L.A. faces suit over DWP fund transfers

Critic alleges utility’s payments to the city amount to illegal tax.

A longtime critic of the Los Angeles Department of Water and Power sued the city of L.A. on Wednesday over its routine practice of taking millions of dollars from the utility each year and spending it on basic services.

The lawsuit, filed in the L.A. Superior Court, was brought by Jack Humphreville. It is one of several filed in recent years that target the yearly transfer between the DWP and the city.

Humphreville’s lawsuit alleges the DWP payment amounts to an illegal tax and asks a judge to order the funds collected this year by the city — more than $241 million — returned to the utility.

Humphreville’s attorney, Jerry Flanagan, said in an interview that the tax violates Propositions 218 and 26, which require voter approval for new levies.

“If the DWP had collected money for infrastructure repair and power generation and used it for those purposes, we wouldn’t have a lawsuit,” said Flanagan, an attorney for Consumer Watchdog, a Los Angeles consumer advocacy group that also has been critical of the DWP. “The problem is that DWP collects money for one purpose and then transfers it to the city government for an entirely different purpose.” Alex Comisar, a spokesman for Mayor Eric Garcetti, declined to comment on the lawsuit, saying the city doesn’t comment on pending litigation.

The city has had a longstanding practice of using a percentage of the DWP’s electricity revenue to balance the city budget. That money goes to the city’s general fund, which pays for police, fire and other basic services.

Unlike investor-owned power companies, which pay regular dividends to stockholders, the DWP makes the payments.

DWP critics have repeatedly denounced the transfer of funds and questioned the City Council’s decision to support electricity rates increases at the same time the utility is making payments to the city. In 2017, the City Council agreed to settle other lawsuits targeting the transfer and agreed to the lower the amount sent by the DWP.

In February, the court issued an order granting final approval of the settlement and entered a final judgment in the matter. However, four people filed appeals of the judgment, a spokesman for City Atty. Mike Feuer’s office said Wednesday.

Humphreville, a Los Angeles resident, is chairman of the DWP Advocacy Committee, a group sponsored by the city’s neighborhood councils. He declined to comment Wednesday.