Deregulation Sending a Jolt Through DWP

So you come home one day, to the same house where you’ve enjoyed bed and board and care for years, and there, over the kitchen door, is a new sign. It reads “Mom, Inc.,” and below it, “We accept all major credit cards. No checks.”

What’s more, says Mom, emerging from the pantry wearing a pinstriped suit under her apron, if you don’t like it, maybe you can go find another mom who’ll do it cheaper if not better.

This is the best metaphor I can craft for the saga of the Department of Water and Power. Los Angeles’ cozy municipal utility company since 1902 will not reach its centennial intact.

The deregulation and marketing of energy, which accounts for the junk in everyone’s mailbox these days--”Buy one kilowatt, get one free!”--means an end to the DWP as we know it: a regulated monopoly that has delivered to the bungalows of Los Angeles some of the cheapest and most reliable electricity in the nation . . . Mom, with a meter.

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What put the “P” in “DWP” was this: In 1901--the year a man named Frank Norris wrote a novel verite called “The Octopus,” about the railroads strangling the farmers of the Central Valley--the railroads in California indeed controlled everything. They jacked up rates, and either stamped out or bought out any competition, as well as the politicians and press.

So civic control of this new stuff called electricity was the only way to keep it available and affordable, away from predatory practices. (The “W” part of DWP, water, was another matter, hardly free from railroad-style piracies, but that’s a column for another time . . . )

Fast-forward 95 years, to deregulation and competition, which in classical economics make prices go down. A benevolent monopoly is obsolete. The DWP is thrown into the pool where it must swim like hell or die. Here is what “swimming like hell” means:

* Many energy firms, the DWP included, got panicky in the 1970s energy crises, when a barrel of oil cost more than a barrel of Scotch, and began investing in alternate energy sources, sometimes expensive, no-count, no-show projects. The DWP is saddled with some $7 billion in debt, which it must dump like ballast before it can swim in competitive waters.

Other utilities have dealt with debt by charging customers a few bucks a month even as they cut the rates a few bucks a month, Peter paying Paul. The difference is, the DWP’s debts are backed by city bonds. If a private company doesn’t pay up, it goes belly up. If the DWP doesn’t pay off its debts, it could suck the city down with it.

* To pay these debts, the DWP is cutting costs--cutting employees, mostly middle managers. There has been little love in City Hall for DWP’s middle management since a strike in 1993 by the electricians. Management took over their duties and in nine days ran up a catering bill of $800,000. That some of them got food-poisoning and others got bellyaches from pigging out wasn’t payback enough.

Ever since, politicians have figured the DWP could afford to lose a little fat around the middle. Even council member Jackie Goldberg--”Red Jackie” to her foes--has gone along with these cuts, maybe because they preserve many of the good-wage blue-collar jobs that have all but vanished from the private sector.

* DWP rates were about 30% lower than Edison’s, pre-deregulation. Its rates tend to be higher for businesses than for residences--the opposite of the big companies, which can offer sweet deals to big users. If a free-market DWP can’t do the same, businesses might find their power elsewhere, leaving it to the folks in the bungalows to pick up the DWP’s tab. They in turn would start shopping around for cheaper juice until it’s RIP, DWP.

Such are the warnings of the DWP’s general manager, S. David Freeman, and how much of it you believe depends on whether you think of him as Cassandra or Chicken Little.

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The Tower of Power can’t be a pleasant place to work these days; deregulation is making for some Mylanta moments over at City Hall too, which gets a check from the DWP for about $100 million every year, and where there is a sturdy hope that even in this dilemma, the more things change, the more they can stay the same.

But I got an idea watching the Green Bay Packers on Sunday. The Packers are a nonprofit stock corporation, the shares owned by fans. Why not do the same to the DWP, make users into citizen shareholders? For all its liabilities, DWP has a head start in name recognition. It has “infrastructure,” and even goodwill. So put Redi Kilowatt in Ray-Bans, order the T-shirts, and let the marketing begin.

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Patt Morrison’s column appears Wednesdays. Her e-mail address is patt.morrison@latimes.com.