Contrary to skepticism raised in an ongoing probe by the California legislature, the nation’s largest municipal utility has done nothing wrong in its wholesale power sales over the past two years, and the state asked for a new short-term power deal for this summer, according to Los Angeles Department of Water and Power General Manager David Wiggs, who spoke last Thursday at a media briefing in Washington, DC.

The energy omnibus energy legislation “is still very much in an evolutionary state, but we’re still concerned that what [congressional lawmakers] are presenting doesn’t adequately protect our ability to serve our native load now and in the future, or does it [guarantee that] we are not going to be hit with more cost,” said Wiggs, noting that LADWP is working with a Large Public Power Coalition on proposed new bill language.

“My message is really the same, over and over: if we can be protected on those two items [ability to serve and no added costs], then we’re willing to work with [legislators and regulators]. We just cannot allow our native load to be jeopardized or allow our customers to be charged more for something we’re not sure is ever going to be beneficial.”

As a major representative of the public power sector, LADWP’s chief executive was in the nation’s capital to reiterate that the multi-billion-dollar government-run utility has some questions and concerns about provisions in the proposed energy legislation. He also disputed allegations out of Sacramento that the utility may have been guilty of some of the same alleged profiteering and market manipulation that private-sector wholesale providers have been accused of doing.

LADWP currently has a deal with the state wholesale electricity-buying agency, the Department of Water Resources (DWR), to provide 400 MW of transmission capacity this summer, and on top of that, the muni has sold another 700 to 1,100 MW during peak times, such as the western heat wave earlier this month.

While Wiggs would not shut the door completely on LADWP someday joining a regional transmission organization (RTO) if it “is voluntary, has the offramps to get out if it’s not working, and doesn’t add to costs,” he is skeptical that it ever will make sense for a nearly debt-free, vertically integrated utility with a 30-35% reserve margin such as LADWP. He did say LADWP is exploring a possible mini-RTO concept among various municipal utilities in the southern half of California that informally cooperate now on transmission operations, of which LADWP has by far the largest portion among the munis statewide.

“I’m not convinced that this is going to work and that our customers are going to be better off. If it does prove workable, we might join (an RTO) with the proper offramps and assurances for our native load. Somewhere around the country we have to be shown that this has worked and people have saved money in the long run. But I haven’t seen it yet, and if you are in the position we are in L.A., you have to question whether it will work.”

In regard to his continuing problems with the California state Senate Select Committee’s probe of past wholesale energy market operations, Wiggs said his utility has committed to getting all of the data requested to the committee by the end of July, and an independent audit by an outside law firm that is now underway will have a report in September. “If we participate in the wholesale market, we will always play by the rules,” he said.

“We have already provided 20,000 of some 35,000 e-mails related to past trading” during 2000 and 2001, Wiggs said. “”I don’t think the department participated in any kind of unlawful or Enron-type transactions. We are not a wholesaler and we are building our system to be a wholesaler. There are no incentives for our employees to want to cheat.”

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