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September 14, 2012

Los Angeles to Invest in Clean Energy

Solar panel installation lowThis week we received the great news that the Los Angeles Department of Water and Power (LADWP) Board of Commissioners approved a funding proposal to invest in clean energy to replace the power the city gets from the Navajo Generating Station coal plant.

The LADWP approved a two year rate increase on the power side to pay for this investment, as well as to repair its crumbling infrastructure, cover rising fossil fuel costs, and more. The increase is scheduled to take effect later this fall and will increase customer rates, on average, by 11% (more for those in mansions, less for apartment dwellers). This shift in funding priorities is necessary to move the city beyond coal, which has costs that affect not only our wallets, but also our health and the environment.

This LADWP proposal heads now to the Los Angeles City Council for a vote. We were at the board meeting live tweeting, but now I'm taking to this blog to share some more extended thoughts on what was somewhat of a remarkable moment.

Brief history: two years ago, after a sustained push from coal activists, LADWP announced it would fully divest from the Navajo Generating Station (NGS) coal plant in Arizona by 2015, four years before California state law forces them out. About 13% of LA's power comes from NGS. At the time LADWP announced this, it was unclear what would replace the power.

Well, now we have our answer. LADWP is holding to its 2015 timeline and boy is that a lot of clean energy replacing coal. To replace the chunk of coal, LADWP's states it will replace its share of NGS with the following: 650 MW of solar (LADWP staff confirm they’re aiming for 300MW rooftop), 490 MW of wind, 130 MW of geothermal, some natural gas (LADWP has not yet determined how much) and a bigger, bolder energy efficiency program to reduce energy demand. 

Wondering how all that clean energy can replace coal? See this short and excellent video by the Energy Foundation:

 

Sounds like projects will start moving in a matter of weeks to months. In fact, the solar cash back program (aka Feed-in-Tariff) is already soliciting projects – so we’re under way already. Wow.

All this is good news for Angelenos, who have taken stand after stand for clean energy over the years and have a publicly-owned utility whose policies are slowly starting to reflect the interests of the vast majority of the public, who overwhelmingly support clean energy over dirty coal.

What else to make of the proposal?

  • What a difference two years makes. It’s amazing to watch LADWP navigate this proposal compared with two years ago. Much credit goes to General Manager Ron Nichols for providing more information, communicating it more effectively, and executing a more transparent process for rates. Certainly, the new Ratepayer Advocate Dr. Fred Pickel deserves credit as well.
  • Two years ago, LADWP spent about $450 million on coal fired power. Last fiscal year, we spent $510 million dollars on coal. This year, we’ll spend $550 million (this according to LADWP’s budget documents). Over that time period, the percentage of coal in LADWP’s portfolio dropped from 44% to 39%. Our drop in coal use isn’t outpacing rising costs associated with coal.
  • Smartly, LADWP seems to be using its Renewable Portfolio Standard requirement to replace coal, meeting two objectives at once (replacing coal and meeting its RPS target). This integrated approach will save LADWP customers money by using one objective to meet another, rather than treating them as siloed objectives.
  • Lots of businesses came out to support the rate increase this time around. Who knew crumbling infrastructure is bad for business? The Los Angeles Business Council also questioned the Department’s continued use of out-of-state coal.
  • It’s great to see a new and sustained push from LADWP on energy efficiency. The program includes a new program for LAUSD to help schools lower their energy bills, plus a low income weatherization program and a big boost to the direct-install program for small businesses. That also means that a lot more local jobs like this one will be generated.
  • Having a better energy strategy in place is a great step forward for LADWP. Having the funding to execute the strategy is also important. But neither are sufficient and over the next two years lots of work remains to ensure customer money is invested wisely, that programs remain on track, and that Angelenos are getting what they paid for.
A few other points on rate increases more generally and where LADWP is heading:
  • Across the country, clean energy is lowering bills. The Center for American Progress recently released a great report looking at the impact of clean energy standards on electric rates and found that states with such standards saw rates climb slower than states without clean energy standards. In California, for example, they found that in the 14 years leading up to the state setting a clean energy standard (a renewable portfolio standard, or RPS, as they’re called), electric rates were rising faster  here than states that have yet to set a RPS. However, in the years since the Golden State launched its RPS, electric rates have increased more slowly than those states without an RPS.
  • Coal is no longer the primary source of electricity across the country. In the last five years, the share of coal has dropped from 49% to 37% (even dipping as low as 34% at one point this year). Meanwhile LA has gone, quickly, from being ahead of the curve to behind. Breaking up with NGS is a good start to catching up and keeping pace with other utilities.
Look, no one wants to hear about rate increases. Given industry trends, it’s hard to see how LADWP could avoid rising costs forever, though. And given the alternatives, LADWP’s proposal puts energy saving programs at the top of the priority list, while laying the foundation for a clean energy future, with less reliance on risky and increasingly expensive fossil fuels. We still have a ways to go to get there, but Angelenos should be encouraged by this new direction.

-- Evan Gillespie is a Campaign Representative for the Beyond Coal Campaignin Los Angeles. Follow their campaign on Twitter: @LAbeyondcoal

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