Los Angeles utility chief steps down

The head of the nation’s largest municipal utility resigned Friday, immediately igniting a debate over the process that will be used by Los Angeles Mayor Antonio Villaraigosa to find a successor.

Los Angeles Department of Water and Power General Manager Ron Deaton, who forged a reputation as one of the most powerful bureaucrats at City Hall, sent a letter to city officials saying he was resigning “with a heavy heart” after working in city government for 42 years.

Deaton, 64, had been on medical leave since July, when he suffered a severe heart arrhythmia that left him in a coma for two days. He has been away from the utility as it lobbies the City Council to approve a package of electricity and water rate increases that would be phased in by July 1, 2009.

Minutes before the resignation letter was released, the Board of Water and Power Commissioners -- a volunteer panel appointed by Villaraigosa -- voted behind closed doors to offer Deaton a $267,500 separation package, according to a source familiar with the agreement.

The source described the lump sum as less expensive than the nearly $690,000 the utility would have paid if Deaton were to stay with the agency on disability for the next two years. Deaton also was offered a life insurance policy that would cost the city $50,000.

Villaraigosa has not publicly said whom he wants to run the DWP, which provides water and electricity to 3.8 million households and businesses. But lawyer H. David Nahai, one of Villaraigosa’s allies, resigned as DWP board president three weeks ago to seek Deaton’s job if the post became vacant.

Nahai is expected to be nominated Monday as the replacement for Deaton, whose retirement will be effective Dec. 1.

Even before Deaton announced his resignation, environmentalists supported Nahai as the right person to move the DWP away from high-pollution coal plants and toward the construction of wind- and solar- generating facilities.

Nahai’s potential hiring “represents the opportunity for a sea change,” said Rhonda Mills, director of special projects at the Center for Energy Efficiency and Renewable Technologies, who has discussed his candidacy with advisors to Villaraigosa and two council members.

Still, one member of the council, which must vote to confirm any DWP chief nominee, voiced concern over Nahai’s ability to make the leap from his tiny law firm in Century City to a municipal utility with about 8,000 employees.

Councilwoman Jan Perry said a nationwide search would give Villaraigosa and the council assurances that they have the best possible candidate.

“It would be to our benefit to fully explore the pool of talent and experience that is out there,” said Perry, who heads the council’s Energy and Environment Committee.

Other council members behaved as though a Nahai nomination was a done deal.

“Given the urgency of our needs and issues, picking a commissioner is just as effective” as a national search, said Councilman Ed Reyes. “I mean, who knows L.A. better than a commissioner?”

Nahai would not comment on the job search. But key environmental activists praised him not just for his service as a volunteer DWP commissioner, but also for his work on the Regional Water Quality Control Board, where he has been a member since 1997.

Jonathan Parfrey, director of the group Green L.A., predicted Nahai would have the support of the powerful union that represents DWP workers. “That’s one of the litmus tests of being general manager right now,” he said.

Deaton’s departure comes as the DWP tries to sell the council not just on the rate hikes, but on major changes to the way the utility charges for electricity. In a bid to promote conservation, the utility plans to charge a higher rate to households that consume greater quantities of electricity.

Villaraigosa also has promised to make sure 20% of the DWP’s energy portfolio is from renewable sources by 2010. In the short term, that means buying wind and solar power from other sources. On Friday, he sought to keep the focus on Deaton, a veteran bureaucrat who was the city’s highest-paid executive, with an annual salary of $345,000.

Deaton worked on issues including the financial effects of Proposition 13 and the power outages in the summer of 2006.

“Ron always embodied the idea that public service is the highest calling,” Villaraigosa said in a prepared statement.

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david.zahniser@latimes.com

Times staff writer Steve Hymon contributed to this report.