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L.A. controller launches audit of utility fund at center of city budget crisis

April 7, 2010 | 12:51 pm
Los Angeles Controller Wendy Greuel on Wednesday announced that her office would audit the Department of Water and Power fund that is now at the center of L.A.’s budget crisis and a growing political conflict between Mayor Antonio Villaraigosa and the City Council.

Utility executives this week took steps to block a promised $73.5 million payment in "surplus" power revenue -– money that comes from ratepayer electric bills -- to the city general fund.
The action was in response to the council's rejection of an electricity rate hike that both the DWP and Villaraigosa said was necessary to cover the fluctuating cost of coal and the mayor’s renewable energy program. Without the increase, DWP executives said the utility cannot afford to make the payment and doing so would endanger the utility’s fiscal health.

Greuel said her “quick-and-dirty" audit would include a review of the utility's books to determine if, in fact, the money can be transferred to the city’s general fund.

Earlier this week, Greuel warned that the city could run out of cash within weeks if the DWP withheld the $73.5 million.
“There’s been a lot of questions and, clearly, the DWP understands there has been a credibility gap with the department," Greuel said. "People have said they have the money... There’s been a lot of political back-and-forth from all sides, and I want to go in and do an independent review."

Greuel said she expects the audit to be completed within a month. Her office also is doing a more in-depth examination of the utility’s renewable energy program, though a completion date on that has not been announced.

Greuel declined to take sides in the political fracas, and would not say whether she supports a rate hike or forcing the DWP to make the $73.5 million payment.

“I deal with the facts," she said.

Villaraigosa suggested Wednesday that he would ask his appointees on the DWP board to transfer at least some money to the struggling general fund.

Appearing on KPCC-FM’s “Airtalk,” Villaraigosa said he would probably not request the full $73.5 million promised by the DWP earlier this year. Instead, the request would likely be in the range of $20 million, he said.

-- Phil Willon at Los Angeles City Hall