Regulating the DWP

* Leon Furgatch’s column (Feb. 21) relied on erroneous facts and a fundamental misunderstanding of the City Charter. The key facts are as follows:

-- The mayor believes that Department of Water and Power’s shareholders--the citizens of this city--are entitled to a dividend by virtue of the city’s ownership and their investment in the DWP. Their investment, the mayor believes, should generate dividends comparable to other investor-owned utilities such as Southern California Edison. There is one key difference, however; our citizens should get most of their dividends in the form of favorable rates.

As a result of inefficient practices at DWP, the rate dividend enjoyed by our residents is seriously threatened, and could vanish altogether. To address this, the mayor has instructed his commissioners to pursue all feasible efficiencies, consistent with prudent practices, for reliable, safe utility service. He has also accepted the recommendation of the board of commissioners that no rate hikes be considered for the foreseeable future.

The transfer of funds from the department to the city is another component of the dividend paid to our citizen shareholders. The charter provisions that allow transfers from DWP to the city have been on the books for many years. These charter provisions are quite explicit, not “loopholes” as Furgatch asserts, and all transfers from the department to the city have complied with these provisions. This year the direct transfer was about 8% of DWP’s gross revenues--substantially less than sums paid by IOUs for taxes, interest and other costs that DWP, as a city-owned utility, is not required to pay.

Furgatch’s assertions that council has a “built-in bias to approve” rate increases are completely unfounded. The electorate has demonstrated little tolerance of rate or tax increases, particularly in the face of incontrovertible evidence that millions of dollars can be saved through operating efficiencies.

The mayor has pledged to support reliable service, efficient operations and a fair return to the ratepayer/shareholders. An independent, elected DWP board could also share the mayor’s goals. However, members of such a board could also have substantially different goals, such as appeasing the special interests most likely to finance and control the election of such an obscure board. This idea is not in the city’s interest. An efficient, competitive DWP that provides quality service at affordable prices is. Under the leadership of Mayor Riordan and the DWP Commissioners, that’s exactly where DWP is headed.

MICHAEL KEELEY, Deputy Mayor

DENNIS TITO, President

DWP Board of Commissioners