David Nahai is an environmentalist and an attorney, not an engineer, and his major previous management challenge was running a 15-employee law firm. But he is the man Los Angeles Mayor Antonio Villaraigosa tapped take on the $304,000-a-year job as general manager of the Department of Water and Power, the nation’s largest — and frequently troubled — public municipal utility. He’s also the first ever to helm the DWP without decades of experience in either the utility business or city government.
The challenges Nahai faces at the DWP are great: The state of California has mandated a greener operation, even as the utility and the region needs new infrastructure. And all this has to be accomplished as rate payer backlashes rise against proposed rate hikes — hikes that Nahai insists are needed to renew the utility.
In addition, the 8,500-person DWP workforce, one of highest paid in the nation, is proving confrontational: Brian D’Arcy, the pugnacious business manager of the International Brotherhood of Electrical Workers’ DWP Local 18, has already launched an aggressive mail campaign charging decrepit operations — a situation that D’Arcy (who did not return calls asking for comment) unsurprisingly sees as remediable by more work hours and more hiring.
Nahai admits that after nearly a decade of workforce buyouts and massive retirements, DWP does need more people — a possible future point of agreement with the IBEW chief. Nahai’s predecessor, retired DWP president Ron Deaton, reportedly refused to meet D’Arcy, but in a sign of a new conciliatory attitude, Nahai said: “I’d like to set the direction and get Brian to go along. The union is really indistinguishable from the workforce itself — and that’s our greatest single resource.”
DWP also needs to shift away from considering itself a private corporation, Nahai said. “It’s a public agency, dedicated to the city of Los Angeles and its 4 million residents.” The pioneer century-old, civic-owned utility must now, under law, turn itself into the most environmentally friendly power producer in the nation. Nahai said he’s ready and eager to meet this challenge.
“There is history to be made here,” said Nahai, a slender, precisely dressed 55-year-old who stands just under six feet. “DWP should become a beacon to innovators all over the world.”
Can he make this happen, though? And without high rate increases?
Nahai believes that in the long run, at least, he can — particularly taking into account the cash and human costs of emissions from DWP’s out-of-state coal plants that now must close or convert. As fossil fuel costs go up, the relative costs of solar and wind power decline. But green-originated electricity still costs more than natural gas. And the DWP must also upgrade transmission lines, power poles and transformers that have been deteriorating since the 1980s.
A skeptical City Council has given Nahai just 60 days to prove his proposed 9 percent hike is really needed. “I really hope we can avoid a fight on this,” Nahai said in a recent interview in his 15th-floor corner office in the DWP’s landmark John Ferraro Operations Building downtown. But many believe that a fight is inevitable.
City Council President Eric Garcetti noted that Nahai has inherited a broad DWP credibility gap: After promising no outages last year, for instance, DWP had major blackouts during a relatively cool summer.
Meanwhile, Los Angeles’ increasingly powerful Neighborhood Councils seem dead set against any rate hikes, whatsoever.
The DWP has been paying lip service to green power for decades, though most of the utility’s prior efforts have fallen short. But these days, failure is no longer an option.
The bill known as AB 32, passed in 2006, means, in Nahai’s words, that the “DWP not just should, but must” turn green. It mandates that “the state’s global warming emissions be reduced to 1990 levels by 2020.”
California is by itself the world’s 12th largest source of carbon dioxide, and the DWP is one of the state’s large CO2 emitters. To meet the 2020 deadline, it has to bring major improvements on line within two years to begin compliance.
Nahai said: “As general manager, I will have no choice but to make the utility comply.” In addition, on the water supply front, DWP must seek out new local water sources, as court decisions reduce the amount of water allowed from outside the region.
For his part, Garcetti sees this as a historic change: “The first [DWP] revolution was the creation of the utility 100 years ago; that made this city possible. Now the second great rebuilding will be to make this utility green.”
To environmentalists, this would be the ultimate goal. Veteran environmental activist, author and former water and power commissioner Dorothy Green said Nahai “is just what they needed.” She recalled that the DWP drifted under enfeebled revolving-door leadership during the mayoralty of James Hahn. This drift climaxed in the billing scandals involving the Fleischman-Hillard public relations firm that resulted in criminal convictions of two PR executives.
In 2005, Villaraigosa appointed Nahai, then president of the state Water Resource Board, to the Water and Power Commission. There, along with former longtime MTA board member Nick Patsaouras (who just replaced Nahai as Water and Power Commission president), he hammered away at what the pair increasingly saw as egregious waste and inefficiency.
Their one-two style contrasted Patsaouras’ brusque bad-cop toughness with Nahai’s lawyerly polish. The two ultimately formed an unprecedented DWP contract oversight committee that shook up its shaky contracting procedures, and the Water and Power Commission’s long decades of benign neglect were obviously over. Nahai regards his two years on the board as boot camp for his DWP general managership.
“I had never even met Nick before, but we got along wonderfully from the beginning,” he said. “It was a great education, working right there in the guts of the department for two years.” In return, Patsaouras recalled, “He was a terrific partner — it was the greatest thing to have David with me on the board.”
Patsaouras, a trained electrical engineer, said he’d be happy to counsel Nahai on any technical problems he might face as general manager.
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