Government as Fast as Yesterday

In today’s Internet-connected economy, speed often is more important than money. Business leaders generally believe that the organizations that can move most swiftly and strategically will be the most successful.

This propensity for velocity is cause for concern in the public sector, which by democratic design moves oh so slowly. In the past, this was less of a problem, but with the increased blurring of the public and private sectors as whole industries and layers of government attempt to redefine themselves, government’s plodding pace eventually may come to harm the very citizens it intends to protect. A case in point is the Los Angeles Department of Water and Power’s attempt to prepare for the new electric industry.

A new state law introduces customer choice, beginning next year, for those who want to shop around for their power supply. The law technically applies only to the state’s three large investor-owned electric utilities, but there are 27 government-run operations (DWP being the largest) that account for about one-third of the power sold in the state. Obviously, the munis, as they are referred to, need to be counted in, if only so their customers aren’t left out in the cold while their neighbors have more choices and lower prices for electricity. DWP is at a crossroads. The next few weeks will determine if the city’s political leaders and DWP can work together to break what is a historic logjam filled with good intentions.

A creative alliance with a private sector partner, Duke/Louis Dreyfus, was approved earlier this month by the five-member Board of Water and Power commissioners. This is a multimillion-dollar deal with broad implications. But in the world of a city-chartered municipal utility, these commercial actions are only preliminary steps in an arduous approval process. There are four other major reviews. “Speed” this ain’t!

Ironically, DWP’s self-sufficiency and relative success in keeping up with Los Angeles’ growth has put it under closer scrutiny by the city’s political leaders. Let’s face it, the municipal utility is a cash cow, churning out almost $2 billion in revenues annually. DWP’s ability to bring in more revenue than it spends and thus provide millions of dollars to the city general fund and millions more in free energy and services to other city departments is useful to politicians trying to balance budgets and satisfy the needs of various voter blocs.

So it should not be surprising that DWP’s recently proposed business alliance with an energy trading and marketing company is the center of a simmering public controversy. Depending on your viewpoint, the debate is either a political brouhaha or just a routine part of a prudent, democratic review process. In either case, one of three things can happen, all of them bad from a timing standpoint: The strategic alliance will be approved, but the process will take too long; competition for the alliance will be reopened, which will take even longer, or the proposed business alliance will be scrapped, at least temporarily.

None of the outcomes is likely to help DWP catch up in the race to be ready for more competition in 1998. If you want strong local oversight, however, you can argue that this is the price you have to accept. If you are more inclined to be a laissez-faire, free-market advocate, you might argue that this is an example of why DWP should be absorbed into the private sector with the other large investor-owned utilities. Both views have validity.

The DWP proposed-alliance is scheduled to go today to an ad hoc city council committee for review before being passed on to two city administrative offices, then back to the ad hoc panel and finally to the city council. Powerful interests hoping to kill the alliance will have plenty of opportunity.

But the fate of this alliance per se is not the critical element here. The key issue is the time it takes city government to make important business decisions. If the alliance, which has been worked on for months following strict public sector bidding procedures, cannot be approved quickly, how can DWP expect to get rapid turnaround on half a dozen other major issues it must address before summer?