Probe of Possible Improprieties May Signal New Era of Sunshine at LADWP

By Published On: December 14, 2003

In what may presage a new day of oversight and scrutiny of the massive Los Angeles Department of Water & Power, a committee of the Los Angeles City Council is probing potential improprieties in a $49 million contract for modernizing the department?s billing system for a small corner of its service area in the Owens Valley. The sole-source contract nearly doubled in cost over three years and was never completed. At a hearing of the council?s Commerce, Energy, and Natural Resources Committee late last month, Los Angeles City Council member Tony Cardenas lambasted the department for wasting taxpayer and ratepayer money on the contract with Texas-based Severn Trent Systems to develop a more flexible and Y2K-compliant billing system. ?This project can?t be construed as a success,? said Cardenas, who chairs the committee. Cardenas and other members of the committee asked the department to provide additional information on what he called the contract ?failure.? Department critics see the probe by Cardenas as a message that the Los Angeles City Council intends to scrutinize an organization that has long operated like a private company instead of a public agency. The department entered a sole-source contract with the Texas firm in 1997 to develop a new billing system for the Owens Valley area. Initially, the contract was for $27.8 million, but that was increased in 2000 to $49.1 million. LADWP paid Severn Trent Systems some $30 million before dropping the contract a little more than a year later. At the heart of the probe is whether any lobbyist for Severn Trent Systems influenced LADWP at a time before government-relations representatives were required to register with the city. ?LADWP does not recall interacting with any lobbying firms on behalf of Severn Trent Systems,? wrote David Wiggs, general manager of the department, in an October 21 letter to the committee. ?I cannot imagine that there wasn?t a lobbyist,? replied a skeptical Cardenas, who ordered the department to further research the issue. Owens Valley, infamous as the place where a young Los Angeles tapped?and drained?its water table for development, has about 33,000 LADWP bill payers. ?What about the other 3.8 million customers?? asked Joe Avila, a staff member in the council?s Chief Legislative Analyst?s Office. At the time of the contract, ?Everybody was focused on how to get ready for Y2K and deregulation,? Pamela Porter, assistant general manager of the department, told the committee. The goal was to update a 30-year-old billing system that was coded in relatively ancient COBOL computer language, she explained. The dropped contract produced only a temporary Y2K fix for the system, which now must be replaced in its entirety. Cardenas plans another hearing on the billing contract issue and also is expected to hold an oversight hearing in as little as two weeks, in which he plans to call the department onto the carpet for its lack of a renewable energy portfolio plan. The Chief Legislative Analyst?s Office is expected to release a critique of the department?s renewable energy record at that hearing.

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