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LADWP Board Approves Multi-Muni Strategy for Acquiring Gas Reserves

With the caveat that city council approval ultimately is needed, the oversight board for the Los Angeles Department of Water and Power (LADWP) Monday okayed the framework for the nation's largest municipal utility to acquire its own natural gas reserves as part of a consortium of public power utilities, and adopted a formal renewable portfolio standard (RPS) calling for 20% green power sources by 2017.

The natural gas action okays LADWP authorizing the state-chartered joint power financing authority, Southern California Public Power Authority (SCPPA), to finalize a deal for buying gas reserves in which the city-run Los Angeles utility will share supplies with other, smaller munis who are among SCPPA's 12 members. "This agreement will allow LADWP the opportunity to share in natural gas acquisition and operating costs with other SCPPA participants," the board said.

A firm deal from the munis to acquire gas reserves is "very close" and previously had been slated for this special meeting of the Board of Water and Power Commissioners overseeing LADWP, but it isn't quite ready for the board, so it will be held off until one of the board's June meetings, a LADWP spokesperson said.

"The board approved the framework [for various deals], but not a specific deal," the spokesperson said. SCPPA and LADWP had acknowledged their interest in acquiring gas reserves last fall (see NGI, Oct. 4, 2004).

In okaying the RPS for LADWP, the city-run utility board is responding to growing political pressure, which is expected to increase with the new mayor, Antonio Villaraigosa, elected last week.

"LADWP is developing a RPS, designed to increase the amount of energy it generates from renewable power sources to 20% of its energy sales to retail customers by 2017, with an interim goal of 13% by 2010," the city-run utility spokesperson said. "The policy will provide a long-term framework to achieve the 20% goal without compromising power reliability or the financial stability of the Department and its customers."

Separate from Monday's action, the muni is continuing to pursue renewable power deals from a request-for-proposal (RFP) it has outstanding, the spokesperson said.

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