DWP COMMITTED TO SCOOTER PROJECT.

Byline: Beth Barrett Staff Writer

Despite objections of the city's top administrator and the emergence of a local competitor, the DWP remained committed Monday to making a ``high-risk'' loan of nearly $2 million to a Hawaiian company that wants to develop electric scooters.

DWP General Manager David H. Wiggs defended the utility's decision to make the three-year unsecured loan to Personal Electric Transports, Inc., although he acknowledged that the venture carried risks. He also said the proposal was supported by the DWP's union and had been undertaken more for public policy than financial reasons.

During a hearing before the City Council's Commerce, Energy and Natural Resources Committee, Councilwoman Ruth Galanter questioned whether the DWP should make loans to startup companies and criticized the lack of financial documentation supporting the PET venture. She said she would not support the loan, and that the Department of Water and Power was backing the venture alone.

``The DWP should not be in the business of making loans insofar as they don't further the mission of the DWP, which is to provide low-cost water and power to the ratepayers of Los Angeles,'' Galanter said.

The committee is scheduled to make a recommendation to the full council Friday, which would then take it up Feb. 18.

Under the City Charter, the council can send the loan back to the DWP for reconsideration.

Wiggs said he would take any council recommendations back to the commission and that other companies, like Van Nuys-based Currie Technologies, Inc., are free to approach the utility with proposals.

PET's CEO, Tony Locricchio, has defended his proposal as unique, saying the system of interchangeable batteries and exchange stations his company wants to develop would make electrical transportation more feasible and flexible.

Locricchio said the infrastructure would take several years to complete, and that he had financial commitments from Bechtel Corp., but it was not immediately clear what they were.

City Chief Administrative Officer William T. Fujioka, in a letter to council members, recommended that the council disapprove the loan and send it back to the DWP commission.

``The proposed loan does not appear to meet DWP or state criteria,'' Fujioka wrote.

Fujioka said the potential cost to the DWP for the charging stations was not included in the proposal, nor a long-term cost-benefit analysis.

Without that information, he wrote, ``the proposed loan will appear to merely subsidize PET, at the expense of other potential competitors.''

Fujioka said the DWP would lend the company $825,000 upfront, while performance milestones for the remainder are ``subjective,'' and ``contain no objective conditions of acceptance.''

Wiggs said the DWP's union, International Brotherhood of Electrical Workers Local 18, approached the utility with the proposal.

``Our goals were, one, jobs in Los Angeles, and, secondly, if we could get some environmental help in Los Angeles or the rest of the world, wonderful,'' Wiggs said.

Galanter, who attended meetings in South Africa last August with representatives from the company, the DWP, the union and Mayor James Hahn's Office, questioned whether ratepayers were being well-served by the loan and adequately protected if the venture failed.

``It sounds like, 'Our union wants it so we want it, even though we know it's a risk,''' she said.

``It is high-risk,'' Wiggs responded, but added that DWP officials concluded it one was worth taking.

Brian D'Arcy, business manager for IBEW Local 18, said the membership has put about $30,000 into the PET venture, mainly to pay for union employees to ride and study the engineering of the scooters in last year's East Coast Tour de Sol, which they won.

``We've invested our membership's time and money in these vehicles,'' D'Arcy told the committee.

D'Arcy said the union had watched for years while the DWP spent its money on other endeavors, without creating union jobs. He said he was convinced the PET proposal would succeed.

The DWP already has spent about $181,000 on PET in a complex deal that it said helped finance tests of the PET products' viability, and also settled a brewing dispute over whether DWP employees questioning PET had made untrue or damaging statements.

Wiggs said the DWP ``didn't want to be sued,'' and that a $31,000 settlement helped resolve what Assistant City Attorney Richard Helgeson called differences between the parties.

Locricchio said he was pleased with the hearing.

``I think it was great,'' he said. ``We got a chance to provide some clarity.''