DWP Plant Bidding to Reopen

Acting after failed talks with a local labor union chief, the Los Angeles Department of Water and Power announced Friday it will reopen bidding for a huge new power plant in Sun Valley, delaying construction for at least six months.

Brian D’Arcy, head of the union representing 5,500 electrical workers, plumbers and other city employees, challenged the award of the $238-million contract to a nonunion builder. The plant was scheduled to be completed in May 2003.

After two fruitless months of negotiations with D’Arcy, DWP General Manager David H. Wiggs Jr. said Friday he has decided to bid the contract again.

“You are not happy about any delay, but we hope we can avoid these problems in the future,” Wiggs said. The delay will not affect the DWP’s ability to provide electricity to Los Angeles residents but could reduce surplus power available for sale to the state.

The decision was immediately controversial, with labor leaders hailing the action and others criticizing the delay in bringing online a new source of critically needed power.

The new plant, to replace the outdated Valley Generating Station in Sun Valley, would produce 500 megawatts of electricity, enough for 450,000 city homes, at a savings of $50 million annually. Pollution would be significantly reduced from current levels at the 1954-vintage plant.

The previous winning bidder, the Industrial Company, insisted that it hires strictly on merit.

Wiggs said he believes the DWP followed proper procedures in selecting the company for the job, but the union disagreed. The union has the contractual right to demand arbitration to settle the dispute.

“The time of going through arbitration with them and getting a decision is more than offset by the time to rebid this and do it the way they feel is appropriate,” Wiggs said. “Either way it will be a delay of six months.”

D’Arcy, business manager for the International Brotherhood of Electrical Workers, Local 18, said the city is responsible for any delays because it picked the Industrial Company to build the plant despite complaints that the company has failed to hire union workers on another $50-million DWP contract to build generators in the Harbor area.

Under the IBEW contract with the city, the union has the right to approve any contract that involves work that could be done by its members. There were two bidders, officials said, and the Industrial Company was the only one to meet the DWP requirements.

D’Arcy said the company began work in February on a separate contract to build a new DWP generator in the Harbor area. He said he learned that the firm was not hiring union workers and notified the DWP of his concerns shortly before its board was scheduled to consider the company’s bid May 1. The DWP then put off a decision and started negotiations with the union.

“They should have thought about that when they started this,” D’Arcy said. “They have been playing around for two months. They could have put it back out and turned the first spade of dirt by now.”

The delay concerned others, including Jon Coupal, president of the Howard Jarvis Taxpayers Assn., who said the demand by unions for contractors to sign project-labor agreements “are killing taxpayers.”

“This is an example of how these project-labor agreements have shown themselves to be detrimental to the public good,” Coupal said.

Councilman Hal Bernson said he supports union rights, but “we need energy. I’d be very unhappy if the only reason was it was a nonunion contractor.”

DWP officials said the delay may push completion of the plant past the start of peak demand in summer of 2003. Wiggs said the DWP, which was exempt from deregulation, will not face a shortage of power for Los Angeles customers. Even without the new plant, the DWP has been able to sell up to 500 megawatts of power on occasion to the state to cover a shortage in the rest of California.

However, the delay in the Sun Valley project will likely result in high construction costs, a longer wait for savings from the more fuel-efficient plant and the loss of up to $15 million a month in surplus power sales.

A minority of the $500 million in contracts the DWP awards every year go to nonunion firms, an agency spokesman said.