How Controller wants LAWDP to improve its wildfire mitigation

Los Angeles Controller Ron Galperin wants the Los Angeles Department of Water and Power to do more to protect communities, ratepayers and the environment from devastating wildfires.

The controller released a report last week asking the utility to increase inspections of overhead power lines and transmission equipment and eliminate backlogs. He would also like the utility to expand the use of technology by including the use of drones, predictive analytics and artificial intelligence programs.

”As the largest publicly-owned utility in the country, the DWP is responsible for delivering power safely to 1.5 million ratepayers in Los Angeles and beyond,” Galperin said. “The rash of destructive wildfires across California is posing new challenges for the DWP and other power utilities across the state. Our local public utility can to do more to prevent these catastrophic events, which will improve the safety and reliability of the power system as a whole.”

Galperin also suggested that municipal utilities should have been included in the state's liability fund that the public utilities chose to opt out of.

Six of ten of the state’s most destructive fires since 2015, have been caused by overhead power lines, according to the controller’s report.

The cause of the Getty Fire that burned 745 acres in west Los Angeles was determined in a preliminary report to be caused when a tree branch fell on a LADWP power line. Liability from that fire could threaten the utility's rating, Fitch Ratings analysts said in a Nov. 11 investors note, but maintained the utility's AA rating and stable outlook.

It remains to be determined whether LADWP will face liability for the Getty Fire and, if it does, the size of the liability, according to Fitch.

Fitch said that it expects that the initial recourse for LADWP, if it faces any liability in the blaze, will be to seek coverage under its $177.5 million wildfire liability insurance policy, with additional coverage available to LADWP through its $160 million general excess liability coverage policy and $192.5 million self-insurance reserve.

Moody's Investors Service changed LADWP's outlook to negative in March during a review of seven public utilities in the state, citing the "uncertain magnitude of future wildfire liabilities under inverse condemnation and the lack of clarity around any legislative or regulatory fix."

LADWP retained its Aa2 Moody's rating. It also holds a negative outlook from S&P Global Ratings since September, resulting from an FBI investigation, and an AA rating.

LADWP said it has spent the last six months sharing the department’s draft mitigation plan with the controller’s staff, which it says incorporates many of the controller’s recommendations. It will present that plan to its board of commissioners on Dec. 10.

The plan builds on the power system reliability plan of which the department has invested $3.9 billion over the past five years, LADWP officials said in a statement. The work includes replacement of equipment located in high risk areas, officials said, which represents 10-15% of its infrastructure.

The department said it replaced 3,757 power poles, 1,238 transformers and trimmed 190,000 trees in fiscal year 2018-19.

“The city controller’s report released today focuses on the 10% to 15% of LADWP’s power transmission and distribution equipment in high fire risk areas, while the department’s infrastructure replacement program prioritizes work across the entire city, ensuring that infrastructure investments are made where they will have the greatest impact for the most customers, not just in hillside communities,” LADWP said.