TPR Interview: DWP President Mike Gage on Water and Growth

Could you share with us the Depart­ment of Water and Power’s economic prognosis for this city and this basin over the next decade?

We anticipate a diverse, strong economy driven by small and me­dium-sized businesses, in the City of L.A. as well as the region. On the power side, we’ve typically grown at the rate of 1,000 megawatts per de­cade and our most recent projections still anticipated that level of growth. The difference today is that we intend to offset that 1,000 megawatts through demand-side management, energy efficiency, and alternative energy sources, to meet our commitment to reduce carbon dioxide emissions by 20% by 2010.

On the water side, a year ago we anticipated that we could offset our water needs for the next decade through water conservation and water reclamation. We’re no longer sure of that because of the enormous capi­tal cuts the water system has suffered. That means we will have to purchase more MWD water, and lhe Metro­politan Water District estimates their rates will double or triple in this de­cade.

How will your water policies affect new development? 

Water reclamation has little im­pact on developers, although if you can think of how to reuse water within a large development, it will dramati­cally reduce your sewage bills, which are often larger than water bills. But in achieving water conservation, DWP has recommended a water offset charge to the City Council, in a pro­posal that is now in the CLA’s office and may come up this fall. 

How would this offset program and fee actually work?

For every 100 new houses, devel­opers would have to offset the equiva­lent of water for 50 new houses or put money into the kitty to allow the city to do the same. For example, we’d calculate the potential for water diminution of a low-flush toilet. De­velopers could install the toilets themselves or pay a fee based on the cost of installation. 

If developers themselves made the improvements, we’d encourage them to work with public entities such as the school district and affordable housing agencies to replace some of their toilets. Or, they could put money into a pot for us to make the improve­ments. And the proposed program exempts affordable housing and other development the city wishes to en­courage. 

Last year, members of the Council were looking at more stringent pro­posals for tying new development to the availability of water hookups. Given the improved drought situa­tion, do you expect these proposals to be taken seriously in the near future? 

I think those dramatic proposals of absolute moratoriums or cutting development by X percent weren’t looked at terribly seriously at the time, and I thought ours was. But these proposals won’t go away in the future because we’re still in the drought. Despite the public perception, we just got a report that we’re 36% below normal in the High Sierra snowpack this year, on top of the five years before that. The MWD will spend $6.5 billion dollars improving the system and allowing us to deliver more water to the rest of the region. But that $6.5 billion doesn’t create one more drop of water. So this issue is not going to go away. 

In the long run, we have to reduce the per capita consumption of water. We can’t assume we can use 150 gallons per day per person. We may have to ratchet that down to 100 gal­lons. That’s going to take replacing 7 gallon toilets with 1.6 gallon toilets, and it may take replacing urinals in public buildings with waterless urinals as in Germany or Switzerland. It will also take more efficient use of water in the commercial and indus­trial sectors. 

The MWD, on whose board you sit, recently approved its first-ever tax on land. Could you give us an over­view of that program? 

MWD has experienced a fluctua­tion of revenues in the last year. In looking for a stable source of income, they’ve looked to a parcel tax, which the City of L.A. opposed (the City offered a service charge in place of the parcel tax). What resulted was a negotiated settlement where the par­cel charge was reduced from $10 per parcel to $5 and the other $5 was made up with a service availability charge on member water districts. 

There’s a two-year sunset provi­sion on the parcel tax, and in the meantime we’re seeking to get con­nection fees in place. New develop­ment must help pay for the cost of water because the marginal cost of providing water gets more expensive every day. 

Does the DWP’s critical role in in­frastructure make it the final arbiter of growth in the region?

The DWP’s mission is to meet the needs of the city. We see ourselves as providing a service, and we see the City Council and Mayor as the devel­opers of policy, who determine what the service ought to be. I’m person­ally opposed to using infrastructure to guide growth because I’ve never seen it work. In the ‘70s, we used sewer capacity to limit growth and all we did was create a sewage crisis and put sludge in the Bay. 

Is the Department active in shaping the kind of growth we have in the region? Are you discussing xeriscape landscaping or new development ordinances? Does the DWP work closely with the Planning Depart­ment or Building and Safety? 

We do believe in conservation. For example, if you replace a conven­tional toilet with a low-flow toilet, we’ll give you $100. We have a technical assistance program for business, to help our customers conserve water. 

On the planning and development side, I think the answer is no. That’s not to say there aren’t some who think we should: I just don’t think we have. Right now, we’re working on energy efficiency programs, targeting both Rebuild L.A. and low-income areas where we’re providing energy assis­tance. Nonetheless, we are not in­volved in the planning of growth. 

The Department in recent years stirred up a major planning contro­versy with its proposal to cover reser­voirs around the city. With an environmentalist board majority, has the DWP’s policy on this issue changed? 

We have employed a mediation process involving all of the key play­ers that opposed covering the reser­voirs. I think there’s now more of a recognition that the water will have to be filtered as it leaves the reservoir rather than using concrete covering. There aren’t many view sheds left in L.A., and there is some public value to a pleasant view shed. Historically, we haven’t been as concerned about aesthetics as other cities have.

We still haven’t thrashed out whether the entire city should pay for the improved view sheds of a select group of people. But I think there’s general agreement that some addi­tional cost will be incurred by this department because there’s some pub­lic value at stake. 

Is the DWP interested in any pending legislation that may affect the climate for growth in this region? 

Some of the most important pieces of legislation deal with water transfers. Right now, it’s extraordinarily diffi­cult to transfer water from agricultural water districts to urban areas. Those districts are the closest thing to the old Communist Party system to be found in the State of California: they con­sider themselves bastions of conserva­tism yet they haven’t figured out what a market is in a hundred years. 

This legislation (Bill Bradley, GeorgeMiller or John Seymour’s bills at the federal level, and Katz, Costa and Cortese’s bill at the state level) would facilitate transfers of water and allow urban areas to pay more for the water and bring it to urban areas. We’re very supportive of facilitating the transfer of water.

Is it fair to say the DWP is bullish on Los Angeles’ social and eco­nomic outlook? 

Yes. I think that we’d be fools not to recognize what we’re in the midst of: we have a serious economic recession verging on a depression. But on the whole we feel very good about this city’s potential, we’re very optimistic about where it can go, and we want to play a major role.