New Report: LADWP's Ratepayer Advocate Is Costing Angelenos Nearly $7 Billion Extra And Should Be Fired

New Report: LADWP's Ratepayer Advocate Is Costing Angelenos Nearly $7 Billion Extra And Should Be Fired

SANTA MONICA, Calif., March 14, 2018 /PRNewswire-USNewswire/ -- Instead of pushing the country's largest municipal utility to be leaner, greener, and meaner, Fred Pickel, the first ratepayer advocate ever appointed to protect the interests of LADWP ratepayers, has fallen down on the job. A new report, "The Price of Pickel" by Consumer Watchdog, finds that his failure to speak up for ratepayers against unreasonable rate hikes and bad projects is costing ratepayers nearly $7 billion.

For the report, see here.

"While he was supposed to advocate for ratepayers, Pickel has endorsed or remained silent about questionable DWP decisions that cost ratepayers nearly $7 billion," Consumer Watchdog's report said. "The $6.93 billion price tag for Pickel's consent includes rate hikes of more than $1 billion despite DWP's cash reserves of $1.6 billion, hefty pay raises for DWP workers who are among the highest paid utility workers in the nation, surcharges on power bills that are not used to improve utility services, and billions to refurbish unnecessary natural gas power plants."

"It's time to hire a ratepayer advocate to start fighting for people and stop rubberstamping wasteful projects that unfairly cost Los Angeles families," said Brenna Norton, Southern California Organizer for Food & Water Watch.

The report finds:

    --  Pickel endorsed power and water rate hikes of $1.1 billion between 2016
        and 2020 without questioning whether other monies might be available to
        offset rate hikes on burdened ratepayers when the utility holds $1.6
        billion in cash reserves.


    --  Pickel endorsed a new 5-year IBEW contract in 2017 hiking salaries by
        13-22 percent for a total $280 million when DWP employees are among the
        highest-paid utility workers in the country and earn two-and-a-half
        times more on average than other workers in comparable L.A. jobs. But he
        raised no red flags on unfunded DWP worker pension and post-retirement
        medical liabilities calculated at $3.8 billion by an independent
        watchdog.


    --  Pickel has not weighed in against spending $731 million through
        2020--and a total of $2.4 billion by 2025--to refurbish vastly overbuilt
        and polluting natural gas power plants. But he criticized a successful
        solar program to pay large-scale commercial and residential developers
        for power sold back to DWP at a fraction of that tab for being too
        expensive.


    --  Pickel stayed silent on illegal transfers to city coffers of "surplus"
        power rates of about $1 billion since 2012 to be used for purposes other
        than utility services. The annual transfers amount to an illegal tax
        under 2010's Prop 26, which mandates that the public must vote on the
        use of rates for purposes other than improving utility services.


    --  In 2017, Pickel endorsed as "affordable" for ratepayers a plan to
        shoulder up to $140 million annually during drought years to fund
        Governor Jerry Brown's controversial North-South water diversion
        project, though ratepayers will not see additional water supplies from
        the scheme that subsidizes massive agricultural interests.
    --  Pickel has failed to improve customer service that ranks at the bottom
        of major Western regional utilities, starting with failing to fend off a
        massive, but avoidable, software billing scandal in 2013. The $193
        million system is costing at least $20 million to fix, while a legal
        settlement calls for DWP to pay ratepayers back $67.5 million for
        rampant overbilling.

    PRICE OF PICKEL  2012-20      AMOUNT

    Power & Water Rate Hikes                    $1.1 Billion

    Gas-Fired Power Plants                      $731 Million

    IBEW Contract                               $280 Million

    Unfunded Pension
     Liabilities                                $3.8 Billion

    "Surplus Rate" Transfers                      $1 Billion

    Billing System Fiasco Fix                    $20 Million

    TOTAL:                                     $6.93 Billion

Source: LADWP, Media Reports

The report concludes that Pickel, appointed in 2012 by Mayor Eric Garcetti to head a newly created LADWP Office of Public Accountability, must be replaced. The office must be overhauled and granted investigatory powers.

"For the Office of Public Accountability to be a success, it must put ratepayers' interests first," the report said. "The City of Los Angeles needs an advocate, not merely an analyst whose bread the private sector has buttered and who favors the utility and its insiders at every turn. The ratepayer advocate should vocally spotlight politicians' use of ratepayers as cash cows to cover for the city's fiscal mismanagement and to reward political supporters. At every opportunity, the ratepayer advocate should be questioning whether the policies and practices of the DWP serve the interests of ratepayers, and he or she should fight to change them if they do not."

CONTACT: Liza Tucker (626) 372-1964

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SOURCE Consumer Watchdog