The Los Angeles Department of Water and Power (LADWP) gained more political support for a far-reaching plan to abandon its historic reliance on out-of-state coal-fired power generation, and part of the plan includes a switch of coal units to burn natural gas.
Separately, the LADWP’s city council-imposed utility ratepayer advocate has told elected officials an earlier-than-expected exit from coal might result in hundreds of millions of dollars of increased retail rates during the next 10 to 15 years, unless remedial measures are taken.
LADWP spokesperson Joe Ramallo told NGI on Wednesday that the analysis of higher rates by the ratepayer advocate, Fred Pickel, was not based on the large municipal utility’s “Clean Energy Future” proposal that includes eliminating coal.
General Manager Ron Nichols is touting the proposal as historic because he characterizes it as trying to essentially replace over the next 15 years 70% of the current utility infrastructure that took a century to put into place. “No other utility in the country is undertaking such a significant transformation,” Nichols said.
A key element in the zero coal push was put in place last month when LADWP and the Salt River Project (SRP) in Phoenix said they were in the process of negotiating a definitive agreement that would end LADWP’s 21% stake in the 2,250 MW coal-fired Navajo Generating Station in Page, AZ, by the end of 2015.
If the final deal is put in place, it will allow the Los Angeles utility to meet California’s law governing coal-fired generation four years before it would have been mandatory. At the same time, the LADWP oversight board has approved a contract for the city utility to “completely transition out of coal-fired power” at the Intermountain Power Project (IPP) facility in Delta, Utah by 2025.
Los Angeles Mayor Antonio Villaraigosa declared that “the era of coal is over,” Thomas Sayles, president of the LADWP Board of Water and Power Commissioners, said the utility is committed “to meet environmental mandates efficiently and in a cost-effective manner while maintaining a reliable power supply.”
On Wednesday the Los Angeles City Council’s energy and environment committee approved the LADWP’s proposed contract with IPP, which would convert some of its units to 500 MW of natural gas-fired power supplies for LADWP.
Under the city utility’s transformation plan, natural gas will move from representing 24% of its power supply mix to being nearly half (47%) by 2025 while coal shrinks from its current 39% share to zero, being replaced by renewables (solar, wind and geothermal), efficiency programs and gas.
The IPP conversion and backing off coal entirely is the most complex part of the transformation because LADWP is one of six Southern California public power utilities, along with 30 Utah-based public-sector buyers at the 1,800 MW coal-fired complex. They all share contractual obligations through 2027, and the only way to change those obligations is by consensus among all 36 organizations, Nichols said.
“LADWP does not own any of IPP and it cannot act unilaterally to change the 2027 contract obligations,” he said. “All six SoCal cities depend on the coal-fired power for baseload supplies and are obligated through 2027.”
Since LADWP and the other California munis have a huge investment in the 2,400 MW, 490-mile southern transmission system between IPP and Southern California, it makes economic sense to build a 500 MW gas-fired combined-cycle plant at the Utah facility and free up even more transmission from there to deliver both gas-fired and more renewable-based power from new and existing wind projects in the region.
As it stands now, LADWP hopes to have a new IPP power sales agreement hammered out by the end of this year, said Nichols, adding that in today’s dollars the muni’s customers have a $11.5 billion investment in the IPP facilities and transmission system.
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