Los Angeles Mayor Antonio Villaraigosa Wednesday appointed his economic czar to temporarily head the city’s Department of Water and Power. Austin Beutner steps into a firestorm of controversy surrounding the powerful agency. The recent debate over a power rate increase and accusations that agency managers lied to elected officials have raised the ire of many in and out of City Hall.
A few months ago, at the urging of business leaders, the mayor hired Austin Beutner as his first deputy mayor and economic czar.
The wealthy venture capitalist who works for a dollar a year adds to his duties interim general manager of the city’s troubled Department of Water and Power.
“I’ve tasked Austin to immediately perform a top to bottom review of the department," Mayor Antonio Villaraigosa said. The mayor wants Beutner to "lead a new era of accountable management and transparency, and to immediately implement business and ratepayer-friendly reforms.”
Beutner said he was on board for up to six months, but immediately sought to lower the expectations the mayor had just raised.
“DWP was founded in 1902," he said. "So this culture has been 108 years in the making. It’s not going to be 108 hours or 108 days before people are going to see a marked difference."
The nation’s largest public utility has long sought to buck the influence of City Hall – even though the mayor appoints its general manager and board of commissioners.
“We have seen for decades it has been a very cloistered agency," Councilman Grieg Smith said. "There’s no real fiscal oversight by the City Council.”
Under the city charter, the DWP is a proprietary department that operates more or less independently of the City Council.
Smith said it was set up that way decades ago by powerful L.A. families that wanted to make sure they had the water to develop places like the San Fernando Valley.
“They ran City Hall," he said. "So they wrote the charter to benefit them. And they wrote it in a way that says you have not control over us."
Rarely has that attitude been more evident than last month when DWP managers withheld a much needed transfer of cash they’d promised to make to the city’s general fund. They said it wasn’t possible because the City Council blocked a power rate increase.
“We have been lied to directly as policy makers and overseers on behalf of the people," City Council President Eric Garcetti said.
Asked if she trusted the DWP, Councilwoman Jan Perry declared “No! Of course not! Absolutely not! Not at all!"
At City Council, business leaders and neighborhood activists have complained about the DWP. Anker Patel of Chatsworth said the agency budget is impossible to understand.
“On page 117... operations and management account for $52 million. Operations and management. They have no other description of it. It’s an absolute joke.”
David Freeman’s served twice as head of the DWP, retiring a second time last week. He defended the agency, and the rate increase it asked the council to approve to cover rising energy costs – including renewable energy.
“Our rates today are 30 percent below what you’d pay in the county," he argued. "Now, we’re asking for some increases, but so are they.”
Freeman said too many people fail to appreciate the importance of the DWP to L.A. history.
“There would not be a Los Angeles but for Mr. Mulholland, DWP and bringing the water down from the Owens Valley.”
The legendary William Mulholland, the DWP’s first chief a century ago, used coercion and even violence to accomplish his goals.
City Councilman Tom LaBonge compares the DWP to another city agency whose strong arm tactics also shaped Los Angeles.
“The DWP will probably go through a period like the LAPD did where people didn’t trust the LAPD," he said. "They had to do a lot of work to try to improve their image and improve their processes.”
LaBonge and the rest of the City Council will talk about no fewer than half a dozen proposals for DWP reform in the coming weeks.
The mayor, for his part, will search for a permanent general manager. He’s had five DWP general managers during the past three-and-a-half years.