MARKETERS PRESS FOR DWP CONTRACT.

Byline: Rick Orlov Daily News Staff Writer

Duke Energy, the firm given preliminary approval earlier this year to help the Department of Water of Power prepare for competition Jan. 1 is protesting delays in getting a final contract.

In a letter sent to the utility this week and obtained Thursday, the firm said it is concerned with the amount of time it is taking for the city to sign a final contract with the firm and the lack of communication.

Doug Pitts, Duke Energy managing director for the Los Angeles area, said he is concerned the contract might be delayed until well after the final appointment of David Freeman as DWP general manager.

``We understand David Freeman would like an opportunity to review everything the department is doing or planning to do,'' Pitts said. ``Our concern is that this could be several months away.''

Beginning Jan. 1, the energy industry in California will be opened to all electric companies, much as the telephone industry was deregulated, allowing customers to buy their energy from any firm.

The DWP, the nation's largest municipal utility, had wanted an alliance with Duke, which markets energy, to help it prepare for deregulation as well as work to keep its largest industrial customers.

Pitts' letter to Freeman said Duke Energy is prepared to begin work with the city by bringing its workers to train DWP employees and prepare for the deregulation of the electric industry.

With any further delay, Pitts wrote ``our great concern (is) that the city may be forfeiting an opportunity to make significant progress toward the transition.''

Tom McGuinness, director of business development for the DWP, said he understands Duke's concerns but that the utility wants Freeman's insights on the proposal.

``We're basically doing nothing until Mr. Freeman says send it on,'' McGuinness said.

Under the preliminary proposal with Duke, it would provide customer-service workers to attract new business for the utility as well as market excess energy it produces around the United States.

Duke Energy officials say they expect their marketing expertise to enable the city agency to grab at least $6 million in additional business annually.

However, the preliminary proposal originally was with Duke and the Louis-Dreyfuss firm, which has since been merged with another company.

``We reviewed the changes and are satisfied they will still be able to do all they promised,'' McGuinness said.

Councilwoman Ruth Galanter, who is chairwoman of a special committee overseeing the DWP, downplayed any time problems on the deal.

``I'm most concerned we do the right thing and if that takes time to figure it out, I would rather spend the time,'' Galanter said. ``My sense is (Duke) is frustrated that they haven't been able to pin Freeman down.''

Galanter said she wants to see Freeman confirmed to his new post as soon as possible and is hoping to schedule a meeting on his confirmation in the next two weeks.

But Pitts said the concern of Duke is that the alliance contract could be delayed several months.

``In the fast-moving pace of deregulation and rapidly evolving energy markets, it is impossible to predict the impact of such a delay on the potential of the alliance,'' Pitts said. ``In the worst case, the department and the city may permanently lose a valuable opportunity. It could take over a year for the department to initiate and complete an alliance with another party.''