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Council approves DWP plan to seek $180 million in debt for distribution work; department forecasts $318 million extra need
Summary
LADWP officials told the council the utility now forecasts roughly $318 million more needed for distribution improvements and proposed issuing $180 million in debt for distribution projects; staff said the issuance would have a minimal long‑term rate impact and individual contracts will return to council as required.
Department of Water and Power officials told the Los Angeles City Council that changes in load growth and capital needs require increased investment in the utility’s distribution system, and the council approved a financing framework to meet that need.
Bob Rozanski, assistant chief financial officer for the Los Angeles Department of Water and Power, said an updated review of operating and capital budgets shows the department now forecasts roughly $318,000,000 more in distribution-related improvements than were envisioned in the original action plan. To fund part of that increased distribution program, Rozanski described a proposal to issue $180,000,000 of debt on the regulated distribution side of the utility.
“We’re forecasting a need to fund approximately $318,000,000 more in distribution system related improvements than was initially envisioned in the original action plan,” Rozanski said. He added that the $180,000,000 proposed issuance is on the regulated distribution side and “should have a very minor impact ultimately … in the delivered rate to our customers” when rates are ultimately unbundled after 2002.
Winifred Gancy of the Department of Water and Power emphasized distribution reliability and said the money would be used to ensure the system can handle future loads. Michael Gorefane of the City Administrative Office said planned uses include hardware for the distribution system — transformers and related infrastructure — and software improvements for customer service and billing tracking.
Council members questioned the scope and oversight of the funding. The CAO explained that individual items would be reviewed by the commission as they come up for expenditure and that council review would occur for contracts exceeding three years. Rozanski said the department had reduced generation-related debt substantially in prior years (he noted roughly $1.2 billion of defeasance of about $4 billion in generation debt) and framed this issuance as focused on the regulated distribution business.
After discussion the council voted to approve the motion related to the department’s financing approach; the roll call was recorded as 11 ayes.
The action authorizes the department to pursue the financing framework described; specific projects and contracts will be presented for review under the procedures described by the CAO and commission.
