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DWP heads answer for money-transfer delay

July 20, 2010 12:55:56 AM PDT
The head of the Los Angeles Department of Water and Power (DWP) was on the hot seat Tuesday as the L.A. City Council demanded answers over the utility's delay in transferring millions of dollars to city coffers.Los Angeles leaders accuse the Los Angeles Department of Water and Power of holding the money hostage until a power rate increase was approved.

The former and current heads of the DWP took the hot seats Tuesday, and the general consensus on the city council was that the biggest public utility in the country misled -- or lied -- to the city of Los Angeles.

The Dept. of Water and Power fought the city over giving it $73 million to help balance the budget and keep from laying people off.

The DWP said it didn't have the money. An audit showed it had the money.

"We thought they misled us in a direction that said, 'We couldn't send the money to the city of Los Angeles,' the annual transfer that they make," said L.A. City Controller Wendy Greuel.

"I just feel that we were held hostage. The council and the people of Los Angeles were held hostage by the Department of Water and Power," said L.A. City Councilman Dennis Zine.

"We were protecting the ratepayers of L.A., which is our job," said former head of the LADWP S. David Freeman.

Freeman was the deputy mayor and president of the DWP while the city struggled with a rate increase request and balancing a huge deficit.

The DWP's tactics worked. It got its rate increase. The city eventually got the $73 million transfer to its General Fund.

"The DWP unnecessarily plunged the city of Los Angeles farther into a fiscal crisis, which contributed to a downgrading of the city by bond rating agencies," said Greuel.

"The department overreached. The department misled the people of the city and their democratically elected representatives," said L.A. City Council President Eric Garcetti.

L.A. City Attorney Carmen Trutanich is looking into whether there was anything criminal in the DWP's attempts to withhold money and mislead the city.

The majority of the city council is looking at putting some strict controls on the DWP's powers to raise rates and transfer money.

The criticism and tone of the answers to the council's questions make it all the more likely there will be an outside agency to look at any future rate increases by the DWP. And voters will probably get to vote on that in March 2011.


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