Split Between LADWP And CA-ISO Widens
The continuing public split between the nation's largest
municipal utility and California's nonprofit, state-chartered
transmission grid operator is widening with finger-pointing
involved in the plans for heading off potential power shortages
this summer. Left unresolved is the more than two-year-old
discussion attempting to bring the Los Angeles Department of Water
and Power (LADWP), a transmission- and generation-rich muni, into
the state's fold.
Prospects statewide for pockets of insufficient peak power when
the weather heats up have accentuated the rift because the state
grid operator, California ISO (Cal-ISO), is looking at possible net
shortfalls while LADWP is facing the summer with excess power to
sell even in most peak-load situations.
"Put simply, they (Cal-ISO) have a problem and we don't," said
LADWP's outspoken general manager, S. David Freeman, following a
public ceremony with city political leaders Thursday celebrating
the city utility's slashing more than $2 billion of its generating
plant debt in the last 2-1/2 years. "We have surplus, and they
don't. Their problem is our opportunity."
Freeman said the department's last complete fiscal year
(1998-99), LADWP earned net revenue of almost $100 million in
wholesale power sales.
Cal-ISO President/CEO Terry Winter a day earlier had referred to
LADWP as somewhat of an outcast within the state, noting that the
state's other major municipal utilities (more than two dozen)
operate under the ISO and the three investor-owned utilities'
control areas, but LADWP is outside of all that, operating like the
out-of-state import generators do.
"On this reliability question, LA is really well positioned to
provide reliable service in this summer peak," said Bruce Hamer, a
LADWP wholesale marketing director. "There is a fear among us that
the Cal-ISO will argue in Sacramento (to the state political
leaders) that our not being a member of the ISO contributes to less
reliability of California's power supply.
"That simply is not true as far as we are concerned because the
reality is that we (LADWP) has built the system to benefit the city
first, and next we go out of our way to help our neighbors in the
state. It is grossly unfair to suggest that we contribute to the
lack of reliability in any way."
At the center of the animosity is the inability of the Cal-ISO
and LADWP to agree on terms for the massive muni turning over to
Cal-ISO its transmission system, which represents a little more
than one-quarter of the state's infrastructure for delivering
high-voltage bulk power. Cal-ISO argues they cannot disadvantage
the three large investor-owned systems that have been put under the
state nonprofit's operations, and LADWP contends that it would have
to raise rates for its customers to pay charges that it considers
too high and unfair.
"If they would make me an offer where I could break even, I
would join," Freeman said.
The proposed Cal-ISO pricing model disadvantages the large
munis, LADWP contends, maintaining what it calls "serious
concerns." Ultimately, Freeman indicated that the state legislature
may pass some legislation this summer that helps resolve the issue
for both the IOUs and municipal utilities.
Richard Nemec, Los Angeles