The oversight board at the nation’s largest municipal utility earlier in September approved annual budgets for the utility natural gas purchases exceeding $500 million annually in the 2008-2009 fiscal year before tapering off significantly through 2016-2017 with the advent of renewables and a more diversified generation portfolio.

Gas volumes used for electricity production by the Los Angeles Department of Water and Power (LADWP) are estimated to hit nearly 80 Bcf next fiscal year (2008-2009), dropping off rapidly and bottoming out at about 30 Bcf in 2014-2015 before heading upward in 2016-2017 to 32 Bcf.

Natural gas costs annually are expected to run about $523 million in the 2008-2009 fiscal year and then drop off sharply to $205 million in 2014-2015 before picking up again. Transportation costs and financial transaction costs add about $100 million/year to the overall gas budget, LADWP said.

The Board of Water and Power Commissioners approved the budget at its meeting Sept. 18, covering the cost of the commodity, pipeline charges and the $15 million annual financial transaction fees.

“The projected expenditures for and volumes of natural gas used to produce electricity [have] been incorporated into the power system’s financial plan,” LADWP officials said. “With the approval, the department plans to enter into contracts for the purchase of financial transactions for natural gas that will reduce the volatility in the cost of natural gas projected to be consumed in the production of electricity.

“Therefore, this will ensure that the power system’s retail electric rates will remain stable for the foreseeable future.”

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.