Comments
ON THE POLIS - Executives at the Los Angeles Department of Water and Power privately approved a major increase in upper management within the Power System, resulting in ongoing costs of tens of millions of dollars each year, with no public input or clear advantages for ratepayers.
This management change is costing Los Angeles hundreds of millions while the city faces historic budget shortfalls, and during a period when residents are struggling with high utility bills.
Further, this reckless expansion is occurring at a time when the Power System faces some $13.5 billion in historic long-term debt and over $1.3 billion in unpaid bills. Instead of fiscal restraint, LADWP leadership is worsening financial instability and risking insolvency.
The LADWP is the largest municipal electric utility in the U.S., providing electricity to about four million residents in Los Angeles. Its Power System is a vertically integrated utility, meaning it generates, transmits, and distributes its own electricity across five Western states.
Additionally, the utility is currently facing lawsuits related to the Palisades fire that could result in billions in liability and higher insurance premiums. Rather than focusing on stabilization, cost savings and public protection, Power System leadership, consisting of three managers, has opted for secrecy and self-interest, which is inappropriate for those responsible for key infrastructure and public assets.
The secret growth in leadership roles and increasing unpaid debt signal deeper issues than just weak management—they erode public trust. Consequently, oversight becomes necessary when those who pay the bills have no voice in decisions. What is occurring is not modernization or greater efficiency, it is an expansion of executive power without transparency.
For more than one hundred years, LADWP’s Power System delivered electricity efficiently with clear accountability and streamlined leadership. The recent leadership expansion, split divisions and added multiple executives, thereby reducing accountability and increasing personal gain at the public’s cost.
This runaway management scheme was implemented through deliberate and coordinated action. The Chief Executive Officer, Janisse Quinones, along with the top three Power System executives, facilitated the restructuring of a successful system by engaging in informal arrangements with selected senior executives, thereby bypassing standard processes for transparency, oversight, and public accountability. As a result, internal controls were diminished, oversight was reduced, and decisions became less subject to external review.
Until this year, the Power System typically operated with eight directors overseeing the planning, engineering, new business, construction, operations, maintenance, and safety of the electric grid. The organization exploded to sixteen directors and included nine newly created Electric Services Manager (ESM) VI Directors, and three newly created Power Engineering Manager (PEM)- A Directors. Further, all existing Directors were retained with full privileges, staff, and rewards.
It is obvious that this was not legitimate reorganization, but rather unchecked executive growth without proper oversight. Divisions were not streamlined but were separated to create new Director positions.
Ratepayers may question why a long-standing structure is being changed and new divisions with are created, as the public benefit is questionable. This fragmentation reduces accountability, encourages blame-shifting, delays projects, increases costs, and raises grid reliability risks.
Among the changes the most alarming is the creation of the three Power Engineering Manager-A Director positions. Historically, this position was reserved for a single executive-level role and was used only once in the history of the LADWP. It was rare, and it required a special labor agreement. Suddenly this unique classification multiplied without operational justification, without demonstrated need, and without public discussion. These new directors will perform the same duties historically performed by Power Engineering Manager- Bs, but at higher pay and elevated status, with absolutely no added value to ratepayers.
The sudden creation of a new classification above the PEM- Bs has caused widespread confusion across the organization. Under existing labor rules and agreements, PEM- B directors are entitled to the full suite of executive privileges, including a Utility Administrator, an Executive Secretary, and a department-issued take-home vehicle.
The costs better tell the disturbing story. Each director’s support staff has a minimum cost of $360,096.48 per year. These are not operational investments. They are executive luxuries embedded into the organization with no performance justification.
Salary for a Utility Administrator is set at $241,143.12 per year, with an Executive Secretary at $118,953.36 per year. A department-issued take-home vehicle is provided, as are office space, IT systems, pensions, healthcare, and payroll overhead.
Maintaining former PEM -B Directors' executive privileges while adding a higher Director tier creates ongoing, unnecessary costs independent of performance or necessity. Instead of enhancing leadership efficiency, the new structure increases executive overhead on an ongoing basis and contributes to continued escalation of costs funded by ratepayers at the core of this restructuring.
The published organizational chart that I reviewed shows only the top level of expansion, with thirteen ESM VI Directors—nine new—and three new PEM -A Directors. And this is just the start.
Most current lower-level Power Engineering Managers (about forty to sixty) and Electric Services Managers (about eighty to one hundred) will be promoted to mid-level management roles under the new executives.
This promotion wave will spread further to administrative, clerical, and support staff, permanently inflating salaries, pensions, and benefits across the organization. The cost does not stop at the executive level. It compounds downward without limit, without discipline, and without accountability, committing ratepayers to untold hundreds of millions, and potentially billions in future permanent obligations.
The reorganization obligates ratepayers to fixed costs: $236.4 million over 10 years, $472.8 million over 20 years, and $709.2 million over 30 years, excluding potential raises or additional expenses.
In return the public receives no announced service improvements, no identified reliability gains, and no strategic plans. And all of this was done without public hearings or the release of any cost-benefit analysis.
City Hall, facing a widening budget crisis, should be alarmed, as well as the public. LADWP’s closed door executive expansion comes as the department carries record-breaking debt and massive unpaid bills and contracts out billions of dollars in work once done internally.
The public deserves clear answers. Is the Mayor informed about this serious violation of public trust? Is councilman Adrin Nazarian, chair of the Energy and Environment Committee aware of this waste of ratepayers' money? Has oversight broken down? Why have LADWP and Power System leaders been permitted to act unchecked within a utility burdened with debt?
This is a specific case where efficient leadership matters. Ratepayers must respond to the obvious disparaging action and not the curated language of the utility. The secret changes are an inexcusable abuse of public trust and must be checked.
Management will claim that an outside consultant, Korn Ferry, supported this decision.
- Yet no report has been disclosed to the public.
- No budget analysis has been shared.
- No assumptions have been tested in the public domain.
Korn Ferry operates under a compromised sole-source relationship, having also recruited the current CEO and General Manager of the LADWP, raising serious concerns of conflict of interest.
An immediate response to the obvious reckless action of the utility should be the appointment of an independent watchdog, an inspector general, to review and audit waste, abuse, and mismanagement, and to investigate to ensure that programs are efficient and effective.
What is obvious is that LADWP deficiencies must be corrected and public trust restored.
--
(Nick Patsaouras is an electrical engineer and civic leader. A longtime public advocate, he ran for Mayor in 1993 with a focus on rebuilding L.A. through transportation after the 1992 civil unrest. Nick has served as president of the Los Angeles Department of Water and Power Board and he is the author of the book "The Making of Modern Los Angeles.")
