Decision on Water Rate Hike Delayed : Politics: The City Council is caught in the middle of a feud between two agencies. But it may have a tougher vote later as the municipal election nears.

For the first time in recent memory, the Los Angeles City Council has balked at a water rate increase requested by the Department of Water and Power, delaying a decision on the politically touchy matter until January.

But in the meantime, the council members find themselves in the uncomfortable predicament of having to choose between the apparently intractable positions of warring city agencies. And they don’t like it.

At the root of the controversy is an unusual public squabble between the powerful DWP, which says a 6.5% revenue increase is essential, and the more obscure city administrative office, whose financial analysts insist that the DWP has cried once too often and is actually operating at a huge surplus.

Despite the pleadings of some council members who want the agencies to work things out quietly--as they always have in the past--the sides, at least for the moment, refuse to budge. One city official termed the communication between the agencies “eggshell-y.”

“I have never seen such open one-upmanship between two offices,” said Councilwoman Joan Milke Flores. “Somehow a feud developed that stopped conversation between the two.” Flores chairs the council committee where the dispute first became apparent.

For the council members, half of whom face reelection in 1991, the situation could develop into a political disaster. Without unassailable evidence that a rate hike is necessary, few council members want to vote for it. But they have been warned by DWP that if they turn down the increase now, they may find themselves voting for a double-digit rate hike next year, precariously close to election time.

“I’m not interested in voting for a double-digit rate increase,” said Councilman Richard Alatorre, who faces reelection in 1991. “It makes more sense to do it now when the amount is smaller.”

Alatorre called the controversy a “turf fight” and said, “Until now they’ve at least agreed on what the increase would be.”

The administrative office “thinks Water and Power is sitting fat,” Alatorre said, adding that he thinks DWP has performed “fairly well” over the years.

“We have to protect the water supply. . . . There’s going to be an increase,” he said. “I’m saying, ‘Why vote for a double-digit increase?’ It’s a nice political issue.”

Council members say they are not sure precisely why the issue erupted now after years of relative peace.

But officials of the administrative office say the process got off to a bad start this summer when the DWP failed to send its rate-increase request to the mayor’s office in time for the administrative office to analyze it.

Normally, the agencies come to an agreement before a proposal is sent to the Water and Power Commission. Instead, the proposal went to the commission with no input from the administrative office. Lacking any other information, the commission approved the DWP request.

But by the time the matter got to the City Council in October, Keith Comrie, the city’s chief administrative officer, had taken a hard look at the data offered by DWP and came up with a dramatically different conclusion.

“We just did our normal analysis,” Comrie said. “They finished last year with a $47-million excess cash balance. . . . We were not in a position to recommend an increase.”

The initial report from Comrie’s office predicted a $30-million surplus by the end of the current fiscal year. That figure has since been increased to nearly $50 million.

Under the DWP proposal, water rates would increase an average of 6.5% for the rest of the fiscal year. The monthly bill for the average homeowner, who uses 1,800 cubic feet of water, would increase from $21.26 to $22.51, a 5.9% jump. Other customers, such as publicly owned grounds, municipally sponsored agriculture and street and drainage facilities, would face higher increases, bringing the average to 6.5%.

If the increase had taken effect in October, it would have brought the DWP an additional $19 million in revenue.

The DWP argues that the increase is needed to offset increased operation and maintenance costs and to finance capital improvements and maintain a good bond rating in order to borrow money at the lowest possible interest rate.

The dispute, according to a DWP position paper, is a “difference of philosophy.” The DWP is looking toward long-term financial planning, while the administrative office is taking a short-term view, the report says.

The DWP position has some substantial backing in the City Council.

Councilman Marvin Braude said he is looking for a “greater comfort level” in the DWP budget to ensure against droughts and disasters.

“I don’t think they’re a bunch of incompetents,” Braude said of the DWP officials. “I don’t think they’re involved in a conspiracy to extract a greater rate from ratepayers so that they can build a bigger empire.”

Braude said he did not think Comrie’s analysis went far enough.

“There was no concern about prospective droughts, insurance and reserves,” Braude said. “All I heard was a bookkeeper’s analysis of having enough dollars to meet the planned expenditures. That isn’t enough.”

Comrie’s analysis was “highly professional and highly competent,” Braude said, “but I did not see the recognition of the tremendous importance of water in Southern California.”

Still, Braude had reservations about publicly pushing for the increase, which he did on the council floor two weeks ago.

“I stuck my neck out,” Braude said. “When I listened to that debate I thought, ‘Marvin, keep your mouth shut.’ I don’t need this. I was hoping that the thing would be resolved on its merits.”

Duane Georgeson, assistant general manager of DWP, conceded last week that the controversy might have been avoided if his department had gotten the rate increase information to Comrie’s office sooner. “There were some delays in getting the request out,” Georgeson said. “Maybe I screwed up.”

Whether the agencies will find a way to reach an agreement and take the heat off the council is unknown. Georgeson insists that there is no surplus of either $30 million or $50 million. “I don’t see anything I would characterize as a surplus,” he said.