The Los Angeles Department of Water and Power (DWP) is the largest municipally owned electric utility in the United States. In 1999 its electricity operations served 1.4 million customers, sold 27 billion kilowatt hours, generated revenues of $2.3 billion, and transferred $129 million to the City of Los Angeles (DWP, 1999). 1 Unlike many other municipal utilities that solely distribute power purchased from others, DWP has substantial ownership shares in hydroelectric, fossil fuel, and nuclear generating plants, as well as in the high-voltage transmission lines serving Southern California.
The City of Los Angeles began generating hydroelectric power in the early 1900s as a by-product of the Owens Valley Aqueduct project built by the city Water Department. 2 In 1911, voters approved establishing a municipal Power Bureau to distribute electricity within the city rather than selling it to private power companies, such as Southern California Edison (SCE). City charter amendments in 1925 created the Water and Power Department headed by a five-member citizen commission. This basic governance structure continues today, although (as discussed in the following section) the commission's and department's relationships with the mayor, council, and other city officials have become considerably more complex.
As a municipally owned utility, DWP can issue tax-exempt revenue bonds and has preference over investor-owned utilities in purchasing low-cost power from federal generating projects. It does not pay federal or state income taxes or Los Angeles property and business taxes but instead makes direct payments from operating income to the city's general fund. The city council has traditionally set utility rates to benefit Los Angeles residential customers—i.e., voters. DWP's residential elec-