the City’s or Mayor’s goals, some of which will be extremely expensive to the ratepayer. That should be the job of the Board of Commissioners, City Council and the Mayor. They should, however, have input into various rate alternatives and timing differences prior to the policy decision being made so that the impact to the ratepayer is known. The OPA should take a long-term perspective on its review of rates. For example, it should shine the light on long-term plans that will have massive implications for residential and commercial rates, not just on the rate increase that may be mentioned for next year. It is important that the position provide advice and counsel to lawmakers on balancing LADWP’s plans to invest in clean power, as one example, with its need to fulfill Charter responsibility to keep rates lower than others. The primary focus should be what is best for the ratepayer. The Advocate can highlight the long term implication of these decisions. This long term perspective and visibility is more important than just blocking specific rate hikes, which may be desired by many, but may not be in the long term best interest of the City or the ratepayer. In summary, the function should provide visibility to the public and guidance to the Council on various anticipated rate increases, and provide expert advice on rate actions and strategies which will protect the ratepayer by identifying the most economical method to accomplish the City’s policy goals and the LADWP’s long-term interests. The ratepayer should be placed first in implementing the Advocate’s responsibility. The Advocate can also be instrumental in ensuring that large categories of costs, such as DSM, RPS and the City Transfer, have visibility on the customer bills. (Also see Recommendation 10.)
• R13

  Page 150
  Ensure that the public has primary input into the appointment of the Ratepayer Advocate. The “citizen’s committee” should have ample representation from Neighborhood Councils and other citizen-based organizations. It is only with broad based input that the public will have the confidence that the position won’t bend to any specific political will. As important as the actual information provided by the Ratepayer Advocate is the fact that the existence of the position itself should be viewed by the public to be honest, independent, trustworthy and knowledgeable. This is probably the single best opportunity for the City and Department management to improve the perception of LADWP with the rate paying public. 124 2010 – 2011 LOS ANGELES COUNTY CIVIL GRAND JURY Summary of Report Findings and Recommendations
• R14

  Page 149
  Although the Department had numerous reasons for not wanting to make the transfer without a rate increase that it felt it deserved, holding the City “hostage” under these circumstances was inappropriate since the Department had the cash to make the transfer, although they had it reserved for other uses.
• R15

  Page 150
  The ECAF as currently constituted at LADWP contains several elements that typically would not be found in a Cost Adjustment Factor.
• R16

  Page 150
  The current ECAF design does not provide for adequate oversight and transparency into long-term commitments made by the Department, particularly with respect to Renewable Portfolio Standard (RPS) and Demand Side Management (DSM).
• R17

  Page 150
  The implementation of a Ratepayer Advocate at LADWP would be unusual in the municipal utility industry.
• R18

  Page 150
  Some people believe that the impact of the Ratepayer Advocate ballot measure is minimized because other proposed Charter amendments were not approved for the same ballot. RECOMMENDATIONS