The Los Angeles City Council is expected to take up within the next 2 weeks a $1.7 billion proposal to upgrade and repower 2,300 Mw of electric generating capacity owned and operated by the municipal Department of Water and Power (DWP).
The city's Commerce, Energy, and Natural Resources Committee voted to pass the measure on to council without major modifications, a spokesman said. To help finance the plan, General Manager David Freeman has proposed selling the city's share of a huge-coal burning plant in the Nevada desert and investing the proceeds in cleaner burning facilities in the Los Angeles basin.
"The strategic shift to more in-basin generation addresses our priority for improving system reliability in the years ahead," Freeman said.
While the rest of California has sweated through the potential for rolling blackouts, Los Angeles, the nation's largest municipal utility, hasn't suffered daily electricity emergency alerts. The municipal utility says it has plenty of power to serve its customers this summer and has actually sent extra supplies to neighboring utilities.
But much of the system is antiquated. Los Angeles cannot afford to "just sit on our lead," Freeman says.
The DWP owns 20% of the Mojave generating station and must sell by September, if it is to participate in an AES Corp. proposal to buy out Los Angeles, Southern California Edison Co., and Nevada Power Co., for $600/kw. The Mojave plant is the biggest single source of sulfur dioxide emissions in the Southwest. DWP will also save about $75 million needed to upgrade pollution controls at the Mojave plant.
In turn, DWP would use about $190 million in profits from the sale of the Mojave to repower the Scattergood, Haynes, and Valley electric plants, while also adding about 500 Mw of new generating capacity. The three plants are natural gas-fired, but they won't meet stiffer environmental restrictions on nitrogen oxide and other pollutants.
In its plan before the council, DWP proposes to modernize 10 units with more efficient combined cycle natural gas units which have state-of-the-art emissions controls. Freeman estimates repowering the units with modern equipment will cut NOx emissions by 65% by 2010.
Freeman said 240 Mw in combustion turbines will serve super peak needs beginning in 2003. Local generation cuts the risk of power lost through congested transmission lines and other outages associated with power traveling hundreds of miles, Freeman said.
He said renewable energy, distributed generation, and demand side management will add another 460 Mw to DWP's in-basin power supply. The Valley station would be completed in 2004, followed by Haynes in 2006, and Scattergood in 2008, if approved by council.
In addition to the proceeds from the Mojave plant sale, DWP's plan calls for cash funding the balance of the projects over a 10-year period to avoid additional debt. The DWP expects to pay off existing debt by July 2002 and has committed to lowering electricity rates by 5% in 2002 and 10% in 2003.
