EXTRAS AT ISSUE IN DWP $1 MILLION SPENT TO PROMOTE WORKERS' FAMILY LIFE, SINGING.

Byline: Beth Barrett Staff Writer

The Department of Water and Power, proposing to hike water rates 18 percent in the next four years and impose surcharges for natural gas and renewable energy, faces increasingly intense scrutiny of how it spends ratepayers' money, down to more than $1 million a year it pays for parenting and breast-feeding classes, a fitness center and a choir for its employees.

The spending is part of more than $16 million in noncore activities the DWP paid for in fiscal 2006, according to an independent study of the utility's finances.

Spending includes $1.1 million for family care and lactation programs, $2.2 million for training and development, $150,000 for a fitness center and $28,000 for the DWP Choraliers, according to the study.

The study concludes that rate hikes would be needed even if the department axed all such extra spending, but the laundry list immediately heightened debate over DWP spending habits and rate-hike requests.

``What are they doing? Haven't they heard the city is in dire need of funds? It's kind of mind-boggling,'' said Michael N. Cohen, a Reseda Neighborhood Council board member.

``Is the rate increase to increase the perks for people who already get more than others workers (in similar classes in other city departments)?''

The $360,000 study by Barrington-Wellesley Group Inc. was designed to give neighborhood councils more detailed information about revenue after the groups successfully blocked the utility's 2005 plan for a two-year, 7 percent water-rate hike.

The renewed pressure for more revenue comes after city officials approved a controversial contract last summer with the DWP's union, granting raises of up to 28 percent over five years, and Mayor Antonio Villaraigosa's appointees to the DWP board vowed to block new rate hikes.

Citing the lucrative deal for workers, Jim Alger, president of the Northridge West Neighborhood Council and a state Assembly candidate, said the public has a right to know more about the perks and expenses.

``I think it's ridiculous. ... It's beyond the pale of ridiculous,'' said Alger, who with other neighborhood councils' representatives was scheduled to meet with DWP General Manager Ron Deaton on Thursday to discuss the study.

``Their function is to provide safe power and water to the residents of Los Angeles, not other programs on the back of taxpayers.''

Deaton on Thursday continued to defend the need for rate hikes, but said he agrees spending on noncore activities needs to be evaluated.

In some cases, Deaton said he already has made cuts. He said he is looking into the family-care program, which since 1985 has included instruction in pregnancy-related issues and breast-feeding, as well as parenting and fathering classes.

The program costs about $730,000 annually in direct services, and indirect costs for computer, fleet and other support services bump the price to more than $1 million.

Until recently, the program had been operated with one full-time and two part-time DWP employees, along with three consultants.

The contract with the fathering consultant has ended, and the fathering program is being re-evaluated to determine whether to continue it.

Last year, 125 employees took part in the pregnancy-related and breast- feeding aspects of the program, said Michele Nagin, DWP director of human resources.

``It helps employees balance work and family life; it assists them in adjusting to that life, which is very hectic when (you) work full time and raise a family,'' Nagin said.

Deaton said he already has made cuts in the choir's budget, noting the DWP used to spend a lot more on it than the current $28,000 identified in the revenue study.

He said there has been a DWP choral group for decades, but acknowledged the program needs review.

Nagin said there are 15 to 20 singers in the choir that performs at DWP holiday events and community events, as well as for groups including Los Angeles Unified School District students.

DWP Commissioner Nick Patsaouras, who has become increasingly frustrated over a litany of department spending issues - including $51 million in overtime during the last half of 2005 - called the spending bizarre.

``They are lunatics,'' Patsaouras said. ``We are in the business of producing water and electricity, not in the social-service business. Breast-feeding and the chorus - this is absurd.''

Patsaouras and other commissioners have said they won't authorize a rate hike unless a line-by-line review of next year's budget makes one unavoidable.

Patsaouras said he believes rate hikes won't be necessary once the budget is combed ``cent by cent.''

Details of the revenue study also show that in addition to a 3.9 percent water-rate hike on July 1 this year and a 3.5 percent hike July 1, 2007, additional increases of 5.3 percent, 3.0 percent and 2.1 percent in the following three years are recommended.

And in addition to a new surcharge on electricity rates to pay for increases in the cost of natural gas, the study also suggests a surcharge to recover costs associated with developing renewable energy sources.

Deaton defended the recommendations, saying smaller, incremental rate hikes are easier for residents and businesses to absorb, while also saving DWP interest on money it might otherwise have to borrow to bridge the gap.

He said any surcharge on renewable energy would depend on how quickly systems - principally wind and geothermal from hot gases around the Salton Sea - could be brought online.

He said cost savings and other efficiencies also could affect future rate increases.

DWP Commission Vice Chairman David Nahai called himself a ``bit alarmed'' that DWP management already is agreeing with the study's recommendations.

``That is not a call for management to make; that's a call for the commission to make.''

And he said DWP's spending habits, as well as whether or not to raise rates, are far bigger issues than just a lactation program, which he said might have ``a very good humanitarian reason,'' or a choir.

``The commission is not going to support a rate increase by DWP unless it's absolutely necessary after thorough, painstaking, no-stone-unturned (review of) every expenditure - all $4.5 billion of it,'' he said.

Beth Barrett, [phone]

beth.barrett(at)dailynews.com