Nominee to lead DWP gets warm reception, so far.

It's not every day that the City of Los Angeles hires a high-ranking official who most everyone in town seems to be impressed with.

Which is why 71-year-old S. David Freeman, selected this month to lead the Department of Water and Power, might want to bottle the positive notices he has received from those in and out of government.

He may have to uncork it a few months from now.

Freeman declined to be interviewed for this article, preferring to stay quiet until his confirmation by the City Council, set for next month. But industry watchers and L.A. city officials willingly weighed in with their views on him.

"He has a reputation for coming into an organization, raising hell, reducing costs and personnel and then moving on," said Robert V. Phillips, a former president of Water and Power Associates, a local advocacy group on utility issues.

The group's vice president, Mike Moore, offered a more detailed assessment.

"He has a reputation for being an independent maverick in the industry, and that's what's called for in this situation," he said. "The department in the last several years has been too slow to develop a plan (for deregulation), and now it's behind the eight ball."

The "eight ball" in DWP's case is a work force of 8,900 and debt of $8 billion, both of which will require slashing if the agency is to survive in the era of deregulated power.

The agency also must lower industrial energy rates to keep its biggest users from jumping ship, which would likely require a concurrent boost of residential rates.

Such drastic moves are expected to be met with strong resistance from inside and outside the utility. But Freeman has handled similar "eight balls" in the past - and quite adeptly.

"In his tenure at some utilities, he's been bold - someone who has brought business sense to the organizations," said Dan Aschenbach, an analyst at Moody's Investors Service. "At New York's power authority (where Freeman served as chief executive), he brought a lot of discipline to the agency with regards to cost structure."

Bringing "discipline to cost structure" often requires bluntness and a willingness to step on toes, two qualities Freeman has shown he possesses.

And that's exactly what the DWP needs, city officials say.

"I think he's going to turn the department on its head, and it's about time," said City Councilwoman Ruth Galanter.

Despite such praise, some questioned whether the city's salary offer of $200,000 is high enough to attract the best talent for the top DWP spot.

The salary is in line with other municipal utility top spots, but is only about half to one-third the amount top executives at investor-owned utilities are paid.

"With this salary we're talking about, we're not going to attract people from the private sector," said Rick Caruso, a DWP commissioner in favor of boosting agency salaries to be more in line with those of the private sector. "I would have hoped that salary wouldn't have been a limitation. But I also don't think he's a bad choice by any means."

In fact, salary was the major issue that led to the resignation of former DWP general manager Bill McCarley last March. McCarley wanted his annual salary of $175,935 raised to $195,000 but was refused the increase by the city.

Officials at Freeman's most recent public utility employer, New York Power Authority, commended him for his ability to implement reform but also noted that his blunt way with people is sometimes a source of tension.

"He's very aggressive; he doesn't suffer fools gladly," said Jan Schori, the general manager of Sacramento Municipal Utility District, a position Freeman formerly held. "He's a very challenging guy to work with. I think the employees at DWP will have an interesting and challenging time working for Dave, but it will ultimately benefit the utility."

Freeman's road to the DWP began last March, when the mayor's office began a national search for a successor to McCarley.

That search resulted in Freeman's nomination by L.A. Mayor Richard Riordan earlier this month.

Freeman is next expected to go before the city council's Commerce Energy and Natural Resources Committee on Aug. 5, with the full council to consider his appointment soon thereafter.

Industry watchers say Freeman's tenure at the DWP will likely be no longer than three years. His main task will be to turn the agency around and set it on a proper footing to compete with such investor-owned utilities as Southern California Edison Corp., Pacific Gas & Electric, and San Diego Gas & Electric.

In competing with those utilities, the DWP will need to reduce its costs and its large debt. It will need to develop a cost structure that more closely resembles investor-owned utilities, which offer lower fees to big industrial users and charge higher fees to residential users.

The DWP will also need to act more like a business by marketing its products and services and providing speedy and efficient customer service to its customers.

"His age will make him independent, but it also means he will be a shorter-term manager," said Moore of Water and Power Associates. "I would see him as a transition to someone younger and longer-term."

Councilwoman Galanter suggested his ultimate successor may come from within the DWP's ranks. "David ... spends a lot of effort grooming the people who are doing the work. At each place he's been he has usually found his successor within the company," she said.

S. David Freeman

Age: 71

Annual Salary (tentative): $200,000

Past Employers: New York Power Authority, Sacramento Municipal Utility District, Tennessee Valley Authority, Lower Colorado River Authority.

Main Tasks at DWP: Cutting costs, reducing debt and negotiating strategic alliances with other utilities, such as the alliance now under consideration with Duke/Louis Dreyfus.