The continuing public split between the nation’s largestmunicipal utility and California’s nonprofit, state-charteredtransmission grid operator is widening with finger-pointinginvolved in the plans for heading off potential power shortagesthis summer. Left unresolved is the more than two-year-olddiscussion attempting to bring the Los Angeles Department of Waterand Power (LADWP), a transmission- and generation-rich muni, intothe state’s fold.

Prospects statewide for pockets of insufficient peak power whenthe weather heats up have accentuated the rift because the stategrid operator, California ISO (Cal-ISO), is looking at possible netshortfalls while LADWP is facing the summer with excess power tosell even in most peak-load situations.

“Put simply, they (Cal-ISO) have a problem and we don’t,” saidLADWP’s outspoken general manager, S. David Freeman, following apublic ceremony with city political leaders Thursday celebratingthe city utility’s slashing more than $2 billion of its generatingplant debt in the last 2-1/2 years. “We have surplus, and theydon’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 inwholesale power sales.

Cal-ISO President/CEO Terry Winter a day earlier had referred toLADWP as somewhat of an outcast within the state, noting that thestate’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 theout-of-state import generators do.

“On this reliability question, LA is really well positioned toprovide reliable service in this summer peak,” said Bruce Hamer, aLADWP wholesale marketing director. “There is a fear among us thatthe Cal-ISO will argue in Sacramento (to the state politicalleaders) that our not being a member of the ISO contributes to lessreliability of California’s power supply.

“That simply is not true as far as we are concerned because thereality is that we (LADWP) has built the system to benefit the cityfirst, and next we go out of our way to help our neighbors in thestate. It is grossly unfair to suggest that we contribute to thelack of reliability in any way.”

At the center of the animosity is the inability of the Cal-ISOand LADWP to agree on terms for the massive muni turning over toCal-ISO its transmission system, which represents a little morethan one-quarter of the state’s infrastructure for deliveringhigh-voltage bulk power. Cal-ISO argues they cannot disadvantagethe three large investor-owned systems that have been put under thestate nonprofit’s operations, and LADWP contends that it would haveto raise rates for its customers to pay charges that it considerstoo high and unfair.

“If they would make me an offer where I could break even, Iwould join,” Freeman said.

The proposed Cal-ISO pricing model disadvantages the largemunis, LADWP contends, maintaining what it calls “seriousconcerns.” Ultimately, Freeman indicated that the state legislaturemay pass some legislation this summer that helps resolve the issuefor both the IOUs and municipal utilities.

Richard Nemec, Los Angeles

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