DWP FUNDS THREATENED, PANEL TOLD.

Byline: Rick Orlov Daily News Staff Writer

This could be the last year the Department of Water and Power is able to provide substantial funds for city coffers, a key Los Angeles City Council committee was told Friday.

Faced with the prospect of deregulation and tougher competition, DWP General Manager Bill McCarley said the agency probably will not be able to afford to give the city the 5 percent of its profits that it has provided in the past.

``We do consider ourselves part of the city family and recognize our role,'' McCarley told the City Council's Ad Hoc Committee on the Budget.

The committee is reviewing Mayor Richard Riordan's proposed $4 billion spending plan.

``But with the level of debt we face, and the increasing competition that will result in lower rates, the future transfers may be in jeopardy,'' McCarley said.

He said the agency will be able to provide a $98 million transfer from the power division, and $18 million from the water division for this year.

The state Public Utilities Commission is in the process of deregulating the electric industry throughout the state, setting the stage for public and privately owned utilities to compete for business.

To prepare for that, McCarley said he is readying proposals to reduce the department's industrial and commercial rates by $25 million while maintaining residential rates.