LADWP’s New Ratepayer Advocate — Meet Tim O’Connor

Tim, what motivated you to take on the role of Executive Director and Ratepayer Advocate for the Office of Public Accountability (OPA) at LADWP?

Over the next 10 years, Los Angeles is going to see remarkable change—probably greater than anything we’ve experienced before. If you look at the past decade, the pace of change was significant, but it’s only going to accelerate. With that change comes big choices and even bigger impacts. We’ll see a massive push for electrification, the deployment of a new generation of renewables, and huge investments in infrastructure — all of which come with real costs.

Los Angeles has the opportunity to show the world how to meet climate and water goals successfully. If we get it right, we can be a model for others. But if we get it wrong, we risk becoming a cautionary tale about why the energy transition, done in a way that ensures a stable climate, a stable future, and economic sustainability, wasn’t achievable.

I want to be part of the solution. The Ratepayer Advocate plays a critical role in that process: bringing data, insight, and an independent voice to help decision-makers think long-term and make informed choices. The goal is to help create that positive story rather than the cautionary one.

Tim, what do you, by way of experience, bring to the ratepayer advocate role at LADWP? 

This role in Los Angeles is a unique opportunity to pull from and build upon the experiences I’ve had throughout my career. I started as an enforcement officer, focusing on accountability in energy infrastructure as it relates to air pollution.

At the Environmental Defense Fund, I was an advocate before the public utilities commission, rate case dockets, and other rulemakings while I worked on climate change and energy issues in Sacramento and at the policymaking level.

At Deloitte, I worked in sustainability strategy with some of the nation’s premier companies that were evaluating the decisions they needed to make to deal with incoming policy, but also the changing environment within which they sit—whether it be consumer issues, technology issues, or external threat issues. Over the last three years, I’ve had the pleasure of working with some of the marquee utilities in North America on advanced metering infrastructure and asset planning and prioritization, while thinking about strategies related to energy transition. I worked with companies approaching this head-on, and from the outside, pushing in to help effectuate change that would drive companies to make these decisions.

Here in Los Angeles, you’re working to advise the utility and City Council on both the transition issues that are affecting it and how the policies we come up with will create additional drivers and challenges. This role is an opportunity to pull it all together.

You stand on the shoulders of your sole predecessor, Fred Pickel. Might you share about the evolution of this role and any intentions to further evolve such public responsibility?

The ratepayer advocate role in the City of Los Angeles evolved over the last 10 years and was originally born out of a need for transparency, coming from things like billing crises and other issues of public trust. Expert analysis and evaluation of the utility was the core focus, but it didn’t really have the external outreach, public communication, and engagement that’s needed in today’s world.

As we’re looking at major decisions—whether it be rate cases or big environmental impact reports that are going to lead to decisions around huge investments going forward—we need to be communicating to the public and policymakers in City Council and the state government about what’s coming, and what some of the potential impacts may be if we don’t do this right.

In short, I think this advocacy office needs to lean into the advocacy aspect harder, more strategically, and with an idea for building a bigger tent of folks who see the importance of doing this right.

Could you help explain to out-of-state ratepayers why water and power in LA are so expensive?

There are a lot of different reasons. Number one is, when you compare it to places like Oregon and Washington that have ample amounts of hydropower and access to low-carbon, essentially free sources of energy—aside from the infrastructure bill—our rates can look high. When you compare it to entities like Edison and PG&E, or even some of our neighboring cities, Glendale and Burbank, the rates can be seen as lower. We’re currently doing a benchmarking assessment and finding that DWP, even with some of the recent rate increases, doesn’t have rates that are more than what you would expect out of some of its sister utilities or neighboring utilities. That doesn’t mean we should just continue to grow our rates without observation and control. We need to build new ways for customers to manage their load, control their costs, and take actions to reduce consumption.

Why is it so high? We are looking at a series of investments in the water system to move toward local water sources and increase resiliency. That comes with costs—nearly $10 billion in new water treatment facilities—on top of the significant operations and maintenance budget to manage over 7,600 miles of water pipes. When you look at the transmission and distribution system for electricity, Los Angeles manages one of the largest energy transmission systems in the country. We’re the largest municipal utility in the nation. We’re importing energy from several different states. We manage a massive customer base—almost 4 million accounts—and with that comes a lot of operational and maintenance budgets.

We are also managing load growth to meet the state’s requirements. For example, SB 100. You can see almost $80 billion in new investments that we need to make to take in those renewables, upgrade our grid, modernize our infrastructure, and manage customer needs. That’s not including other potential increased costs needed to move forward, so we need to be managing the programs we have so customers can afford them going forward.

Tim, you spent much of your professional career pushing the regulatory envelope to be more climate protective. Now you are tasked with protecting LADWP ratepayers from the immediate costs of pushing that same envelope. Is this a new challenge for you? 

I think, in many ways, we are pushing the envelope—just in a different way. Los Angeles has faced real challenges in building out affordability programs because of policy choices and legal challenges we have here. For example, rules that prohibit subsidies for low-income ratepayers, and the fact that the utility hasn’t undertaken a true cost-of-service and rate-design effort since 2015. As a result, we’ve been sitting on base rates that have been nearly stationary for the last 10 years while the whole world has changed around us.

We also haven’t been engaging in things like public-private partnerships in the water system at all, which is a missed opportunity given the challenges we face. I think my job is to push the envelope in these areas—where we can create new abilities, create flexible load, create cost containment, and achieve these ambitious and audacious policies in a way that hasn’t been thought of or possible before.

There is an aspect of defending policies that have been established. But I don’t think this is an issue of, “Damn the torpedoes, let’s go with changing the system at all costs.” Because what I know is that the least durable policy is the one that blows up in its face, right? It’s the one that doesn’t work for people because it’s not economically sustainable. I think we need to be thinking about sustainability in multiple aspects here, and that’s where this office can help push the envelope. 

Last year, Fred Pickel told the LA Times that LADWP may need to delay its 2035 clean energy goals, saying, “We shouldn’t blindly charge ahead for 2035, come hell or high water.” Do you have the same position on cost management? 

I think that’s in general alignment with what I’m talking about—ensuring that we have the ability for ratepayers and the general public to manage these costs. It isn’t just utility costs people are facing. It’s the escalating cost of everything—whether it be education, groceries, purchasing a new vehicle, or just basic living expenses. When you layer on increases in energy and water prices on top of that, you do have an affordability challenge in this environment.

However, I think that forecasting right now that we’re going to need to pull back on some of these policies is not the way we solve this issue. The way we solve it is by leaning in—pressing the city to develop new mechanisms to control those costs—instead of predicting, from the outset, that we’ll need to get rid of the policy. You can create a self-fulfilling prophecy when you start to talk like that. I don’t think it’s helpful to view the 2035 policy solely through the lens of forecasted prices for 2045. You can take those long-range projections and say, “Those may happen, therefore we need to stop,” but the only constant in the energy system is change.

For example, look at where solar-plus-storage was 10 years ago—back when iPhones still just had the home button. Today, just a couple of iPhone models later, we’re looking at a 90% cost reduction in battery technology, and facilities like the Eland solar-plus-storage project are generating electricity at prices lower than some natural gas plants. We couldn’t have predicted that. In Europe right now, we’re seeing massive deployments of energy storage to capture negative energy pricing and for large investors to engage in energy arbitrage—bringing private capital into the market.

I think Fred Pickel is right that we can’t do this at all costs—but that means we need to lean in on controlling those costs, rather than leaning out on the policy.

The Palisades and Altadena were devastated by the January fires that swept Los Angeles; clearly, new yet costly investments are to be made by LADWP in infrastructure. Address how you foresee this needed investment impacting ratepayers in the coming years.

A lot has been said about making the tragedy an opportunity for advancement. An opportunity for clean energy and flexibility. But first, we have to start with this: it was a tragedy. It was a catastrophe, and it will come with significant costs. Based on statements from bond rating agencies and outside investors, those costs can have a material impact on the utility, especially if there’s litigation.

To rebuild in those devastated areas while also continuing to build in the non-devastated areas, there’s a limit to what the department can do at a given time. We’re not just talking about walking and chewing gum anymore; we’re talking about walking, chewing gum, roller skating, and playing with a yo-yo at the same time. Doing all of that is challenging—not just operationally, but economically.

As you pointed out, there’s also an opportunity here. We can use this as a chance to accelerate undergrounding. We’re doing undergrounding in the Palisades, but also in other parts of the city—using those learnings to advance infrastructure elsewhere. However, the bigger issue is that we need a holistic energy strategy. LA100 is the underpinnings of strategy, with modeling and technology forecasts, but it was done pre-fires and itself isnt a full strategy. I think we need to engage in another round of holistic energy system analysis and cost forecasting that integrates wildfire impacts.

We also haven’t seen the forecasted LA100 prices account for the impact of tariffs or the potential reduction in funding from the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. We need to incorporate those factors before we can fully understand the true opportunities and implications for the city.

As the LADWPs appointed Ratepayer Advocate, you don’t have any statutory role in actually setting rates. How difficult then… is saying “No” to proposed increases in investment in resiliency or adaptation when there isn’t a majority on the board and/or the City Council to support your advocacy?

The former Ratepayer Advocate built such strong credibility and a knowledge base around the role of an independent voice—and its impact on the city—that this office now occupies a space in between many of the decision-makers. That’s different from, for example, the state ratepayer advocate office. Here, the role works within as well as from the outside. It’s a non-traditional advocate role, truly integrated, helping those on the outside push in, but also evaluating and advising from within.

The second part is that this role can convene people together. If the utility tries to convene voices around affordability, that will have a different connotation than if the Ratepayer Advocate brings people together to talk about affordability. Similarly, if the Mayor’s Office or City Council does it, the outcome will be shaped by their imprimatur. Our office can bring people from the outside in, and from the inside out.

There are so many elements of work that have gone into making this a unique role and opportunity. I don’t want to undersell what this office can do. Yes, we don’t make decisions. We advise and provide recommendations—but that carries with it a level of stature and capability to impact decisions…perhaps more so than some other ratepayer advocate offices.

Tim, you recently launched the LA Ratepayer Advocate’s website, along with other suggestions focused on office management and engagement strategy. Elaborate on your intent here and what you initiated.

We intend to make information, which can be pretty impenetrable when you’re talking about how utilities forecast risk or quantify the impact of these decisions on people, understandable and digestible for policymakers, for educated members of the public, and even for those just looking for information about how utility decisions will impact them today and in the future. Our goal is to deploy a robust community engagement strategy, and the website is one part of that. We’re planning multimedia videos, stakeholder engagement workshops, convenings, and a very active blog to talk about the issues facing ratepayers.

Right now, if people want information about what’s happening at the utility, they have to go to the utility’s site. The information there is diverse, spread out, and often outdated. We want to provide a single pane of glass where people can see the issues the utility is facing, how it’s managing them, and where to go for more details.

Looking ahead, we’re going to need to revamp affordability programs, reevaluate things like net energy metering, and look at the water-energy nexus and infrastructure investments. We want to make sure we’re on the front end of communicating those impacts to ratepayers, and this website is just the first step.

Normally, after a disaster like the Northridge earthquake in 1994, the Federal administration, FEMA, and other state funding and resources would be offered to the City and regional governments. Presently, it appears LA is unlikely to be so fortunate, as FEMA seems to be increasingly less robust and capable of offering much support. What then are the likely consequences for LADWP ratepayers of essentially going it alone? 

You can see a direct line between the diminishment of federal funds for disaster recovery and potential ratepayer impacts. You can also see things like the rescission of grants and previously committed funds for hydrogen infrastructure, transmission lines—costs that are then shifted onto ratepayers. So it’s not just about disaster recovery; it’s also about rebuilding the system with vision and foresight.

It’s easy to feel like we’re here by ourselves, playing in our own sandbox by ourselves. But I think there’s also an opportunity to do more by working with other utilities in the state, and with private capital that, in many ways, is sitting on the sidelines. We need to find new mechanisms and solutions to bring that capital into the market. The federal government isn’t just taking resources away; it’s also adding pressure to the environment we operate in, which makes it harder to move forward with an evocative, forward-thinking vision. As Ratepayer Advocate, my job is to help make sure the city keeps its foot on the pedal, while also thinking differently about how to keep it there, so those costs don’t just get passed to the people who can least afford it.

It’s easy to say that—it’s harder to do. If we raise things like property taxes or sales taxes, that burden ultimately lands on ratepayers. Somebody has to pay. The question is whether we can approach it differently, engaging the private sector more. The Eland facility is one example: nearly $2 billion of investment the ratepayers didn’t have to fund upfront, while getting energy from the project at bargain-basement prices. The developer gets a guaranteed long-term offtake, which made the investment possible. We should think about that more broadly, because those are the kinds of solutions that can help solve the problem.

Tim. Last question—Given the expertise and experience of your wife and yourself, what are your family's dining room conversations with your children like?

Right now, a lot of those conversations are us scratching our heads, saying, “Can you believe what just happened?” Or, “Other places are taking a leadership role—it would be great if the U.S. were to do that.” 

And yes, while big-ticket items are facing future generations, we are also still trying to be in the here and now - trying to get our kids to eat their vegetables. At the same time, we’re in this game for the long haul – to help make durable solutions that will create a path not just for our kids, but for all future generations.

Tim, excellent interview. We look forward to reconnecting with you in the months to come.