DWP board approves $2.5 billion budget.

LOS ANGELES--(BUSINESS WIRE)--June 20, 1995--The Los Angeles Board of Water and Power Commissioners Tuesday approved a $2.5 billion budget that President Dennis A. Tito said reflects the bold strategies and goals concerning major business transformation presently under way at the city's utility.

"With significant changes facing the electric industry statewide, the Department of Water and Power is preparing for intense competition expected to be brought about by deregulation," Tito said.

"The most notable strategy is to keep electric charges 10 percent below the competition's while supplying high quality and reliable products and services in both traditional and emerging energy markets."

Two cutbacks in the budget facilitate a move toward the new goals: lower labor costs due to the separation of 1,000 employees, expected to take advantage of a current financial incentive to resign or retire, and reductions totaling $50 million in capital expenditures in the power system. Overall expenditures total $123 million less than the 1994-95 fiscal year budget.

The scaled-back 1995-96 controllable budget is $1.1 billion after deducting costs for debt service, fuel for generation of energy, and purchases of both power and water from other agencies. A budgeted transfer to the city of $111 million reflects a return to the traditional 5 percent of revenues to support general city government.

While capital expenditures in the power system are reduced in the approved budget, they are up $8 million in the water system and are primarily attributable to mandated water quality projects and infrastructure improvements.

Tito said these water system expenditures are expected to increase by $20 million to $50 million in the following five years as DWP complies with surface water treatment rules at the major in-basin reservoirs. Also contributing to the escalation is the ongoing program to replace aging water trunk lines, which adds approximately $15 million per year to the capital program during the next five years.

"The DWP recognizes the need to depart significantly from past operating practices in order to increase productivity and maximize the financial return to the people and customers of the city of Los Angeles," Tito said.

CONTACT: Department of Water and Power, Los Angeles

Dorothy Jensen, 213/367-1307