DWP MANAGER GETS GOOD GRADE FOR VISION; NOW HE MUST CONVINCE CITY'S POLITICAL LEADERS TO THINK IN LONGER TERMS.

Byline: RICHARD NEMEC Local View

AFTER a successful first year on the job, the Department of Water and Power's homespun lawyer-engineer general manager, S. David Freeman, has no plans to ride off into the sunset. He promised supporters and critics alike that he will be sticking around as he maneuvered recently for a passing grade on his first year's performance from his collection of bosses at City Hall.

It is easy to see that Freeman thinks he deserves an A grade from the City Council's five-member energy ad hoc committee chaired by Ruth Galanter, who is quoted in laudatory terms in a DWP press release summarizing the department's one-year status report. However, reality would dictate that the DWP leader, although one of the nation's most accomplished public sector power executives, deserves something less than an A grade for his efforts so far.

I would give him a B- on his results because of two factors: (1) many of the accomplishments realized over the past 12 months were at least partially tied to initiatives begun before he came on the job, and (2) many major initiatives, aside from slashing costs, still languish in various parts of the city's cumbersome three-level governance process, including Freeman's proposal to drastically streamline that process as part of the ongoing City Charter reform movement.

For vision and thinking big, I would give Freeman a solid A, maybe even an A+. Critics can say whatever they want about this 72-year-old Chattanooga, Tenn., native, but they can never accuse him of thinking small. Nevertheless, Freeman may still underestimate the power of local partisan politics to undercut his socioeconomic vision, despite the fact that he has cavorted with U.S. presidents and state governors and elected officials from Washington, D.C., to Sacramento during his more than four decades' work in the government-run electricity industry.

Freeman's view of the future is definitely warm and fuzzy. Debt-free. Environmentally clean. A government-run utility providing below-market prices for power and ``beating the pants off'' competitors from the private sector.

You can't help rooting for a guy who wears a cowboy hat and boots with his double-breasted conservative business suits and describes the DWP's current performance report as coming at a time when ``we're not just talkin', we're doin'.'' This is big talk from the man who characterized the $2 billion-plus municipal utility as being on the brink of bankruptcy a year ago when he assumed command. In his words, DWP has come from ``Death Row to now being in a horse race,'' and it is looking at creating a ``cleaner, greener future'' for the city.

By the year 2003, when the transition to more competitive electricity is completed under a state law that doesn't yet include the public sector utilities, Freeman envisions the city leaders having the enviable choice of selling at a handsome profit a reliable, debt-free power generation system, located mostly out-of-state in Nevada, Utah and Arizona, or keeping it and making extra money selling wholesale power in a deregulated market. He also sees a third option using a combination of the two strategies to create the lowest electric rates in the state and attract many more businesses to the city.

There are a bunch of ``what if'' questions that still need to be answered before the city ever gets this lucky or this wealthy. Even Freeman has to admit that.

A major wrinkle in reaching this happy set of choices is the fact that much of Freeman's vision depends on the city's keeping rates frozen at current levels (meaning no decreases) for the next four or five years and denying Los Angeles residents choice of who produces their power, which the majority of Californians already have through the state's three large investor-owned utilities, including neighboring Southern California Edison Co. The electricity restructuring nationally - not just in California - theoretically should keep driving down wholesale prices for power.

But to get to Freeman's end-of-the-rainbow happiness in 2003, city political leaders and their constituents are going to have to be willing to delay tasting the benefits of lower prices in the open market. And while they are paying more so they can save more later, Freeman wants to change the DWP to a more semiautonomous, state-chartered public utility, less tethered to City Hall.

What Freeman, who is the ultimate optimistic visionary, must do is get the city's political leaders, including the charter reform commissions, to think long term, so they, in turn, can convince voters to do the same. Accomplishing that may be beyond even Freeman's considerable salesmanship. But I'm convinced he'll give it a good try if our political leaders allow him to keep DWP's top job.