DWP Fails in Planning for Future, Audit Says : Drought: The agency should give immediate attention to finding new sources of water for Los Angeles, the study concludes.

The Los Angeles Department of Water and Power has failed to adequately plan for the city’s future water needs either through conservation or development of new water sources, according to a sweeping management audit released Thursday.

The audit, conducted over six months at a cost of $1.2 million, concludes that planning for new sources of water “should receive immediate attention.” Though planned years ago, the audit is particularly timely as California enters its fourth consecutive year of drought-like conditions and the city of Los Angeles is preparing for possible water rationing in the hot summer months.

The decennial audit, required by the City Charter, found that attempts by the DWP to forecast water demand are “practically non-existent.” The last DWP forecast, auditors noted, was in 1985 and “is hopelessly out of date.” The auditors pointed out that actual demand for water in 1988 surpassed the level that the DWP had predicted for 1990.

The study by the management consulting firm of Richard Metzler & Associates said that the city is “unwisely” relying on “optimistic assumptions of conservation.”

Auditors found that the DWP--which claims that citywide consumption has been reduced 4% to 8% in the last four years--has no mechanism for calculating savings from conservation programs.

“There are definite risks inherent in a plan that assumes that more than 9% of demand will be offset by conservation methods by the year 2000, when there are no hard facts or empirical evidence upon which to base this assumption,” the auditors wrote in the 585-page report delivered to the DWP Board of Commissioners on Thursday.

Rick Caruso, president of the DWP Board of Commissioners, said in an interview that he agreed with many of the criticisms and vowed to rectify the problems.

But Caruso also said that many of the problems are likely to be unsolvable. “I’m not sure anyone knows” how to find all the water that a growing Los Angeles will eventually need, he said.

“It’s not like the energy side, where you just build another plant. . . . You just can’t build another water manufacturing plant,” Caruso said.

The audit, while critical of these many aspects of the DWP’s water operations, was generally favorable and was particularly supportive of the DWP’s energy operations.

But even on the energy side of the department, the audit found some problems that need attention. Auditors warned that air quality rules will require the DWP to retrofit its local power plants at a cost of about $1 billion over the next 10 years.

On their concerns over Los Angeles’ water supply, auditors were particularly critical about the DWP’s failure to develop one of the greatest potential sources of water: reclamation of sewage.

Auditors said they “questioned the validity of the DWP’s efforts in this regard” as only two projects using waste water have been developed in the last seven years. “It appears that the DWP is one of the least aggressive (water agencies) in pursuing these projects.”

Caruso said auditors’ complaints about reclamation were unjustified. He said the DWP has planned several projects to use reclaimed waste water, but has been stymied by state health officials.

One ominous warning about the DWP’s water supply called into question the reliability of the DWP’s source of last resort: the Metropolitan Water District.

The MWD transports water from the Colorado River and the state Water Project on the Sacramento River Delta, and wholesales it to more than 300 communities in six Southern California counties. As the largest member of MWD, Los Angeles is entitled to about 25% of the MWD’s water supply.

This year, as DWP’s own supplies have shrunk, Los Angeles will be getting about one-half of all its water from the MWD.

But auditors warned, “There is concern over the MWD’s ability to provide sufficient supplies” in a dry year. And, in fact, the MWD has told its members that its supplies are likely to fall short of demands by about 10% this year.

“More important,” the auditors wrote, “the DWP is implicitly assuming that both the MWD’s reliable supplies and the city’s preferential right to those supplies will remain intact. Discussions with the MWD indicate that both of these assumptions may be unreliable” and officials there forecast “several likely scenarios which would result in significant shortfalls in five years or less.”