DWP Board OKs Sweeping Layoff Plan

Los Angeles Board of Water and Power commissioners unanimously approved a sweeping plan Tuesday to make the utility more competitive, heeding a stark warning from DWP General Manager S. David Freeman that “we will go broke” if the nation’s largest municipal utility doesn’t slash 2,000 jobs and reduce its huge burden of debt.

While angry and dismayed employees vowed to carry the fight for their jobs to the City Council, Freeman also won the commission’s quiet approval to remove three top DWP managers, including key executives of the water and power systems, so he can put in place his own management team.

In addition, Freeman was granted extraordinary authority to negotiate long-term deals to supply power to the utility’s biggest customers, a crucial element in the DWP’s effort to fend off competitors eager to capture major industrial and commercial operations in the city.

Unless the department lowers its cost of generating power by reducing its operating costs and paying down $4 billion of its $7.5 billion debt by 2003, the utility will be unable to lower its rates sufficiently to meet competition from other utilities.

While the commissioners clearly were prepared to give Freeman a quick vote of confidence, the mood was very different among many department employees. The general manager was booed by hundreds of workers when he entered the packed auditorium and was surrounded by DWP security officers when he left.

Patt Sanders, vice president of the union representing DWP engineers and architects, drew a standing ovation when she shouted that Freeman, on the job for only three months, was like a hurricane that would leave “devastation” and “chaos” in its wake.

“You’re killing the Department of Water and Power, and you’re killing the city,” she told him.

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The daughter of a longtime DWP employee, Sanders struck an emotional chord when she accused Freeman of trying to “gut” the utility, a charge that the former head of the giant Tennessee Valley Authority and other major public power systems later denied.

Freeman’s plan to usher in a new era at a utility long accustomed to being a monopoly was attacked by engineers and workers who told commissioners that the job cuts would cripple the DWP’s ability to provide electric service in the nation’s second-largest city.

“You don’t get rid of your best and brightest and expect to meet and beat the competition,” said Kent Cartwright, a 25-year DWP veteran who works at the department’s energy control center.

“We are the people who are needed to keep the lights on,” said electrical engineering associate Mukles Bhuiyan.

Yet it was clear from the beginning that, despite the employee protests, the commission was poised to give Freeman the full mandate he sought.

The battleground now shifts to City Hall, where the size and scope of the job cuts at the DWP, potentially the biggest in the city government’s history, will be decided.

An initial skirmish will take place today, when an ad hoc City Council committee on DWP deregulation hears Freeman’s plan and the protests of workers who stand to lose their jobs.

“The council understands this is a very critical juncture in the department’s history,” said a spokeswoman for Councilwoman Ruth Galanter, who chairs the panel.

In his defense, the new DWP chief, recruited by Mayor Richard Riordan, quoted a study prepared last year by Price Waterhouse, which concluded that the department had to move fast.

Freeman told his employees in blunt terms that the DWP faces its greatest challenge: having to aggressively compete in the coming free market for electric power in California. “Coming in second loses the ballgame,” he said. “It’s very, very late in the game.”

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That sentiment was evident as the five commissioners expressed sympathy for the employees who will lose their jobs in the process, but said they had little choice but to proceed.

Commission President Rick Caruso, a real estate developer and the panel’s longest-serving member, said he preferred the era of building power plants and celebrating the department’s growth to the wrenching task that lies ahead. “The reality of it is the jobs have to be cut,” he said.

Caruso defended Freeman’s plan and said the new general manager’s goal “is not to dismantle this utility.” He told employees who will be laid off that they can leave with their heads held high.

Commissioner Jose Legaspi said the DWP had tried in vain to avoid layoffs, but now must act “in order for this department to survive.”

In granting Freeman the authority to negotiate contracts to supply power for up to 10 years, the commission endorsed a new structure for managing the huge department.

At a breakfast meeting of business leaders Monday, Freeman invoked the name of William Mulholland, the department’s legendary chief engineer earlier this century, to describe why he needed expanded power. “Mr. Mulholland didn’t have to come to the City Council for approval of every parcel of land he acquired for water rights,” he said.

And Freeman added that he needed to recruit people with an entrepreneurial, cost-cutting approach to assist him. “DWP’s management structure is not chock full of [those] people,” he said.

The commission unanimously agreed to sign consultant contracts with three assistant general managers who will step down from their $154,198-a-year posts:

* James F. Wickser, who joined the department in 1961 and has run the city’s water system since March 1990.

* Eldon A. Cotton, who arrived at the DWP in 1965 and has been a top official of the power system since November 1988.

* Faye Washington, who became the first woman to be appointed chief administrative officer and assistant general manager in October 1995.