LADWP Troubles Escalate

By Published On: February 6, 2014

The Los Angeles Department of Water & Power is in disarray. Details of the problems at the nation’s largest muni emerged Feb. 4 as its board of commissioners confirmed Mayor Eric Garcetti’s nomination of Marcie Edwards as general manager. If confirmed by the full city council, she will replace Ron Nichols, who resigned from the post last month. Meanwhile, senior assistant general manager Jim McDaniel serves as interim general manager. The problems at the department discussed at the meeting revolve around: *Poor customer service: Commissioner Jill Bank Barad characterized customer service for LADWP ratepayers as “really unacceptable at every level.” She cited billing errors and delays in resolving customer inquiries regarding bills, installing solar systems, and getting new service hookups. Assistant general manager for customer service Sharon Grove acknowledged the problems, noting that the department ranks “at the very bottom” of J.D. Power ratings for utility customer service. * A shortfall in revenue collections: Grove explained that in November 2013 after a new computerized billing system overbilled customers and emptied the checking accounts of many who had signed up for auto-payments the department shut down automatic collections and other attempts to collect money. It also instituted a moratorium on service disconnections. It hasn’t resumed collections since, resulting in a revenue shortfall of $57 million so far. Overall, power system revenues are $200 million under budget this fiscal year, which began July 1, according to Philip Leiber, chief financial officer. The department’s ratepayer advocate Fred Pickel said the shortfall may stem from a “deeper” problem. He noted that power usage has plummeted 3 to 4 percent over the last year. He guessed it could be due to conservation in the face of rising rates. * A water shortage, exacerbated by power outages: Water deliveries through the department’s 100-year-old aqueduct from the Owens Valley are expected to be the lowest on record this year, according to McDaniel. That’s prompted the department to impose mandatory water use restrictions. Ironically, he added, when power failures occur in the utility’s aging distribution system automatic sprinklers reset to their default setting. When that happens they water lawns for 10 minutes a day even though watering is now restricted to three days a week. * Customer distrust: Neighborhood Council activists speaking to the commission voiced concern about the rising cost of water and power and questions about how ratepayer money is being used, including some $40 million given to the muni’s biggest union, the International Brotherhood of Electrical Workers Local 18, to run two institutes to train employees. The city controller and the Los Angeles County District Attorney are investigating potential misuse of the money. Meanwhile, Edwards came under criticism from at least one of the activists for being a department “insider.” * Employees can’t get a cup of coffee: On Jan. 27, the 13 employees who staff the department’s cafeteria run by contractor Sodexo were dismissed without pay as a contract between the muni and company ran out, according to department employee Heidi Bass, who spoke to the commission. The cafeteria remains closed and the workers unemployed without back pay as the department now focuses on renewing the agreement with Sodexo. Bass said when they found, out muni employees raised $2,500, split it up, and handed it to the workers as they left the building. Asked about what she would do to fix the problems, particularly customer service, Edwards was momentarily lost for words. “It is a very tenuous relationship,” she admitted, that the muni has with its customers. She said she was not fully aware of why there were problems, but indicated that she would work to identify “small barriers” that keep department employees from doing a better job and seek to remove them. Edwards previously worked for 24 years at the department, starting as a clerk typist at 19 and rising through the ranks to eventually become assistant general manager for marketing and customer service when she left in 2001. She was the California Independent System Operator’s chief executive officer in 2004, and was one of the original board members there. After that, she served as general manager of Anaheim Public Utilities. Last year, the Anaheim City Council hired her as city manager. In nominating Edwards, Garcetti said she “has the toughness and expertise necessary to take on the status quo at LADWP and deliver real, lasting change for LADWP customers." The mayor said his goals for the department are to make it “more efficient, tightly managed, reliable and that costs are cut." Edwards pledged to “run this department like a business and leave politics at the door.” The turnover at the top also displaced senior assistant general manager for power Aram Benyamin, who was placed on administrative leave and replaced by former general manager David Wiggs. He ran the department from 2001 through 2003.

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