Pacific Swell | Southern California environment news and trends

DWP chief Ron Nichols denies departure linked to controversy over $40M nonprofit trusts

Outgoing DWP general manager Ron Nichols says he's cooperated with a city audit of how two nonprofit trusts spent ratepayer money.
Outgoing DWP general manager Ron Nichols says he's cooperated with a city audit of how two nonprofit trusts spent ratepayer money.
Molly Peterson/KPCC

Ron Nichols, the outgoing head of the Los Angeles Department of Water and Power, denied in an interview with KPCC that his departure was linked to controversy over $40 million in public money given to two nonprofit trusts and added that it "dumbfounds" him that the DWP labor union is fighting a request to disclose the trusts' financial records.

On Wednesday morning, the Los Angeles County District Attorney's Office said it was working with the city controller to get the financial records for the two trusts. But the D.A. has not opened a formal investigation.

Nichols, the head of the nation’s largest public utility, is stepping down Friday; he has been General Manager of the DWP for three years. Under his tenure, the agency moved to embrace renewables and end the city’s reliance on coal-fired power, which contributes to greenhouse gases.

But since September, controversy has shrouded the DWP: The Los Angeles Times reported that two nonprofit trusts set up by the city and DWP’s largest employee union, the International Brotherhood of Electrical Workers, had received $40 million in public money with little accounting of how it was spent. The groups are meant to improve training and safety for electrical workers.

RELATEDLADWP's Ron Nichols says IBEW stonewall on trust accounting 'dumbfounds' him

Nichols sits on the board of directors for each organization. He’s one of four management representatives who, along with four labor representatives, oversee the training and safety institutes.

In an interview with KPCC earlier this week, Nichols disputed media reports connecting his departure to the controversy. “I actually stayed here longer in part because of that," Nichols said. "I had indicated to our board president last October that I was looking to leave in early December. And he asked me to stay on."

Nichols added: "Look, when is there a time when there isn't controversy around LADWP? With the amount of changes and things that are happening here and the issues around here, there's always controversy around this utility, and there has been forever. I've watched this utility for 38 years. But my departure has nothing to do with that."

Questions have escalated since the new year about where the money for the training and safety trusts has gone. The day after Nichols resigned, City Controller Ron Galperin issued a subpoena for the trusts' financial records to Brian D'Arcy, the head of IBEW, Local 18. D'Arcy has gone to court to fight the subpoena. 

Nichols said he doesn't understand why D'Arcy is refusing to cooperate.

“I think that entire circumstance about the trusts is an unfortunate situation that’s been created by the head of Local 18," Nichols said. "His unwillingness to release information dumbfounds me, and I think it’s done nothing but harm the very purpose of these trusts.

"I concerned that there's this idea that somehow I invented these trusts. I inherited them. They were established in the early part of the last decade as a negotiated matter between IBEW and the [Los Angeles] City Council, who approved their creation, and the management at DWP. In fact, a good number of the sitting council members right now have their signatures on approving the creation of these trusts. Inherently, I see nothing wrong with the trusts. I'm completely unaware of any inappropriate expenditures of the trusts. But the fact that Brian D'Arcy has been unwilling to release that information makes people believe that there's something there. I don't blame them.

"The reality is it has an impression that something is being hidden, and that needs to get resolved," Nichols said. "I have done everything I can to be able to release information that I have access to. I've cooperated with my board. I've cooperated with the Controller."

A memorandum of understanding between the city and the IBEW lays out the structure of the nonprofit trusts, called the Joint Training Institute and the Joint Safety Institute. In their early days, they each received $2 million annually in public funds.

I asked Nichols whether he regretted not having looked more closely at how the trusts were spending ratepayer money. 

"I'm unaware of any particular problem that's in them other than the fact of [D'Arcy's] reluctance to release the records with respect to them," Nichols said. "If there are problems with expenditures prior to 2011 when I came here, I don't know, because I wasn't here. And I certainly don't have access to any historic details prior to me being here. 

"As for the continuation of the trusts, they exist under the memorandum of understanding that was just recently reapproved in December of last year, so my understanding is there is an obligation to continue their operation," Nichols said. "I would certainly be hopeful in a recommendation to my successor that they find some way in which there can be some more regular disclosure to get that done. Heretofore, that's not been possible."

Nichols didn’t dwell on the controversy in his resignation letter to Mayor Eric Garcetti January 9th. He focused instead on his efforts to get more energy from wind and solar.