DWP may establish a ratepayer advocate

A little-known government agency in New Jersey scored a victory last month, forcing that state’s largest electric utility to give its customers a $122-million rebate. The Division of Rate Counsel also got a planned rate hike reduced to less than 1%.

That sort of advocacy has been long sought by Los Angeles neighborhood activists, who contend that the city’s Department of Water and Power, the nation’s largest municipal utility, has a track record of concealing information about its spending practices. Even City Council members have been frustrated by their inability to get answers, with one recently threatening to subpoena top utility executives so they show up for meetings.

Now, after two years of resistance, the DWP is looking to create its own government office to champion the interests of customers. Critics fear, however, that the utility’s new “ratepayer advocate” won’t have anywhere near the teeth of its counterparts around the country.

Austin Beutner, DWP interim general manager, unveiled a plan last month to give the advocate a yearly budget of $300,000, enough to pay for two employees and administrative costs. Some critics contend that would leave the office significantly understaffed — and lacking the political independence demanded by the DWP’s 1.4 million customers.

“You can’t get much of anything for $300,000 per year,” said Chuck Ray, who serves on the Mar Vista Community Council.

New Jersey’s rate counsel has 32 government staffers, half of them attorneys, to watch over four power companies serving 7.2 million customers. California’s Division of Ratepayer Advocates relies on 145 employees to weigh in on rates pursued by the state’s investor-owned utilities, such as Southern California Edison. Even Delaware, whose population is a fraction of Los Angeles’, has a four-person office and access to a lawyer employed by its attorney general.

Two years ago, the very notion of a ratepayer advocate drew little interest from Los Angeles Mayor Antonio Villaraigosa, whose appointees on the DWP board dismissed the idea as expensive and unnecessary.

Then last year, the mayor breathed new life into the issue during his push to win higher electricity rates in part to help pay for renewable energy development. Now, some council members are looking to amend the City Charter to require a ratepayer advocate in an upcoming election, a move that would prevent the position from being repealed by future DWP executives.

Beutner, who also serves as first deputy mayor, has said he does not want to wait to put the issue to voters. He sent the DWP board a proposal to place the post under City Administrative Officer Miguel Santana, the top budget official at City Hall.

“We’d like to start” creating the office, Beutner told council members last month. “If it turns out the council has a different view over time, or any members wish to take it to the ballot, we can do that.”

More than 40 states have ratepayer advocates, according to Charles Acquard, executive director of the National Assn. of State Utility Consumer Advocates. But those organizations monitor rates imposed by investor-owned utilities, not utilities owned by governments.

Acquard said a ratepayer advocate for a publicly owned utility would represent a “whole new frontier for consumer advocacy.” That’s because historically, regulators have assumed that the politicians who oversee public utilities will respond to the demands of their ratepayers, who also happen to be voters.

“The theory is that [public utilities] represent the people, they’re owned by the people and therefore they do what the people want,” Acquard said.

In fact, that happened this year in Los Angeles. When Villaraigosa unveiled a plan for four consecutive rate hikes, the council heard furious protests from constituents and then voted to limit the size and number of increases. Since then, Beutner has promised to keep a lid on rate hikes by trimming expenses and selling off DWP assets.

But as they debated the rate proposals, council members repeatedly complained that they could not get the information they needed from the DWP. City Controller Wendy Greuel released a report criticizing the DWP for threatening to withhold $73.5 million if the increases were not passed.

That lingering acrimony has caused both elected officials and the public to look for ways of keeping the ratepayer advocate free from political pressure.

Greuel has argued that her office is the most independent in City Hall — and the most sensible place to put an advocate. Yet after working with Greuel on the idea for months, Villaraigosa and the DWP decided to recommend putting the office under Santana instead.

One state utility lawyer questioned whether that arrangement would add much to the city’s political process. Santana was hired by Villaraigosa and reports directly to the mayor and the council.

“If you get to the point where you think you need a ratepayer advocate, having the ratepayer advocate respond to the same political people that you already have doesn’t seem to really add anything,” said Joe Como, chief counsel to California’s Division of Ratepayer Advocates.

Still, some DWP critics don’t believe Greuel can be impartial either, since she won office with significant help from the union that represents DWP employees. Meanwhile, Councilman Greig Smith has called for the utility to create an inspector general, who would not just look at proposed rate increases but also identify waste and fraud within the agency.

Beutner’s proposal is more limited in scope, calling for a ratepayer advocate to issue quarterly reports and review the need for rate increases. Under his plan, the ratepayer advocate would receive $125,000 annually and an assistant ratepayer advocate would earn $75,000.

New Jersey, by contrast, has a $6.5-million budget for its rate watchdog agency. That kind of funding allows the agency to maintain its adversarial role — and go to court, if necessary, said Stefanie Brand, director of New Jersey’s Office of Rate Counsel.

“No single customer is going to take on a utility because they’re just not going to have the resources,” she said. “An institution like ours, we can be a real adversary.”

david.zahniser@latimes.com