The City Council was urged Friday to withhold payment of $600,000 in electricity bills to the Department of Water and Power until the utility pays an equivalent amount owed to a consulting firm that evaluated the need for a contentious electricity rate hike last spring.
Councilwoman Jan Perry said the Board of Water and Power Commissioners was scheduled to approve the payment to PA Consulting on Thursday, but backed away on the advice of its attorney.
"Holding off on the payment to PA (Consulting) brings into question when the DWP plans to pay and if they will pay," Perry said. "It is critical that this matter be reconciled immediately inasmuch as these services have already been provided by the contractor."
Perry introduced a motion urging the council to immediately disburse the $600,000 owed to PA Consulting -- but using money that otherwise would have gone to the DWP as payment for electricity bills.
Perry said the city should stop paying its electricity bills until the DWP pays PA Consulting and reimburses the city.
Under its original contract, PA Consulting was supposed to be paid only $250,000. When the council ordered additional studies, the contract was amended so that the cost rose by an additional $600,000.
The board authorized the payment of $250,000 earlier this year. When payment of the remaining $600,000 came up for a vote Thursday, Assistant City Attorney Joe Brajevich, lead counsel for the DWP, said the matter needed to be reviewed further.
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Brajevich questioned whether the council had the authority to nearly triple the cost of the contract with PA Consulting and direct DWP to pay the difference.
"Under the charter, this board controls the funds of DWP so council doesn't have the ability to appropriate DWP funds," Brajevich said. "There's no authorization by this board above the $250,000."
He said DWP Interim General Manager Austin Beutner asked the council's chief legislative analyst to explain the $600,000 bill and provide additional information, but has received no response.
"The city Charter requires certain prerequisites before you can expend money," Brajevich said. "Without the information requested by the general manager, we cannot make a recommendation as to whether or not that is an appropriate expenditure after the fact of DWP funds."
In a statement issued Thursday, DWP spokesman Joe Ramallo said, "The total PA Consulting bill for services will cost our customers over $1 million, and the DWP Board cannot authorize payment until the city attorney signs off on the resolution."
Perry defended the contract amendments, saying, "This payment arrangement was consistent with the initial independent third-party review arrangement between the DWP and the council inasmuch as the review was conducted to fully understand the DWP's proposal."
Aside from calling on the council to withhold payment of electricity bills to the DWP, Perry on Friday urged the council to assert jurisdiction over several contracts approved Thursday by the board.
The move would give the council authority to veto those contracts.
When the DWP approached the council for an increase in its Energy Cost Adjustment Factor surcharge late last year, the council called in PA Consulting to provide independent analysis of the proposal.
The council and DWP eventually engaged in a bitter fight over how much of an electricity rate hike to impose during an economic recession.
