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Audit: DWP had the money it refused the city

June 10, 2010 12:00:00 AM PDT
Were Department of Water and Power officials telling the truth when they said they couldn't transfer money to the Los Angeles city budget? City Controller Wendy Greuel weighed in on the controversy Thursday.The Los Angeles Department of Water and Power promised to transfer $73 million to Los Angeles to help the city balance a severe budget deficit. Then the DWP backed off. City Controller Wendy Greuel says the utility held the city hostage while it demanded a power-rate increase.

The DWP Board of Commissioners said it didn't have the money.

Greuel's office performed an audit after questions were raised about the utility's real status.

"I am not going to make judgment of whether they lied or not," said Greuel. "What I'm saying to you is that the reasons that they gave for not transferring the money are unsubstantiated, and that they could have transferred the money without putting DWP in a fiscal crisis situation."

Instead, DWP put the city in a dangerous financial situation. The city's bond rating was reduced, which could have cost taxpayers millions of dollars.

The DWP's own report shows a power revenue fund balance of more than $752 million.

"Their own numbers show that they would be able to meet their targeted financial goals even after completing the full power-revenue transfer to the city," said Greuel.

DWP Interim General Manager Austin Beutner issued a statement talking about the good things the utility is doing. Of the audit, Beutner said the utility is still reviewing it, and that there may be several errors of fact in the report.

But L.A. City Council President Eric Garcetti calls the audit hard evidence of the DWP's deceit. He wants an independent watchdog.

City Councilman Bernard Parks calls the DWP's actions "extortion." He questions the DWP's now asking for a water rate increase.

The city council has been moving tentatively to take power from the DWP over rate increases and major decisions. This audit will give them added force as they move toward that decision.

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