Tuesday, September 30, 2008

DWP’s Greatest Ripoff/The $equel: LAUSD TO PAY DWP MILLIONS MORE AS DISCOUNT ENDS + a blast from the past

By Kerry Cavanaugh, Staff Writer | LA Daily News

Sept 30, 2008 - Los Angeles schools will pay as much as $3 million more a year for electricity starting Wednesday when a long-standing agreement for reduced power rates expires.

Los Angeles Unified School District officials said they've tried to persuade the Los Angeles Department of Water and Power to continue the 5 percent discount on electricity, but the utility has said no.

"At a time when the ratepayers of Los Angeles are subject to a rate increase, to give a straight, arbitrary 5 percent reduction is not the desirable way to go," said DWP General Manager H. David Nahai.

Nahai said the utility is willing to provide incentives for solar and energy efficiency so the district can lower its electricity costs.

But LAUSD board member Tamar Galatzan said the utility should be willing to cut a deal with the school district. "We're a huge customer and most businesses give huge customers a discount and incentives," she said. "In addition to the budget hit from Sacramento, that's another unexpected expense that the district is going to have to figure out a way to manage."

The DWP has given the LAUSD and about 30 other large customers a 5 percent discount for the past 10 years. The contract with the LAUSD expires today.

The contract was controversial because it prohibited the LAUSD from generating its own power by installing solar panels. That has frustrated environmentalists and some school officials who saw an opportunity to generate clean power from school roofs.

Now, the district has a major school-construction program and a plan to install solar photovoltaic panels on school facilities to generate as much as 50 megawatts of power by 2012.

LAUSD officials said they had hoped the DWP would be willing to make a deal - continue the electricity discount and offer more incentives for solar - in order to help the utility meet its goal of generating 20 percent of its power from renewable, green sources by 2010.

"We're offering something of value to DWP that no other customer can offer," said Randy Britt, director of sustainability initiatives at the district. "We're offering them the initiative to install megawatts of solar in their service territory, which would go through to renewable service standard." The agencies are to meet today.



Gentle readers: Please read the above through the lens of the following, a gentle reminder for Daily News reporter Cavanaugh, DWP General Manager Nahai and the taxpayers and ratepayers of Los Angeles as to all the good faith and generosity shown in the past to LAUSD by DWP — “ripping off” (the attorney general’s words, not mine!)  the District – and by extension the schoolchildren - of $900,000 on their water bill and $95 million on their power.

Bear also in mind that LAUSD and DWP are entities of Los Angeles City government, created by the Los Angeles City Charter.

The question becomes what rates does DWP charge other city entities like LAPD, Rec & Parks and City Hall itself? – smf



by KERRY CAVANAUGH  Staff Writer | LA Daily News

Jun 13, 2007 - The Los Angeles Department of Water and Power overcharged the school district, county and other government agencies for more than a decade and now must return more than $220 million, a judge has ruled.

Six government entities sued in 2000, saying that under state law the DWP can only charge them for the cost of producing the electricity they use -- less than what the utility had billed them.

Among their concerns was that the DWP was overcharging them and using the funds to essentially subsidize the city budget through an annual transfer that this year totals $185 million.

In his ruling Monday, San Bernardino County Superior Court Judge John P. Wade agreed that the DWP ignored state law and he ordered the utility to refund $222 million in overcharges from 1997 through 2006.

"Basically (the DWP) ripped off a number of agencies," said California Attorney General Jerry Brown. "It was a political move. This way the City Council gets more money to spend on their special projects. This takes money away from the schools, the colleges, the Highway Patrol."

Brown's office joined the lawsuit on behalf of state agencies in Los Angeles that were overcharged $31 million by the DWP.

The ruling is a significant loss for the DWP -- and potentially Los Angeles ratepayers -- if the utility has to dip into its savings to repay the public agencies named in the judgment.

But DWP officials said they will appeal, and they disputed the judge's ruling and assertions that the utility was bilking customers.

"We are a public agency. We're a municipal utility. We're not a profit- making entity," said Board of Water and Power Commission President H. David Nahai, adding that the DWP's rates are among the lowest in the state.

"The suggestion that we were somehow engaging in profiteering is offensive."

Nahai called the ruling preliminary.

"Immediately, we don't think it will have an impact," he said. "If the courts ultimately determine that DWP has to pay these amounts, we'll abide by the courts' decision."

The $222 million would be a one-time payment. Last year former Assemblywoman Jackie Goldberg, D-Los Angeles, passed legislation that allows the DWP to maintain its current rates for public-agency customers.

If the decision is upheld, the payment could have a one-time effect on the DWP's annual cash transfer to the city's general fund.

"Because this affects a proprietary agency, any effects on the city budget are limited," said Thomas Saenz, counsel to Mayor Antonio Villaraigosa.

Still, attorney Eric Havian, who represented the six agencies that sued the DWP, said the judge's ruling appears to limit how much the utility can charge its public customers going forward.

In particular, the judge prohibited the DWP from charging its public-agency customers for the power revenue transfer to the city's general fund, an annual cash hand-over worth $185 million this year.

Public-agency customers had complained that the DWP ratepayers are essentially being taxed and subsidizing city government through the transfer.

"You're not allowed to charge more for electricity and then turn around and use it for parks and the city budget. The law requires you to be very straightforward about that," Havian said.

Los Angeles Unified School District board member David Tokofsky has battled the city over the DWP reimbursement and said Tuesday he was pleased with the ruling.

"I hope that City Hall will not pursue its fantasies of appealing, and instead dedicate these resources immediately to the families and children of LAUSD, the county, UCLA, and the other educational and public agencies victorious in this litigation," he said.

Last year, the DWP tentatively agreed to pay $900,000 to the LAUSD under a proposed settlement over a similar lawsuit related to water rates.

LAUSD General Counsel Kevin Reed said he hoped the two agencies could settle again rather than pursue an appeal.

"But once we get this money, it's general fund money. It goes straight to the classroom," he said.

Ruling breakdown
Under the ruling, the DWP will have to pay roughly:

$95 million to Los Angeles Unified School District
$45 million to Los Angeles County
$39 million to the Metropolitan Transportation Authority
$31 million to California state agencies
$8 million to the Los Angeles Community College District and
$5 million to the University of California, Los Angeles.

article: http://www.thefreelibrary.com/_/print/PrintArticle.aspx?id=164920033

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