Los Angeles, CA -- The Los Angeles City Council should reject a recommendation by Fred Pickel, Director of the Office of Public Accountability at the LADWP, that the city back tunnels altering water diversions South from the San Francisco Bay Delta, and should fire him for once again favoring utility over ratepayer interests, Consumer Watchdog said today.
“Pickel’s assertions that the Delta tunnel project is affordable for ratepayers is pure fantasy,” said Consumer Watchdog Advocate Liza Tucker.
“His backing of this unnecessary project is just the latest example of Pickel advocating for higher rates and pet projects that put the interests of utilities before those of the ratepayers for whom, as ratepayer advocate, he is supposed to advocate. Ratepayers need someone to stand up for them, not a rubber stamp for the powers-that-be at DWP. ”
Pickel’s five-year contract has ended and a search committee to replace or rename him has been formed while he works month-to-month.
On August 24, Pickel and Grant Hoag, another insider who served as a municipal utility consultant and now works in Pickel’s office, issued a report on the Delta tunnel project in which they lowballed the cost of the tunnels and how much Los Angeles area consumers would be charged to buy the imported water. The report asserted that long term city policies favoring DWP’s use of local water supplies “will minimize” the costs to consumers.
But ratepayers and taxpayers would be obligated to pay construction and debt service costs, regardless of how much of the imported water DWP buys, according to a letter sent to LA Councilmember and Chair of the Energy, Climate Change, and Environmental Justice Committee Nury Martinez by Food & Water Watch, Consumer Watchdog, Los Angeles Waterkeeper and the Southern California Watershed Alliance.
“We strongly oppose higher water rates and property taxes on Los Angeles residents to build new tunnels under the San Francisco Bay Delta at a time when the city must spend billions on fixing and upgrading its own aging water infrastructure,” the groups wrote. “Financing these tunnels, estimated to cost from $25 to $50-billion, would be a colossal waste of public dollars for a project that will not bring any new water to Los Angeles.”
For the letter, click here.
Instead, Los Angeles ratepayers would end up paying higher rates to move more Delta water south, even as they reduce their use of Delta water by 50 percent via groundwater storage, recycled water, and other projects, wrote the groups.
“It’s no wonder that Pickel, who has worked as a consultant defending energy companies, including Enron, is aligned with water contractors that stand to benefit instead of ratepayers,”
said Tucker. “Pickel has consistently sided with powerful utility interests against the powerless. He even authored a report for Enron cheerleading disastrous electricity deregulation that ultimately cost Californians $45 billion.”
Pickel has taken actions and provided cover for decisions that have cost ratepayers needless millions:
- •Pickel has backed rate hikes when a ratepayer advocate should be on the side of ratepayers. The latest raises water rates 4.7 percent a year for five years, while power rates go up 3.86 percent a year in the same period. Customers will pay about $21 more per month than they do now at the end of the five years.
- •Pickel called a new contract with 9,000 DWP employees belonging to the International Brotherhood of Electrical Workers, good for workers. The contract grants six raises in five years—totaling as much as 22.3 percent by 2021 to these workers, pushing the average salary above $100,000. As it is, the average total annual compensation for a DWP worker in 2015 was $136,100, including base salary of $99,500, retirement contributions and medical benefits.
- •On Pickel’s watch, the country’s largest municipal utility botched the roll out of a new billing software system in 2013 that mis-billed ratepayers at least $67.5 million. The DWP ignored warnings from its own quality assurance expert that the new system wasn’t ready, and implementation was a disaster. Ratepayers still have not seen a dime in refunds.
- •Pickel claimed that a settlement in a class-action lawsuit over LADWP’s billing scandal provided “reasonable restitution,” when the agreement gave the utility all the power to determine what customers are owed with no independent third-party review for accuracy and no way to intervene on behalf of ratepayers.
- •Pickel authored the ballot summary for a Los Angeles ballot measure that would have allowed the utility to sign contracts for power and water, and raise rates without approval from the City Council—spending billions of dollars without critical oversight. He also failed to disclose that he had written into the measure a large raise for himself. In 2015, the City paid Pickel $276,000--$39,000 more than the Mayor, Eric Garcetti. If the ballot measure had passed, Pickel would have automatically gotten another 5-year contract at $280,000 a year.
“The City Council should fire him immediately and replace him with a real ratepayer advocate that puts Los Angeles residents first,” said Tucker.
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