DWP PANEL MAY CUT OFF EDISON.

Byline: Alexa Haussler Staff Writer

Putting it on a collision course with the City Council, the Los Angeles city commission that oversees the Department of Water and Power threatened Tuesday to stop selling energy to financially troubled utilities that owe the city $145 million.

Under pressure from Gov. Gray Davis, the DWP's Board of Commissioners delayed a decision for 48 hours to allow time for a deal to be brokered to end the state's power crisis.

Commissioners said their first obligation was to protect the ratepayers and taxpayers in Los Angeles - a position that put them at odds with at least some City Council members.

The council, prodded by Venice Councilwoman Ruth Galanter, was set today to consider a motion to ``adopt as city policy the commitment to supply surplus power to the state power grid whenever necessary'' even though the utilities are on the verge of bankruptcy and private power suppliers are demanding cash on the line for new energy purchases.

``Our first priority, as a matter of policy, needs to be to take care of our own,'' said Commissioner Rick J. Caruso. ``We can't do anything that is going to risk our own credit worthiness.''

The commission plans to hold an emergency meeting Friday, giving the governor and Legislature two days to work out a deal to solve the crisis and keep Southern California Edison and Pacific Gas & Electric from going under.

Because the DWP has excess power, the city has been able to earn windfall profits on paper during the current energy crisis affecting the private utilities and their customers by selling its surplus through the state's Independent System Operator.

That profit could evaporate if the utilities seek bankruptcy protection, leaving the city with a loss.

But Galanter said the DWP board would be wrong to stop selling its excess power because the city has a greater obligation to maintain power supplies to the rest of the state.

``The problem with taking a stance like that is that we are basically saying to the rest of the state, 'We are not part of you,' and, believe me, we want to be able to go to them when we need help,'' said Galanter, chairwoman of the City Council's Commerce, Energy and Natural Resources Committee.

``We don't exist here as an island. We are part of the state of California and we have personal and business relationships with all sorts of people whose electricity is in jeopardy.''

It was not clear whether Galanter has the support of the two-thirds majority needed under the new City Charter for the 15-member council to veto actions taken by the DWP commission, whose five members are appointed by the mayor.

For his part, Mayor Richard Riordan has left open what exactly he wants done.

``This is a challenging issue because I think the real issue is we may not get paid,'' said Deputy Mayor Kelly Martin, Riordan's chief of staff. ``Ideally, Sacramento will have worked out a solution that is comfortable.''

Riordan has said he fears that the city will not recoup its costs of providing power to the state grid, which in turn provides it to the private utilities. He sent a letter last week to Davis asking for assurances that the city will recoup its costs to provide power to the state grid.

The city has been unscathed by the state's energy crisis so far because Los Angeles leaders five years ago chose to remain a municipal utility while others opted to sell their generators and participate in a deregulated market.

Still, the current shortage has left city officials balancing on delicate lines between making public policy and business decisions, and being a good neighbor to the rest of the state and protecting local taxpayers.