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DWP to make $400 million in cuts, not seeking rate increase at this time

April 5, 2011 |  1:37 pm

Mark Arredondo of the DWP shuts off a 12" valve on a dresser leak of a reclaimed water line.

Los Angeles officials unveiled on Tuesday more than $400 million in cuts for the Department of Water and Power but vowed no service reductions and said the giant utility was not now seeking a rate increase from its customers.

“This will enable us to maintain our customer-service quality as it is today,” said Ron Nichols, general manager of the DWP, which provides water and power service to more than 4 million city residents.

The DWP, like all city agencies and departments, is facing severe budget pressures, including rising fuel expenses, the costs of legal mandates to reduce greenhouse-gas emissions and other pollution, and the price tag of replacing aging infrastructure and updating technology.

The utility’s budget is separate, however, from the general revenue fund, which pays for police, fire and other basic services. The general fund faces an estimated $350-million shortfall in the coming fiscal year.

The DWP cuts in labor and operations -- including a hiring freeze, reductions in nonessential travel and training and the elimination of take-home vehicles for executives -- will be focused on administrative jobs and not result in slashed services for the utility's customers, officials said. Nor do the cuts represent a rollback of energy efficiency and other goals, said Nichols and Mayor Antonio Villaraigosa, who appeared at a City Hall news conference. The reductions are to be implemented over a three-year period.

“We’re keeping the level of people we need in the customer-service side of things,” said Nichols, who in January took the helm of the agency and its $4-billion-a-year budget. The DWP is the nation’s largest municipally owned utility. “We’re making certain we’re keeping our people in the field.”

The utility is not seeking a rate increase at this point, Nichols said. But when asked if he would rule out a rate increase this year, Nichols responded: “No, I can’t rule that out.”

Among the items eliminated, officials said, is the popular Holiday Light Festival, the annual light show in Griffith Park between Thanksgiving and New Year’s. The DWP has funded the festival for 14 of the last 15 years. Also to be cut are two smaller holiday light festivals, one in Leimert Park and the other on the 1st  Street Bridge. The DWP will save $1 million a year eliminating the holiday light shows, said Joseph Ramallo, a DWP spokesman.


L.A. in line for $258.8 million in surplus DWP funds

DWP slow to spend federal stimulus money, L.A. controller finds

New DWP manager announces that No. 2 executive will step down immediately

-- Patrick J. McDonnell at Los Angeles City Hall

Photo: A DWP worker shuts off a valve to control a leak along the Los Angeles River in Burbank in May 2010. Credit: Gary Friedman / Los Angeles Times