When you return to Mean Street after defeating the Blotworx Dragon go on top of city hall and talk to gremlin Stuffus. You have to pay him some scrap metal so he can fix it. Then you can enter an area of the underground.
Instead of talking to Stuffus go to the sides of the tower. You can see power pads behind some grates. use a fairy sketch on both of those grates and have Oswald shock them. The tower is destroyed and you get some scrap metal.