Study finds DWP offers among lowest rates compared to its peers, scores 1st and 2nd quartile on reliability and 1st quartile on operating costs, but must make customer service improvements
LOS ANGELES – Mayor Eric Garcetti announced today the results of an initial benchmarking study at the Los Angeles Department of Water and Power (LADWP) to find efficiencies that will improve operations and save money for ratepayers. To promote transparency and ensure the Department is focused on the most pressing needs of ratepayers, Mayor Garcetti directed the Department to conduct an independent evaluation of its operations and costs, which was performed by PA Consulting and Strategy&, based on a wide range of performance metrics, including water and power reliability, operating costs, and customer service.
"One of my top 'back to basics' priorities is to ensure that the Department of Water and Power delivers affordable and dependable water, power and customer service," Mayor Garcetti said. "The results of this independent benchmarking analysis show that the DWP scores in the first and second quartiles on reliability, is in the first quartile on operating costs, and offers among the lowest rates compared with our peers. The study finds a need for customer service improvements, reinforcing our work to hire 190 customer service representatives since April 2014 to drive call hold times down to under 5 minutes. Under our new leadership at the DWP, we are changing the culture to focus more on customer service, because that’s what our customers deserve."
LADWP General Manager Marcie Edwards said the wide-ranging, 3-Phase Benchmarking study offers the baseline comparison metrics for future analysis that will continue drilling down into areas that need improvement. "I am very pleased with the initial results of this study, which will help us find and achieve real cost savings and greater efficiencies within LADWP’s operations," Edwards said.
"It is also important to note there are some costs that rank high compared to our peers, such as power distribution operations and maintenance costs——but this highlights the need for greater capital investments in replacing aging infrastructure," Edwards adds. "The performance metric for power Total O&M costs per customer also reflects LADWP’s continued low rates relative to our California peers."
Compared to major California electric utilities, LADWP’s electric rates are below those of investor owned utilities in the State. Water rates are competitive with those of other water utilities in the region.
The key findings of the initial phase of benchmarking analysis will be presented to the Board of Water and Power Commissioners today by Jeffery Peltola, Director of LADWP Corporate Performance, a position established by Edwards within her first months on the job. The initial high-level analysis is the first of three phases of the benchmarking study being led by LADWP’s Corporate Performance Division, focusing on operating and capital costs using audited financial information from fiscal year 2012-2013. Phase 2 of the benchmarking will include more in-depth analysis of staffing levels and resulting costs in the various functions and sub-functions, with additional focus on Customer Service, Power Distribution, energy losses, and uncollectible expenses. Phase 3 of the benchmarking will be business process improvement studies in specific areas that are found to be outside of industry norms. As a result of the findings from Phase 1 of the benchmarking studies, LADWP is now in the process of obtaining 3rd party experts to assist in business process improvement studies for reducing energy losses, accounts receivable balances, and related noncollectable expenses.
The study compares LADWP’s performance to other large utilities nationwide as well as within the Western region, including 36 investor owned and publicly owned electric utilities with more than 1 million customers in the U.S., and 26 private and publicly owned electric utilities with more than 100,000 customers in the West. The comparison data for water utilities is based on information provided the American Water Works Association which is comprised principally of publicly owned utilities. The results are shown as rankings within four quartiles, with first being best, for both the nationwide peer utilities and regional peer utilities.
A summary and full report are available at http://www.ladwpnews.com/go/doc/1475/2479870/