DWP DIRECTOR GIVES HIS SIDE : RETIRING OFFICIAL CITES ACHIEVEMENTS.

Byline: Luz Villarreal Daily News Staff Writer

After 32 years as a key player in nearly all aspects of city government, Bill McCarley says the most challenging role of all is his last - head of the city utilities system as it moves toward competing with private firms.

That's what made his decision to retire last week so difficult, he said Wednesday during a meeting with Daily News reporters and editors.

McCarley submitted his resignation as general manager of the Department of Water and Power hours after the City Council's decision to delay a salary hike that would have made him the highest paid official in Los Angeles.

His proposed pay raise was lumped together with those for nine other general managers, a decision made by Mayor Richard Riordan and council President John Ferraro that brought to the surface McCarley's growing frustration with the government process.

``I believe I've done my best work in the last few years,'' said McCarley, who was seeking to up his $175,000 annual salary by $14,065.

``I happen to think most of my fellow general managers are not overpaid,'' he said. ``But we're not all alike. . . . There is a philosophy that `one size fits all' in government and `I'm not going to act on it one at a time.' You need to learn to distinguish.''

As general manager of the country's largest municipal utility, McCarley said he strove to modernize the DWP's internal working culture from that of an engineer-oriented workplace to a customer-friendly environment.

He reduced the staff by 20 percent or 2,000 employees by attrition and transfers, and has achieved a savings of $251 million in cost-containment measures. He has also secured long-term contracts with major customers and drafted a plan that he says will successfully guide the department into an era of deregulation.

McCarley said one of his major accomplishments has been to prepare a transition plan for the department to meet its greatest challenge - the coming era of deregulation in the electric industry and open competition between utilities.

McCarley, who said he never before asked for a raise in his years with the city, made his request public last summer when he wrote the city council. He also wrote the Board of Water and Power Commissioners saying he was weighing other options, which included job offers and retirement.

Despite his protest, McCarley's request was lumped together with that of other general managers. That, he said, was when he knew his chances for an increase were weakened.

He turned in his retirement notice just hours after the council decided to put off the matter for a 30-day study.

``I felt my position was unique,'' he said, comparing the different levels of importance given to the city's department heads.

McCarley, who had served as acting council member five times for the city and wore many hats during his career, said he was not enraged or surprised by the council's action, but hopes his departure will call attention to the need for competitive salaries.

``There really is a need to look at these things on an individual merit basis,'' he said. ``If you are really running a business, and this is a business, you need to treat it differently.''

McCarley said the council's action last week was political, but said his decision to retire was not meant to be a response to their action.

``I think I came to the conclusion that while I think I've done my best work . . . it was time to move on.'' he said.

McCarley's retirement is effective Feb. 1.

His notice comes at a time the city utility is facing major changes as the state Public Utilities Commission deregulates the industry to allow power producers to compete in providing electricity to homes and businesses.

Next month, voters will be asked to approve a ballot measure to change the city charter that will allow the DWP to sell electricity outside the city, expand the city's ability to manage its debt and investments, and increase management accountability by creating civil-service-exempt positions.

The changes are designed to allow the city-owned utility to compete in the soon-to-be-created energy marketplace.

Ultimately, McCarley said, the department will have to increase rates to residential customers in order to remain financially viable, while rates to large industrial customers will likely see a 4 percent to 5 percent reduction so that they will not be wooed away by competing utilities.

Another key to being competitive will be the reduction of the utility's $620 million annual debt on outstanding bonds.

The DWP's bond rating was downgraded Wednesday along with five other Southern California power utilities. Standard & Poor's announced DWP's $2.68 billion electric revenue bonds and refunding revenue bonds were lowered from AA minus to A plus.