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 to rely more on natural gas.
Separately, the LADWP’s city council-imposed utility ratepayer advocatetold elected officials an earlier-than-expected exit from coal might result in hundreds of millions of dollars of increased retail rates during the next 10-15 years, unless remedial measures are taken.
LADWP spokesperson Joe Ramallo told NGI last week 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, which would eliminate coal. General Manager Ron Nichols said the proposal is historic because it could 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,” he 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 began negotiating an agreement to sell LADWP’s 21% stake in the 2,250 MW coal-fired Navajo Generating Station in Page, AZ, by the end of 2015. If an agreement is finalized, it would allow the utility to meet state requirements to reduce coal-fired generation before it is 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, UT, by 2025.
Last Wednesday, the Los Angeles City Council’s energy and environment committee approved the utility’s proposed contract with IPP to convert some units to 500 MW of gas-fired power supplies. Under the utility’s transformation plan, gas would increase from 24% of its power supply mix to nearly half (47%) by 2025, while coal would fall from 39% to zero, replaced by renewables (solar, wind and geothermal), efficiency programs and gas.
The IPP conversion and retreat from coal are the most complex parts of the transformation because LADWP is one of six Southern California (SoCal) public power utilities, along with 30 Utah-based public-sector buyers at the 1,800 MW coal-fired complex. They 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. All six SoCal cities depend on the coal-fired power for baseload supplies and are obligated through 2027.”
LADWP officials hope to have an IPP agreement hammered out by the end of this year, said Nichols. In today’s dollars, he said, the muni’s customers have a $11.5 billion investment in the IPP facilities and transmission system.
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