Soledad S. Garcia, Chair

DRAFT MINUTES of the January 5, 2008 MEETING

1. CALL to ORDER and SELF-INTRODUCTIONS of all participants (approximately 35), Daniel Villegas may be able to provide the “roster” of participants from the “sign-up” lists)

2. MINUTES OF OCTOBER 6, 2007 – was approved as presented

3. EXECUTIVE BOARD REPORT (Soledad Garcia)
a. Summary of Rate Increase Events
b. Brian D’Arcy of the IBEW Union has prepared a 10 min. DVD which may be viewed from a link on MYNEIGHBORHOODCOUNCIL.org
c. The interconnections between the 60-day postponement of the DWP Rate Increases, from 1/1/08, and the need to contact all of the 15 City Councilmembers was stressed. Meetings with most, in their City Hall Offices, have been arranged as below :

ED REYES – 01/09/2008 - Soledad Garcia, Stanley Moore, Heinrich Keifer
WENDY GREUEL – 01/09/2008 – Soledad Garcia, Todd Martin
DENNIS ZINE – 01/08/2008 – Soledad Garcia, Tommy Thomason
TONY CARDENAS – 01/08/2008 – Soledad Garcia, Candido Marez
JAN PERRY – she has promised to set a date & time
HERB WESSON – 01/09/2008 – Soledad Garcia, Humberto Camacho
GREIG SMITH – 01/09/2008 – Soledad Garcia, Joe Vitti
Hahn, Rosendahl, Alarcon, Huizar, Weiss, Garcetti & Park – t.b.a.

d. It is important for DWP/MOU OSC participants to voice their opinions at City Council Meetings and elsewhere frequently and to go to City Council in large groups to impress them.

4. A series of KEY DOCUMENTS created by DWP/MOU OSC will be posted on the OSC WEBSITE, on MYNEIGHBORHOODCOUNCIL.org and sent to other media outlets (newpapers, City Watch, etc.). These documents include, but are not (yet) limited to:
a. The OSC RECOMMENDATIONS
b. Humphreville’s Article, “DWP RATE ACTIONS – There is more than meets the eye”
c. Al Abrams’ “The Perfect Storm”
d. The QUESTIONS posed by Soledad Garcia and ANSWERS provided by DWP GM David Nahai (?with further comments from OSC members?)

5. A complete discussion of the Telephone Utility Tax, called the Communications Utility Tax which appears on the February 2008 city ballot as Proposition “S” will be done at the LANC CONGRESS which will follow this meeting, here.

6. DWP says it will need $6 billion to $7 billion in “new” Bond Funds to repair, replace and upgrade their “50-70 year old (deteriorating and outdated) infrastructure. Tommy Thomason reminded us that, until the Bond Funds are spent, they gather interest which flows to the L.A. City General Fund. There was a MOTION, MSP & passed (unanimously), that DWP Bond Fund Interest should be attached to the Bond Fund Designee (that is, to the DWP) so that it would be used for the proposed activities and not for “other” uses.

7. The OSC RECOMMENDATIONS were reviewed. They are copied here, for convenience. There was a general discussion (started by Daniel Wiseman) that the primary problems found by and concerning the DWP/MOU OSC were the DWP’s.
a. inefficiencies,
b. lack of transparency
c. lack of publicly presented plans
d. failures of timely & proper public notification …and…
e. accountability, including periodic progress reports and publicly presented final reports
Many participants commented that they recognized these concerns and our primary “work” but preferred to focus on the issues in the September 3, 2007 Letter of Resolution, at this time.

8. Jeff Bloch reminded the OSC that the DWP Industrial, Economics and Administration (IEA) Review was overdue. This report is required by the City Charter to be prepared and presented every 5 years; the last report was in 2002 but the Request for Proposals (RFP) won’t be issued until 01/10/2008. It takes 8 – 10 months and about $ 1,000,000 to produce and goes into detail on the operations of DWP. It was MSP (unanimously) that: OSC wants to see an expedited completion of an updated IEA Review and that OSC can not support any further DWP Rate Increases until we receive copies of the IEA report.

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LOS ANGELES NEIGHBORHOOD COUNCILS/LADWP
MEMORANDUM OF UNDERSTANDING OVERSIGHT COMMITTEE

LETTER OF RESOLUTION
RESPONSES FOR PROPOSED DWP RATE ACTIONS FOR 2008-2010

September 3, 2007

Notification

The Intra-City Memorandum of Understanding states that DWP will provide notification and supporting documents to the Neighborhood Councils 120 days before the proposed rate action is submitted to the Board [Section 2.10.2 (ii)].

THE OSC DOES NOT RECOMMEND ANY WATER and POWER BASE RATE INCREASES, RELIABILITY OR DEFERRED MAINTENANCE ADJUSTMENTS, SURCHARGES OR PASS THROUGH INCREASES AT THIS TIME BECAUSE IT HAS NOT BEEN GIVEN THE FULL 120 DAY NOTIFICATION AS PROVIDED IN THE MOU; FURTHER, THE OSC RECOMMENDS THAT THE NEIGHBORHOOD COUNCILS SUPPORT THAT THE 120 DAY NC REVIEW PERIOD SHOULD BEGIN UPON THE DATE OF THE FIRST HURON PRESENTATION, AUGUST 18, 2007.

Proposed Rate Increases

Attached is the Executive Board assessment of the DWP proposed rate actions, as published in City Watch.

City Transfer

During the past ten years approximately $2 Billion has been transferred from the DWP to the City’s General Fund. This year the transfer will be approximately $215 Million. DWP’s financial condition is now such that the Department’s proposed bond issuance is, in part, for the purpose of enabling the transfer. This is noted in the July 30, 2007 Huron Consulting Group report. The concept of the transfer is based upon DWP having “excess funds” from operations, not from long-term borrowing.

THE OSC RECOMMENDS THAT ANY TRANSFER TO THE CITY BE BASED UPON DWP HAVING EXCESS OPERATING FUNDS , AND THAT IN NO EVENT SHOULD DWP BONDS BE USED, DIRECTLY OR INDIRECTLY, TO ENABLE THE CITY TRANSFER.

Workforce Planning System

The Barrington-Wellesley Group, Inc., and its successor, the Huron Consulting Group, in several independent studies over a period of years, has criticized the DWP for not having a Department-wide Workforce Planning System. With labor costs approaching $1 Billion per year great savings can be achieved. A mere 10% workforce productivity increase represents $100 Million per year that could be applied to infrastructure improvements.

THE OSC RECOMMENDS THAT THE DWP IMPLEMENT A DEPARTMENT-WIDE WORKFORCE PLANNING SYSTEM AS ELABORATED UPON IN VARIOUS CURRENT AND PAST INDEPENDENT CONSULTING STUDIES.

Labor Costs

DWP employee salaries are 15% - 40% above comparable classifications in other City departments; likewise, DWP salaries are 15% - 40% over those for comparable electrical craft positions in other public and private utilities.

THE OSC OPPOSES THE DEPARTMENT’S POLICY OF PAYING WAGES SIGNICANTLY IN EXCESS OF PREVAILING MARKET RATES.

In each of the past two years, overtime has been approximately 19% of base labor costs. The goal of the Department is to reduce these costs to 10% through better management controls and the addition of staff.

THE OSC RECOMMENDS THAT THE DWP REDUCE OVERTIME LABOR COSTS TO LESS THAN 10% AS HURON CONSULTING INDICATES IS COMMON IN OTHER UTILITIES.

Rate Payers’ Advocate

The OSC envisions a hired consultant who is completely independent of DWP and the City political process, and who can provide continuity and institutional memory for the Neighborhood Councils.

THE OSC RECOMMENDS THE HIRING OF A RATE PAYERS’ ADVOCATE, AT CITY EXPENSE, TO PROVIDE ADVICE AND COUNSEL IN FURTHERANCE OF THE AIMS OF THE Intra-City Memorandum of Understanding between Certified Neighborhood Councils and Los Angeles Department of Water and Power.


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