DWP Chief Lashes Out at Hahn’s Criticism

The head of the Los Angeles Department of Water and Power angrily accused City Atty. James K. Hahn of injecting the utility’s energy policies into his campaign for mayor Wednesday and in the process breaching attorney-client confidentiality between the city’s top lawyer and its utility chief.

“I told [Hahn] privately that he was out of touch and that I resent him injecting a successful part of city government into his political campaign, when he should be providing me with legal advice which is private,” said DWP General Manager S. David Freeman.

Freeman--who has not endorsed a mayoral candidate but who contributed $500 to the campaign of former Assembly Speaker Antonio Villaraigosa--said that Hahn “does not know what he is talking about,” when he addresses the complicated topic of energy sales on the state’s wholesale market.

“Quite frankly, if he was my private attorney,” Freeman said, “he would be fired.”

Freeman’s sharp assessment of Hahn comes with less than two weeks to go in the mayor’s race and as candidates have increasingly focused on the hot issue of how the city should take advantage of its power-rich utility. State Controller and mayoral candidate Kathleen Connell on Wednesday released an energy plan of her own, offering rebates to current customers who conserve energy and to businesses that choose to relocate to Los Angeles. And Hahn slammed former legislator and mayoral rival Villaraigosa for voting to deregulate most of the state’s private power companies.

It was Hahn’s policy position, however, that provoked an unusually sharp exchange in a mayoral campaign that sometimes has lacked fire.

Hahn took the first shot. His campaign released a press release and a pair of letters he sent to Freeman in the past week. In them, the city attorney suggested that the utility should do more to ensure that it is repaid when it sells excess power to utilities outside Los Angeles.

“I am demanding that the DWP take immediate steps to collect money owed the city and put future power sales to the state on a sound business basis that protects Los Angeles ratepayers,” Hahn said in his statement to the press.

With $193 million in electricity still owed the city from the state and the independent power grid, Hahn said the city must be assured that it gets the money back so ratepayers and taxpayers don’t get stuck with the bill. The city attorney urged in a March 23 letter that the DWP chief “require the state to provide a letter of credit, or other adequate security, to ensure that DWP ratepayers are protected.”

Mayor Richard Riordan similarly has sparred with Freeman over the issue of how best to protect city residents from the fallout from California’s energy crisis. But Freeman, a veteran public power executive, did not take Hahn’s prodding quietly.

Freeman noted pointedly in an interview that he recently helped the state buy $42 billion worth of electricity. And, he said, he got the job done without offering a single letter of credit to any energy suppliers.

“We are the most successful utility in the state right now,” Freeman said. “And the idea that he would tell me how to run my business is just outrageous.”

Freeman has been a virtual political untouchable in recent months, as the DWP has enjoyed a euphoric detachment from the power outages and increased electricity rates that have swept the rest of California.

Hahn rejected the criticism, saying he has a duty to the city’s ratepayers and taxpayers to make sure the money is repaid.

“There had been a question in my mind about the vigor with which [Freeman] was pursuing this debt,” Hahn said. “Maybe he has more faith in Sacramento politicians than I do, but I would rather have it in writing.”

Candidate Criticized

Hahn also took a swipe at Villaraigosa, saying his mayoral rival has received about $250,000 in campaign contributions from energy companies as Assembly speaker, to promote a park bond measure and in his run for mayor.

“Mr. Villaraigosa was part of creating the crisis in this state,” Hahn said. “We are owed $193 million, we have no security for this debt and we have seen the surplus of this state completely dissipated.”

Villaraigosa has defended himself from charges about deregulation by saying that he helped ensure that the DWP would be exempted from the plan. He denied that campaign contributions played any part in his deregulation vote.

But Los Angeles’ relative immunity from the current problems has not stopped mayoral candidates from offering suggestions on how to improve the city’s position on the issue.

Connell proposed two programs Wednesday that she said would allow the DWP to cut customers’ rates by as much as 50% and attract businesses to Los Angeles from throughout the energy-strapped state.

Connell said her plan to cut prices for customers who reduce energy use goes further than a similar proposal made last week by mayoral rival Xavier Becerra. Connell proposed reselling energy saved by the DWP’s customers on the short-term market and dividing the proceeds between the utility and the customer.

At current market rates, that could mean a reduction in monthly bills of 23% for those who cut energy use by 10%, Connell said. The saving could be much higher for customers who save more--presuming energy resale rates jump substantially during this summer’s anticipated crunch, the candidate said.

“It’s a win-win situation,” Connell said at a morning news conference outside DWP’s downtown headquarters. “The state has additional power for its grid during the summer months when it has potential blackouts. The DWP will have an additional sum of revenue. . . . And we, as consumers, are going to get a significant rate decrease of up to 40% or 50%.”

Bonuses Urged for Businesses

Freeman’s chief of staff, Frank Salas, called those predictions overly optimistic because they underestimate DWP’s power production costs.

In a second proposal, Connell suggested that companies fleeing energy-strapped communities elsewhere in California should get a bonus for relocating to Los Angeles. A company of more than 25 employees would get a $5,000 utility bill credit for each new median-wage job it brought to the city. It would have to agree to stay more than three years and to conserve energy, Connell said.

“What we are saying is, come to Southern California, where the lights are on, where we have excess energy,” Connell said.

The controller said she would provide the rate rebates for as many as 50,000 new jobs, at a total cost of $250 million. She said the money to pay for the program would come from the DWP’s sale of excess energy to private utilities.

DWP official Salas said that such bonuses might not be needed to attract new businesses, because the utility’s rates already will be 30% below those of Southern California Edison. And the DWP already offers another 25% discount in enterprise zones in San Pedro and parts of the San Fernando Valley and South-Central Los Angeles.