Over some concerns raised by its administrative leaders, LosAngeles elected officials Tuesday approved the sale of itsmunicipal utility’s 20% interest in the Nevada coal-fired MohaveGenerating Plant. It is a multi-interest deal that will be wrappedup with Arlington, VA-based AES Corp. by next month.

The Los Angeles Department of Water and Power (LADWP), thenation’s largest municipal utility, now can sign a deal for thesame price as pending sales of Southern California Edison. andNevada Power interests in the same plant, according to aspokesperson for LADWP. The AES offer was to have expired Sept. 1.

Both the city’s chief legislative analyst and chiefadministrative officer submitted reports to the Los Angeles citycouncil expressing concerns that the competitively pricedcoal-fired electricity (more than 300 MW) would be needed while thecity utility upgrades its natural gas-fired power plants in thegreater LA metropolitan area. (In a separate action, the cityelected officials approved LADWP’s 10-year, $1.7 billion”Integrated Resource Plan” that includes extensive repowering ofLADWP’s in-state natural gas generating plants. The 10-year plan isa mixture of new generation, distributed generation and increaseddemand-side management.)

Environmental concerns about the emissions of the Mohave plantand the prospect of having to spend $75 million for its share ofupgrades to the plant swayed the vote in favor of the sale. LADWPwill use net proceeds of about $190 million from the sale to helpfinance its initial repowering efforts, and to bring some newpeaking capability online by next summer, General Manager S. DavidFreeman told the city council.

Los Angeles political leaders are very aware that inCalifornia’s volatile wholesale electricity market this summer, itslocal government-run, $3 billion utility has made a small killingon the wholesale market and remained seemingly immune from powershortages for its 1.3 million customers (3.5 million population).

LADWP has a peak-demand of between 4,500 and 5,000 MW, withanother 2,000 MW it can call on to sell into the over-heatedwholesale market. Since last summer, LADWP reportedly amassed anextra $140 million in revenues from selling wholesale power,including $35 million last month alone.

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