As Workers Protest, DWP Chief Urges Cuts

Confronted by hundreds of angry Department of Water and Power employees, a special Los Angeles City Council committee heard impassioned pleas Wednesday to consider all alternatives before slashing 2,000 jobs and paying off $4 billion in debt to prepare the municipal utility for the coming competitive market in electric power.

And the five council members appeared to be listening closely, hoping to find a way to avoid approving the largest layoffs in the city government’s history.

On a four-block march from the DWP’s landmark headquarters, the workers shouted their opposition to plans by new general manager S. David Freeman to swiftly and painfully restructure the utility by eliminating one out of every five jobs.

“Hey, hey, ho, ho, Freeman’s plan has got to go,” they chanted on the steps of City Hall before packing the council chambers with a standing-room-only crowd. As the DWP chief was presenting his plan, he was repeatedly booed.

A parade of speakers, mostly from the Engineers and Architects Assn., which represents the workers to be laid off, told the committee that the cuts were disproportionately targeting their members instead of being applied across the board to the department’s work force.

Councilman Richard Alatorre said he and his council colleagues are going to have to examine all the options, including a buyout or severance package to encourage employees to leave voluntarily before any action is taken on layoffs.

“I’m not into laying people off. I’m not into going bankrupt either,” Alatorre said. “We have to pay down the debt. We have to be competitive in five years.”

Councilwoman Ruth Galanter, who heads the special committee on deregulation of the DWP, told Freeman the question is not whether cuts have to be made, but: “It’s how deep? How much? Are we cutting the right positions?”

Galanter said the committee will meet by mid-December and recommend that the full council make a final decision on the plan before Christmas. “There is nothing fun about layoffs,” she said.

But Galanter added that the DWP really is financially desperate. She spoke of a recent phone call from a Wall Street rating agency asking if the council “has the nerve” to approve the layoffs.

“We are being watched not only by the competition, but by the people who rate our bonds and sell our bonds and who allow us to continue playing with the big boys,” she said.

Councilwoman Jackie Goldberg captured the prevailing sentiment when she said she would vote for layoffs only if there are no other alternatives.

Freeman said he agreed that layoffs are the last resort and he readily acknowledged that his plan, which was unanimously approved Tuesday by the city’s Board of Water and Power Commissioners, was not set in concrete. “We may have to rewrite the script,” he said.

“Listen, this is not fun for me,” the veteran utility executive said. “I’ve never had to lay off people other than construction workers” when decisions were made to stop building power plants at the Tennessee Valley Authority, which he formerly led. “This is not the way I like to manage a company.”

But Freeman made it clear that he believes there is no room for delay. “Every month that goes by just makes it more difficult to get the money to pay down the debt.”

Looking each of the council members in the eye, Freeman said that if the DWP doesn’t cut its costs and buy down billions in debt, “the city will not have a choice, but to go out of the [electric] business.”

More to the point, he said the nation’s largest municipal utility must cut in half the cost of generating electric power by 2003 if it is to survive in a competitive marketplace.

While the state’s private utilities, including Southern California Edison, must begin offering their customers a choice of power suppliers beginning New Year’s Day, municipal utilities can phase in competition over a longer period of time.

Freeman told the council members that the decision about when to open the nation’s second-largest city to competition rests in their hands, but DWP cannot remain a monopoly forever.

“The city of Los Angeles cannot assume it will be an oasis of monopoly in a sea of competition,” Freeman said. “The policy of the state is open competition.”

The DWP chief said he would not try to hold on to DWP’s biggest customers by playing “gotcha and I’m going to keep you by brute force.”

Council President John Ferraro praised Freeman for having the courage to present a tough plan and face the opposition after only a couple of months on the job. And he, like his colleagues, praised the DWP workers for their commitment to the utility and their willingness to offer alternatives to layoffs.

In response to pointed questions, Freeman explained that the debt associated with the massive coal-fired Intermountain Power Project in Delta, Utah, ballooned to $3.3 billion because no interest or principal was paid while the plant was under construction. Freeman said the plant, which supplies a third of the electricity used in Los Angeles, operates fairly efficiently and can generate power at a competitive price if the debt is paid off.

However, he said of DWP’s long-term commitment to buy millions of tons of coal for the plant: “We have a coal contract that is out of this world that we need to break or do something with.”