The Los Angeles Department of Water and Power has been worried about the cost of complying with Assembly Bill 32, a 2006 law that requires California to reduce its greenhouse gas emissions by 2020.
Last month, DWP officials decided to beef up their advocacy efforts in Sacramento by bringing in the author of the global warming bill, Los Angeles Democrat and former Assembly Speaker Fabian Nunez, to advise the department's team of lobbyists.
That effort hit a roadblock last week after the five-member panel that oversees the DWP asked its executives to explain the need for a contract worth up to $2.4 million with Conservation Strategy Group, which serves as a lobbyist and bond advisor to the utility. Under the proposed contract, the conservation group would retain Nunez' firm, Mercury Public Affairs, as a subcontractor at a rate of $120,000 a year.
DWP Commission president Lee Kanon Alpert, an appointee of Mayor Antonio Villaraigosa, said he wants department officials to explain whether the consulting work could be performed for a lower price. "It seemed to be a relatively costly item," he said.
Department officials have voiced concern that AB 32 would result in a "cap and trade" program that requires utilities that rely on coal power, including the DWP, to purchase expensive pollution credits. That process could result in a "massive transfer of ratepayer money" away from the utility, said DWP spokesman Joe Ramallo.
"It could be implemented in a way that costs the ratepayers a heck of a lot of money," said Glenn Gritzner, managing director of Mercury's L.A. office.
Nunez referred questions to other Mercury staff members. The department already receives advice on legislation in Sacramento from former Los Angeles-area Assemblywoman Cindy Montanez at a cost of $180,000 annually. Since she was retained by the DWP last year, her monthly consulting fee has increased from $12,500 to $15,000.
Montanez also earns roughly $128,000 per year as a member of the state's Unemployment Insurance Appeals Board. The man who put her on that board shortly after she lost her 2006 bid for State Senate was then-speaker Nunez.
Ramallo, the DWP spokesman, said the utility's officials hope to answer Alpert's questions at the board's first meeting in September.
Jack Humphreville, a frequent critic of the DWP, said a cap-and-trade program could cost the utility hundreds of millions of dollars. If Nunez succeeded in stopping such an initiative, "I'd pay him investment banking bonuses," he said.