CITY MIGHT SEEK LETTER OF CREDIT.

Byline: Harrison Sheppard Staff Writer

City Council members said Wednesday they might ask the Department of Water and Power to obtain a letter of credit from the state to ensure that Los Angeles is paid for electricity sold to the state during the power crisis.

City officials told the council that the state's Department of Water Resources, which has been buying power on the state's behalf, is up-to-date in paying for its recent purchases from the DWP, totaling about $232 million since mid-January.

But, the state's Independent System Operator, which is separate from the Water Resources agency, still owes Los Angeles $193 million for its earlier power purchases, said Henry Martinez, DWP assistant general manager.

The DWP does not believe a letter of credit - which would take additional time and expense to obtain - is necessary to ensure repayment, Martinez said.

``The state has been paying their bills,'' Martinez said. The DWP sells the power at varying prices, but for the most part charges less than independent power companies and only a ``slight'' amount higher than the costs to produce the power, he said.

On Wednesday, council sent to a committee, for later consideration, a measure requesting the DWP to ask for a letter of credit.

Councilwoman Laura Chick said that while the city is trying to be a good neighbor by selling surplus power to the state, the DWP also needs to ``make sure the state puts in place a very concrete guarantee - a letter of credit or through other means'' to make sure the money is paid.