The head of the Los Angeles Department of Water and Power is stepping down Friday. In an earlier post, Ron Nichols reflected on the controversy surrounding how $40 million in ratepayer money was spent.
Later in that same conversation, Nichols went on to say his biggest achievements were environmental ones.
With a history that includes lawsuits, land grabs and labor scandals, the Department of Water and Power doesn’t typically draw praise. But Ron Nichols wouldn’t mind if that changed.
“I do believe DWP overall deserves some credit for making some incredible strides in what we’re doing on sustaining this city environmentally,” Nichols says.
In his 2009 inaugural address, Mayor Antonio Villaraigosa caused a stir when he announced the goal of weaning Los Angeles off coal-fired energy by 2020. No California utility relies on that dirtiest of fossil fuels as much as DWP has. Nichols was tasked with assembling a team to figure out how to make that happen – without just switching over to that other cheap fossil fuel, natural gas.
“We could have done that. That wasn’t the way to go.”
Reaching Villaraigosa’s goal required an institutional shift at DWP. The utility has long been famous for wanting to own and operate its own sources of power. Over the last several years, DWP has entered partnerships and long-term contracts to buy renewable energy from someone else. Now the city’s on track to ditch coal-fired energy by 2025.
“We’ve not only contracted for but actually delivered 20% renewable energy. We’re on a clean path to get to 33% renewable,” Nichols says. “We’ve done more on local solar. We’ve doubled down on our energy efficiency. We’ve doubled our energy efficiency, and if you’re reducing carbon, that’s the thing you do first. And we’ve done all that maintaining electric rates that are among the lowest in the state.”
But Nichols admits those rates won’t stay low. California’s climate change rules are one big reason why.
“There will be rate increases going forward. There will be for a number of years,” Nichols said. “The customers, the stakeholders, the council and our board need to know what’s standing behind that. They also need to know that we’re being as cost effective as we can.”
And part of that cost efficiency has been in labor, Nichols said.
The only achievement he listed in his resignation letter that wasn’t environmental is DWP’s work with city officials like Miguel Santana, the chief administrative officer, on the utility’s latest union contract. New hires will get smaller pension benefits, and many workers will go three years without raises.
“There has been a haircut in labor costs for LADWP," Nichols said. “There was just a very major compromise labor agreement that saved just short of half a billion dollars over the next four years and about another $4 billion net present value over the next 30 years.”
L.A . City Council president Herb Wesson says Nichols has earned his respect.
Nichols said in LA, where the council can exercise a lot of power, explaining the DWP’s choices has been an important task.
“To try to anticipate that council members are going to be able to dig into those issue in detail, is just a really heavy lift and a big ask of them. And I’ve spent a lot of time, trying to get what little time you can get with council members and their staff, to shed more light on what the solutions are, what the circumstances are and more importantly, what the tradeoffs are,” Nichols said. “They have myriad issues they have to deal with.”
Environmentalists in the Eastern Sierra who oppose a large DWP solar project moving forward north of Lone Pine remain unimpressed by Nichols’ tenure.
But he earned some praise from local environmentalists for his non-flashy, nuts-and-bolts approach to the DWP’s problems. As he gets ready to leave the utility, Nichols says DWP’s biggest unresolved challenge is tapping more local sources of water and finding ways to pay for them, particularly if they’ve been contaminated.
“People generally don’t think about water beyond, ‘I turn on the tap, and it’s there.’ They’re always concerned, rightfully so, am I paying the right amount for that water? But they’re not thinking of the challenges of getting that water to them 24/7,” Nichols said. “I think we actually have done a lot better job of that in the last three years, of making people aware of that complexity.”
In a sense, Nichols is like the resources his utility delivers. In the past, if water and power were flowing, the hands behind the switches didn’t matter. But Nichols says a changing energy market, and a drier California mean utility managers must do more to explain to ratepayers where their water and power comes from.
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“It’s not just Los Angeles where people don’t know what’s behind that switch,” Nichols says. “And it’s not an overnight change.”
Nichols plans to work right through his last day. Sometime after 6 o'clock, after one last trip to Sacramento to meet with officials, he’ll return to DWP’s Hope Street headquarters, turn in his phone and his badge, and flip off the light in his office one last time.