DWP Bows to Criticism, Cancels Study

The Los Angeles Department of Water and Power on Tuesday moved quickly to cancel a $25,000 contract for a study of what went wrong in the agency’s failure to win approval for a rate hike.

The giant utility canceled the contract with the Center for Crisis Management at USC the same day City Council members ridiculed the expenditure in a Times story as a “prime example of the department’s inability to keep a lid on unnecessary costs.”

“They’re listening, aren’t they?” Councilwoman Joy Picus said after the contract was canceled. “We’re getting through.”

Councilman Zev Yaroslavsky said the DWP “should be congratulated for undoing the wrong thing. That is what the DWP is coming to. It is being praised for undoing mistakes.”

The DWP acted within an hour or two after its City Council liaison saw a motion introduced by Councilwoman Joan Milke Flores seeking to bring the contract before the council.

In the motion, Flores asked: “When is the department going to get the message that the ratepayers of Los Angeles want them to stop wasting money?”

After hearing that the contract had been canceled, Flores said: “Hopefully, they’re starting to get the message.”

Flores, who chairs the council committee with oversight of the DWP, said she is considering reviewing all DWP contracts for the past year. DWP management can award contracts of less than $100,000 without the approval of the Water and Power Commission appointed by the mayor.

DWP officials defended their motives for seeking the contract.

“Our goal was to see if there were alternative approaches to better inform the public about trade-offs the DWP was faced with when we recommended the rate increase process,” said Michael T. Moore, DWP executive assistant to the general manager.

“We hoped to learn important lessons from our difficult experiences to be more responsive to our customers’ concerns,” Moore said. “However, given the strong reaction against the USC contract, it has been canceled.”

The USC crisis center has investigated the Chernobyl nuclear accident, the chemical spill in Bhopal, India, the Tylenol product tampering case and other disasters.

The contract was ridiculed by council members, including Yaroslavsky, who said the DWP’s problems stem from “contracts like this.”

Council members also complained about what they called the DWP’s arrogance, its unwillingness to compromise and indifference to community concern over escalating costs and diminishing supplies, which members said led to the department’s rate-hike debacle before the council.

The council slashed the agency’s rate request from 11% to 3.6%--requiring the agency to cut more than $175 million from its budget and impose a hiring freeze.

The DWP will conduct a review of what went wrong with its rate request, Moore said.