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Amid Political Fight, LADWP Head Resigns

The nation's largest municipal utility, the Los Angeles Department of Water and Power (LADWP), a major force on the California energy landscape, is surrounded by public controversy at the start of the new year, caught between political infighting with a newly-elected mayor and an entrenched utility union boss. As a result, LADWP General Manager Ron Nichols resigned suddenly last Thursday.

The $4.6 billion city-run utility, which faces major operating challenges tied to climate change and the state's newly framed debate about the future of natural gas-fired power generation (see Daily GPI, Dec. 23, 2013), has been caught up in Mayor Eric Garcetti's campaign pledge to "reform" the massive utility at a time when state requirements for renewables and repowering aging coastal gas-fired generation plants are straining its considerable resources.

After three years on the job as the fifth GM since 2007, Nichols finally bowed to political pressure, agreeing to resign as of Jan. 31. Neither Garcetti nor LADWP spokespersons would speculate on a replacement or when a new head of the utility would be named.

In a letter of resignation to Garcetti, Nichols said his decision to leave was his own and for "personal reasons," and that he was proud of what he had accomplished in his three years, including moving in a "timely manner" to implement a state-mandated, multi-year effort to upgrade all of LADWP's coastal gas-fired generation to eliminate the use of seawater for cooling.

The focus of the elected officials' pressure on the city utility is not related to its energy programs or its rates, but instead on an unaccounted for $40 million allocated by LADWP management during the past 10 years to the International Brotherhood of Electrical Workers (IBEW) to promote training and safety programs for utility workers. At one point last year, union business manager Brian D'Arcy allegedly threatened to sue Nichols if he turned over documents to city officials related to the IBEW fund.

The political firestorm comes at a time when LADWP has multi-billion-dollar, multi-year programs to eliminate all coal-fired generation from its mix (see Daily GPI, April 25, 2013), repower its local gas-fired power plants and add more renewable energy sources to its portfolio.

In the past, utility leaders have touted gas-fired generation as a key to eliminating coal reliance and shifting to more reliance on intermittent renewables such as solar and wind power (see Daily GPI, Aug. 30, 2011).

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