EDITORIAL : POWER PLAY IN L.A.; DWP STILL BEING USED AS A CASH COW, AND THAT'S NO FAVOR TO THE PUBLIC.

THE Los Angeles Department of Water and Power appears to be a bottomless pit of money.

Despite $4 billion in bad debt and facing the challenge of losing its monopoly, the DWP has found the money to pay nearly $400 million in severance to get rid of unneeded employees and now is offering to bankroll City Hall's uncontrolled spending.

This week, DWP head David Freeman said he's willing to provide tens of millions of public dollars to keep the city budget flush. Instead, he ought to be refunding the money to ratepayers or paying down the debt.

In essence, the DWP's cover-up of City Hall's sins is a hidden tax on ratepayers. It is reckless and endangers the agency's future.

It would be far better for the DWP to concentrate on preparing itself for the new, competitive market for power in California.

It's obvious that the DWP has serious problems. Its $8 billion investment in fuel sources and energy generation at the height of the oil crisis now is worth half that, a situation euphemistically known as stranded costs.

The DWP's publicly announced goals include keeping residential rates at the current level while making its power-generation system debt-free by 2003 so it can be competitive on price in an open market.

To reach the critical goal of debt reduction, Freeman's highly-touted plan has called for cutting the department's payments to the city by about $34 million annually between now and 2002.

But under the strain of trying to help Mayor Richard Riordan balance his proposed $4.1 billion budget without actually cutting the cost of city government, the DWP has come to the rescue by offering to raise its contribution to the city by $40 million - a total of $129 million this year.

The DWP's offer amounts to a bailout of City Hall's inability to come to terms with the truth: city government costs too much, does too little.

It is a bailout that postpones the hard decisions that will have to be made at City Hall in the next few years.

The strategy is a monumental gamble that the public should reject. City Hall is gambling that its coffers will fill up in coming years as the economy rebounds. It is gambling that the DWP will not teeter over the brink by putting up more money to balance the budget.

While City Hall gambles with the future of Los Angeles, it is the taxpayers and the ratepayers who will get stuck with the bill.

This is supposed to be a government - not a casino. It's time for the city's leaders to kick the spending habit and quit using the public as a cash cow.