CITY TOLD OF AGING SYSTEM CONSULTANTS MONTHS AGO WARNED OF DWP PROBLEMS.

Byline: BETH BARRETT Staff Writer

Los Angeles officials were warned as recently as February that the city's aging power system faced serious problems -- including potential outages like those that have left thousands of residents sweltering in the record heat wave.

And while Department of Water and Power officials said they boosted maintenance spending in the wake of the warning, they now admit costs may have been underestimated and future rate hikes could be needed.

``The recent peak demand demonstrated we hadn't appropriately modeled what customers were truly able to consume,'' said Randy Howard, a DWP power executive who noted peak demand last week hit levels that weren't expected until 2011.

``We saw that consumers have a much greater ability to draw power and load our system than we'd contemplated with all our historical models.''

The DWP had originally planned to spend $2.4 billion for power infrastructure improvements over the next five years.

But a review of power needs may determine the utility has to adopt a faster modernization schedule at an extra cost that could be in excess of $100 million, DWP Chief Administrative Officer Robert Rozanski said.

Last week, commissioners approved passing along the higher cost of natural gas and environmentally friendly energy to consumers, expected to bump power bills up about 2.5 percent, or roughly $15 annually on average.

Still, peak energy use already had been approaching last week's record levels. Last year, a heat wave sent usage soaring to a record, and usage in the recent heat wave exceeded that by about 10 percent.

In the February warning by EPRI Solutions, an engineering and business consulting company, consultants found the DWP system was older than the industry average and the utility needed to adopt a clear mission, goals, objectives and consistent priorities for maintenance.

In nine categories from transmission substation breakers to distribution substation relays, DWP's equipment was older than the industry average -- sometimes by as much as 15 years.

It also found that DWP's operations and maintenance costs were higher compared to industry averages and the utility's capital expenditures were lower.

``Susceptibility of LADWP's infrastructure to weather may be increasing,'' the study said, noting that while the system's reliability is currently favorable it has declined over the past five years.

``Like all utilities, DWP infrastructure is aging. Normally as systems age, failures increase. At some point, there is concern that failure rates can increase dramatically,'' it said.

Since 2000, customer interruptions, customer interruption durations and interruption events have been increasing and the reliability trends are declining, it said.

In response, DWP budgeted $377 million this year to improve the reliability of its power distribution system.

But even plans to boost those expenditures to $553 million annually by 2008 could fall short of the city's power needs if demands continue ahead of projections, officials said.

Commissioner David Nahai called the recent outages fueled by the heat wave a wake-up call.

``We're certainly going to re-examine all the assumptions that underlie the current budget so that what happened here will not happen again,'' he said.

The department might have to shift priorities, including on the distribution system, where the bulk of the failures occurred as transformers blew, particularly in the San Fernando Valley, he said.

``You can say this is unprecedented, that we've never had a load of this magnitude, but we have to be prepared for it,'' Nahai said.

DWP commissioners warned, however, that there is simply not enough money and resources to fix everything tomorrow.

``It would be a physical impossibility, even if there was enough money, to do it all at the same time,'' said Commissioner Nick Patsaouras.

The utility needs to consider outsourcing some work -- now constrained under terms of an agreement with union workers -- to speed modernization, he said.

Brian D'Arcy, general manager of IBEW, Local 18, which represents the union, did not return calls for comment.

Patsaouras said the current problem is the result of years of inaction by city and utility leaders.

The result, he said has been exorbitant spending on maintenance of an aging system that the EPRI report shows is declining.

The study -- at the request of Mayor Antonio Villaraigosa after serious power failures last September and October -- specifically cited concerns over the utility's aging underground infrastructure.

At the current rate of replacing 10 miles of underground cable annually, the ``change out'' rate would be 400 years for equipment that has a life expectancy of about 50 years.

Patsaouras said previous politicians and commissioners neglected the upgrades.

``Politicians figured, `Yeah, I won't be around.'''

Nahai charged DWP with being asleep at the switch and said that even with the unprecedented high temperatures, DWP was caught off guard and failed to adequately communicate the situation to customers.

Nahai said the EPRI study emphasized the choice facing the DWP: If you don't upgrade your infrastructure, more staff will be required to maintain old equipment.

Staff Writer Kerry Cavanaugh contributed to this story.

beth.barrett(at)dailynews.com

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