Villaraigosa’s DWP pick an outsider

Los Angeles Mayor Antonio Villaraigosa reached outside his usual City Hall circle to fill the top job at the Department of Water and Power, selecting a Seattle-based consultant with 30 years of industry experience to run the turbulent utility.

If confirmed by the City Council, Ron Nichols, managing director of the energy practice of Navigant Consulting Inc., would become the sixth general manager to lead the nation’s largest municipally owned utility since Villaraigosa took office in 2005. He also would be the first in three years to lack previous political ties to the mayor.

Nichols arrives at a time of turmoil for the DWP, which has infuriated business leaders with its aggressive push for higher electricity rates and angered environmentalists for attempting to pull back on some of its more expensive renewable energy goals. Given the agency’s recent history of frequent management turnover, some at City Hall had called for the appointment of an outsider who could shield the $4-billion utility from politics.

“That might be the breath of fresh air the department needs,” said Councilman Herb Wesson, who met Tuesday with Nichols and was confident that he would serve as a “nonpolitical” utility executive.

First Deputy Mayor Austin Beutner, who had a hand in Nichols’ selection Tuesday, declined to comment but has said previously that the utility should be run more like a business. Beutner served as the DWP’s general manager after replacing Deputy Mayor S. David Freeman. Freeman, in turn, replaced H. David Nahai, a lawyer who helped raise money for the mayor’s 2005 election.

Nichols said he did not believe he could “totally depoliticize” the utility, which is overseen by a commission made up of five Villaraigosa appointees — whose decisions can, in turn, be vetoed by the council. But he argued that he had the ability to work well with other utility employees.

“I don’t speak ill of any of the more recent general managers in the last few years,” he said. “But I think I’ve got much more broad-based utility experience that I think will help work with staff to get them more comfortable.”

Nichols, who lives in Medina, Wash., will quickly get a chance to see firsthand some of the frictions between the DWP and the 15-member City Council. On Wednesday, council members will consider, yet again, a proposal for the March 8 ballot that would give them — not just the mayor — power to fire the utility’s general manager.

The measure, in part, was a response to a bitter public fight over electricity rates last spring, which nearly brought the city to the financial brink after the DWP threatened to withhold $73.5 million from the budget that pays for police and firefighters.

Villaraigosa vetoed the ballot measure last week. As of Tuesday, council members were still scrambling to get 10 votes needed to override the veto.

Yet even if that measure dies, Nichols will find himself in politically treacherous waters as he guides one of the largest agencies in the city, with 9,000 employees and 1.4 million customers. The union that represents DWP workers, with its proven ability to raise money and campaign for candidates, holds enormous sway over council members, high-level utility managers and the mayor.

“Public support of the DWP is at an all-time low,” said Mark Gold, president of the environmental group Heal the Bay. Gold described the general manager post as “one of the toughest jobs in the state.”

Nichols said utility executives need to be candid with the public as they work to meet, at a minimum, state deadlines for increasing the use of renewable energy. Those goals, he said, are not “something you can do overnight.”

“You need to do it in discrete steps, know what your plans are and be transparent about what those costs are going to be,” he said. “What will help the department going forward is better sharing of information and more timely release of information” to the public.

Colleagues said Nichols has the political skills to run even a contentious bureaucracy. He negotiated long-term power contracts at the Department of Water Resources just as electrical deregulation sparked a major energy crisis in California.

Before that, he advised the Long Island Power Authority as it acquired Long Island Lighting Co. That $7-billion transaction allowed rates to drop by 20%, said Patrick J. Foye, a deputy county executive in Long Island, N.Y., and former vice chairman of the power authority.

“The acquisition was a hot political issue here on Long Island, and Ron was able to understand and navigate those waters,” Foye said.

Nichols, 57, graduated from UC Davis in 1975 with a bachelor’s degree in agricultural economics and business management. From there, he was hired by the California Energy Commission to put together regulations for the siting of power plants. Three years later, he joined the state Water Resources agency, working in its energy division on renewable and hydroelectric energy projects.

He co-founded the consulting firm Resource Management International in 1980 and sold it to Navigant 17 years later.

When the council takes up the nomination sometime in January, Nichols will need the backing of at least eight members.

The DWP has had four commission presidents since 2006 and five general managers since 2007. At one point, tensions between high-level managers prompted the DWP to retain an organizational psychologist to deliver an oral report to Villaraigosa.

The agency had a bruising rate fight with the council earlier this year over a package of electricity rate increases backed by Villaraigosa. More recently, the DWP has begun backing away from Villaraigosa’s promise to make renewable energy, such as wind and solar, 40% of its energy portfolio by 2020. That move has drawn an outcry from environmentalists who supported the mayor when he ran for office.

A dozen advocacy groups sent Beutner a letter last week complaining that the DWP was retreating from Villaraigosa’s pledge to end the utility’s reliance on coal.

Even with those goals pared back, the utility has warned that it would need electricity rate increases ranging from 5% to 8% each year to meet its slightly more modest target. Even that proposal has drawn resistance from council members and ratepayer advocates.

Councilman Dennis Zine, one of seven council members who met with Nichols on Tuesday, said the next executive needs to make sure the DWP “doesn’t constantly raise rates.” But Councilman Tom LaBonge warned that the move to solar, wind and geothermal energy would require more money.

“There’s a price to pay to transform from very inexpensive coal to the modern option of green power,” he said.