LADWP retirees bring in bigger pensions than city, county workers, audit says

As reported by the L.A. Daily News:

Workers who retire from the Los Angeles Department of Water and Power enjoy a higher monthly pension, on average, than retired public employees from the city and county, according to an audit released this week by City Controller Ron Galperin.

LADWP retirees received an average monthly pension payment of $5,212 in the fiscal year ending July 1, 2015, the audit said.

That figure is higher than the $4,023 average monthly payment for other city retirees and the $3,881 pension amount per month for retired county workers, amounts that are used as comparisons in the audit performed by contractor, Aon Hewitt Investment Consulting.

But while the LADWP’s pension benefits on average surpass those of other local government agencies, they are still slightly lower than the pension payments received by police and firefighters. The average monthly pension is just shy of the $5,309 monthly payments for Los Angeles police and fire department employees, according to the audit. …

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Ratepayers Lose in Game of DWP Monopoly

DWPIt’s easy to say the Los Angeles Department of Water and Power is bloated and inefficient, but it’s even easier to prove it.

All you have to do is read the “Benchmarking Analysis” produced in February by LADWP’s Corporate Performance Division with the help of two outside consultants, PA Consulting Group Inc. and PwC’s Strategy&.

The report on the first phase of the multiyear, three-part “benchmarking effort” recommended that LADWP conduct an “enterprise-wide examination of labor and benefit costs, including the administrative and general function.” The “ultimate goal,” the experts concluded, “will be to identify specific areas/process with the highest potential for improvement and/or cost savings.”

Translation: They are wasting so much money that it will be 2017 before they even figure out where to begin to address it. However, LADWP doesn’t intend to let this leisurely beard-tugging exercise delay its five-year rate increase, which could be approved in just a couple of weeks.

It’s an outrage.

The benchmarking study reveals that LADWP spends more money on payroll, measured by total payroll dollars per customer, than more than 75 percent of comparable utilities. LADWP also spends more on pension and health benefits than other utilities.

The report notes that wages in the L.A. metro area are 13 to 33 percent higher than wages paid by “peer utilities.” But a report in March from the California Policy Center found that “the average DWP employee receives compensation that is 155 percent greater than their non-DWP counterpart.”

The DWP also lagged its competitors in its debt ratio, having borrowed more money than comparable utilities. Is this a problem? Not for investors who buy the bonds and collect the interest payments. In August, Moody’s gave a positive rating to $300 million in LADWP power system revenue bonds, with an admiring nod to “LADWP’s strong flexibility as an unregulated monopoly providing an essential service to the city of Los Angeles.”

Translation: LADWP can always pay the bondholders by forcing its customers to pay more for water and electricity.

Bond ratings analysts at Moody’s, Fitch and Standard & Poor’s all lamented the slow and politically charged process for raising base rates, but they were cheered up by the presence of “cost adjustment mechanisms” that enable LADWP to quietly add extra charges to everybody’s bills. “About 50 percent of costs can be automatically passed through to customers without City Council action,” Moody’s explained to investors.

And that number could go higher. Fitch analysts said the new rate hike proposal “includes revenue stability features that would enhance the consistency of cost recovery.”

Translation: The “adjustment mechanisms” are about to be adjusted upward.

You can’t blame investors for wanting the money that was promised to them, but it’s fair to ask why LADWP has borrowed so much money – more than $23 billion over the last 30 years, according to data from the California state treasurer – while comparable utilities seem to be able to pay their bills more easily.

The problem could be that every year, LADWP transfers 8 percent of the power system’s gross revenue for the previous year to the L.A. city treasury. The city grabbed $247 million in 2013, $253 million in 2014, and $266 million in 2015. Standard & Poor’s projects that by 2020, the city transfer will be more than $320 million.

The annual transfer equals or exceeds the $270 million in annual revenue that would be raised by the five-year rate increase. Without the city transfer, the rate increase would not be needed.

Although L.A.’s city charter allows the transfer of surplus revenue, there is no surplus revenue, not while LADWP is raising rates and planning to borrow billions more. Is the city transfer even legal? Maybe not. Three lawsuits challenging it were recently consolidated into one case and set for trial.

Mayor Eric Garcetti and the City Council have the power to approve or block the DWP’s rate hikes, upcoming salary raises and transfers of “surplus” funds. At the very least, the city transfer should be halted until the legal challenge is resolved, and LADWP’s rates and salaries should be frozen until the “enterprise-wide examination of labor and benefit costs” is completed and made public.

It’s a disgrace that a publicly owned utility that is also an unregulated monopoly operates like a political slush fund. Feel free to call the mayor at 213-978-0600 and your City Council representative at 213-473-3231, and ask them what they plan to do about it.


Susan Shelley is a columnist for the Los Angeles Daily News. Reach her at or follow her on Twitter, @Susan_Shelley.

Solar Energy Gives Investors a Shock

Ivanpah solar energySolar energy is full of surprises.

The operators of the Ivanpah Solar Electric Generating System were recently surprised by state air quality regulators, who informed them that the $2.2 billion solar energy plant is a carbon polluter.

Solar energy doesn’t emit carbon dioxide into the atmosphere. That’s the whole point of California’s increasingly mandatory and wildly expensive push to replace fossil fuels with solar and wind energy.

But as it turns out, the sun does not shine at night. This is what happens when governors don’t do any research before they sign legislation.

The Ivanpah plant is located on five square miles of the Mojave Desert near the Nevada border. You can see it from Interstate 15 — it’s that alien-looking landscape of shiny circles surrounding three skeletal towers topped with black-and-white capsules.

The shiny circles are hundreds of thousands of mirrors that aim sunlight at boilers mounted on the towers. The sun boils the water, and the steam rotates turbines, which generate electricity.

But only during the day.

At night, and on cloudy days, Ivanpah burns natural gas to keep the water hot.

And that attracted the attention of the California Air Resources Board, which gave Ivanpah’s operators until Nov. 4 to comply with the state’s cap-and-trade program by cutting the plant’s carbon emissions 10 percent or purchasing pollution credits from somebody who has cut carbon emissions someplace else.

Ivanpah, a “clean energy” plant built with $1.6 billion in federal loan guarantees and $600 million in federal tax credits, now has to pay for being a “polluter” in California.

Solar panelsAnd that’s not the only surprise in the solar business. Some people who invested tens of thousands of dollars in rooftop solar panels have been disappointed by the revenue from net metering — the money they’re supposed to receive for selling surplus electricity back to the grid.

West Hills residents Barbara and Bob Schoenburg are beyond annoyed that the Los Angeles Department of Water and Power is holding more than $1,000 of their money. The Schoenburgs’ solar panel array, for which they paid about $20,000 after rebates and credits, consistently generates more electricity than they use. But LADWP will not write them a check. Instead, the credit on their bill just grows, year after year. It can’t even be used to pay the rest of the DWP bill for water, taxes or sewer and sanitation charges.

Here’s the surprise: California’s net-metering law, which requires utilities to pay their customers for surplus electricity generated by solar panels, applies to all utilities in the state with one exception — the Los Angeles Department of Water and Power.

Yet some customers of Southern California Edison are equally aggravated. Hidden Hills resident Dr. Daniel Gross invested more than $20,000 in solar panels and was surprised when the installer told him the electricity generated by them could not be used to power his own home.

The electricity from the rooftop panels flows to the grid, and the home is powered with electricity drawn from the grid, as before. Once a year, the utility settles up. “The rate they pay you is markedly less than the rate you pay them,” Gross said, adding that he’d like to install batteries and be off the grid altogether.

“I thought I was doing something good for the country, for the community, for the economy,” he said, “and instead I’m a peripheral provider of electricity that Southern California Edison sells to make money.”

Southern California Edison is concerned about losing customers like Gross. In its most recent quarterly filing with the Securities and Exchange Commission, SCE disclosed that future revenues could be negatively affected by “possible customer bypass or departure” if new technologies, government subsidies or higher rates made self-generation “economically viable.”

LADWP made a similar disclosure in a recent statement to bond buyers. Self-generation was listed as one of the factors that may “materially affect the operating and financial position of the department.”

SCE and other investor-owned utilities are now asking the California Public Utilities Commission to lower the rate they have to pay their power-generating customers for surplus electricity. And they say the CPUC must approve new fees on solar customers to prevent the existing system from collapsing due to declining revenue.

Gross has no patience for their argument. “That’s the same concern the wagon wheel makers had,” he said.

Maybe that will be the final surprise. If California lawmakers and regulators continue to pretend there’s no longer any need for fossil fuels, wagons could make a comeback.

DWP Demands Could Uproot Two Plant Nurseries

PlantWhy is the Los Angeles Department of Water and Power forcing two San Fernando Valley nurseries out of business?

Green House Nurseries in Arleta and Live Art Plantscapes in Northridge are small, owner-operated businesses. They have employees. They pay taxes. They comply with all applicable regulations. And like many nurseries in Southern California, they’re located on utility-owned land that is directly underneath power transmission lines.

These wholesale nurseries supply indoor plants to hotels, retail stores, office buildings and commercial designers. Some of the lush, tropical plants that decorate the Wynn and Encore hotels in Las Vegas were grown in Arleta. Some of the spectacular red bromeliads that will be in the Bellagio’s Chinese New Year display are growing right now in Northridge.

Green House Nurseries was a new business venture when owners Mark Whitten and Paul Needleman began renting land from LADWP in 1998. Whitten, a geologist, and Needleman, a horticulturist, built two climate-controlled greenhouse structures with the full approval of LADWP. In 2003, they received approval to build a third greenhouse on the property. Small-business loans helped to cover the cost of construction, which ran into the hundreds of thousands of dollars.

“These are engineered structures that will withstand 100-mph winds and earthquakes,” Whitten said, pointing to a thick steel support post sunk deep into the ground. “They were built to LADWP’s specifications.”

But about a year ago, LADWP’s real estate department sent Needleman and Whitten a letter stating that the 15-foot-high greenhouses would have to be dismantled and replaced with smaller structures no taller than 10 feet.

That would put Green House Nurseries out of business. The heating and cooling equipment in their greenhouses can’t be cut up and segmented into smaller modules.

Live Art Plantscapes received a similar letter and faces the same grim situation. Owner Larry Tabeling has built a business that depends on the climate-controlled greenhouses approved by LADWP 11 years ago.

Too bad, says LADWP.

But why?

They won’t say.

There’s no question that the city-owned utility has the legal right to control the use of the land under its transmission lines and to withdraw permission for any structures or activities. But neighbors are concerned about the kind of structures and activities that could return to the sites if the nurseries are kicked out.

The Arleta Neighborhood Council pleaded with City Councilwoman Nury Martinez in September to help keep Green House Nurseries under the power lines. “We do not want to see them go,” wrote council president John Hernandez. “We fear that if they do go, the property will revert to an empty lot attracting illegal dumping, drug traffic, homeless, etc.”

Like Live Art Plantscapes, Green House Nurseries is located in a residential neighborhood, surrounded by quiet streets of single-family homes. “They are the perfect neighbor,” Hernandez wrote, “This is the kind of business that any city would be happy to have, and we do not want to lose them.”

Loyce Lacson, who heads an Arleta neighborhood watch group, wrote to Martinez asking for her help to get Green House Nurseries “grandfathered” for another five-year extension of their license. “Previous to Green House locating to Arleta, DWP was not maintaining the property,” Lacson wrote. And crime was a problem. A cluster of candles and flowers still marks the site of a shooting before the nursery moved in.

The Arleta Neighborhood Council made inquiries to see if other utilities were implementing new height limits for greenhouses. They were not. “We found that nurseries under power lines in other parts of Los Angeles and Orange Counties with similar structures have not been asked to make any modifications to their structures,” John Hernandez wrote in his letter to Martinez.

Given the cost of land, these businesses are unlikely to reopen in Los Angeles if forced out of their current locations. The city will lose the tax revenue, the employees will lose their jobs, and the communities will lose a good neighbor.

But why? If the greenhouses met all applicable LADWP and building code requirements at the time they were approved, what has changed?

Before two small businesses in the San Fernando Valley are destroyed, someone at LADWP should answer that question.


California Residents Face Bigger Energy Bills For Using Less

Southern California residents who sacrificed by using less water are now suffering higher prices because the Los Angeles Department of Water and Power has a $111 million shortfall in its latest revenue projections.

“We have no other way of recovering the revenue to maintain the system for our customers,” Neil Guglielmo, director of budget, rates and financial planning for the DWP, said Wednesday. The Board of Water and Power Commissioners approved a pass-through charge that will be applied to consumers beginning in 2016, according to The Los Angeles Times.

Los Angeles is not alone, however, as agencies throughout California have faced revenue shortfalls from the drought. Some regions in California have instituted a “drought surcharge” while others will simply double their service surcharge, reports The Los Angeles Times.

In L.A.’s case, the DWP’s long-term plan includes instituting an incremental five year rate hike that would increase the average user’s utility bill by roughly 3.4 percent each year. Residents are not thrilled with the action however, according to The Los Angeles Times, with one twitter user saying, “LADWP hikes rates because they aren’t making enough revenue. We’re saving water like we’re supposed to, U mad? I am.”

The paradox of less water use meaning higher costs is just one symptom of the drought that continues to plague California. Resident are hopeful however that the strongest El Nino in decades could bring much needed rain relief, reports Bloomberg. Alan Haynes, service coordination hydrologist at the California Nevada River Forecast Center in Sacramento noted however that, “If the wettest year were to occur, we still wouldn’t erase the deficit we have seen in the last four years.”

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Originally published by the Daily Caller News Foundation