Strong, Needed Jolt for a Complacent DWP

The Department of Water & Power is in for big changes, none too soon. The municipal utility has long been shielded by City Council politics. It takes an outsider like the new general manager, S. David Freeman, to see what’s needed and shake things up.

And that he is doing. Two short months after taking the job, Freeman has come up with a massive reorganization plan. It calls for laying off 2,000 employees, eliminating the DWP automobile fleet and paying down the municipal utility’s staggering debt of more than $7 billion. The goal is to save $2.1 billion over the next four or five years to effectively compete in the deregulated electrical power market that is nearly upon us.

If the giant city-owned DWP does nothing, “we enter a death spiral,” explained Freeman. His message apparently is getting through to city officials. He’s backed by Mayor Richard Riordan, who appointed the energy industry veteran, a former head of the Tennessee Valley Authority and the New York state power system. Even Councilwoman Jackie Goldberg, the council’s most passionate defender of city jobs, has said she is prepared to support the cutbacks.

The plan is not set in stone. The steep cut in jobs, mostly in management, engineering and administration, is likely to be contested by employee unions. Freeman, meanwhile, is taking his plan to the public--the DWP’s customers, who are ultimately its owners. He held the first of many planned community forums Wednesday night in Westwood. It’s like “taking a play to Boston,” he said. “We may have to rewrite the script.” That’s a welcome change of pace from the insular politics of the City Council.

Freeman may be his own best salesman for the DWP reorganization. He is utterly non-L.A. in his cowboy hat and boots, and refreshingly blunt and decisive: “We don’t need engineers because we are not building anything and we don’t need seven layers of management.”

His strategy will be to reorganize the DWP in three business segments--power generation, transmission and distribution--along the lines of privately owned utilities. The DWP will face little competition when it comes to transmission and distribution, which it controls in the city. But come Jan. 1 when deregulation takes effect, privately owned utilities such as Edison will be able to sell power direct to the DWP’s big business customers, potentially at half of the DWP’s current price. The DWP has to impose discipline in its power business, burdened by over-investment and ineffiency, if it is to offer competitively priced electricity.

Right now Freeman is the hot current at the DWP, delivering much needed energy to refashion the complacent agency.