26 Jul 2011
- Written by Jack Humphreville
But a week later, the environmental community was pummeling DWP because the State Water Resources Control Board granted the DWP an additional nine years to phase out Once Through Cooling in its three coastal power plants (Scattergood, Harbor, and Haynes) that represent 39% of DWP’s total generating capacity and 85% of its generating capacity within the City.
However, the environmental community conveniently failed to mention that this extension to 2029 would result in savings to DWP and Ratepayers of about $1.2 billion through 2020, was six years shorter than the time frame requested by DWP and endorsed by the City Council, and unlike the “infeasible” 2020 scenario proposed by the well healed environmental lobby, would not jeopardize the reliability of the entire DWP Power System, especially as it relates to the southern and western parts of the City.
But it is not like the Ratepayers are getting any bargain.
Over the next three years, the combined revenues of the Water and Power Systems are projected to increase by almost 30% while capital expenditures are projected to be over $8 billion, financed in part by almost $5 billion in new debt.
According to DWP, one of the major reasons that rates are increasing so rapidly is the need to meet the many new environmental rules and regulations. Yet, Ratepayers really do not have a thorough understanding of the underlying programs and their costs.
For instance, DWP is now required by law to have 33% of its power from renewable energy sources by 2020, up from the existing level of 20%. But how much is this going to cost, not only over the next three years, but over the next ten years.
And in the same vein, how will the Solar Incentive and Feed-In-Tariff Programs impact DWP and the Ratepayers over the next ten years?
Of specific interest is the Power Systems Strategic Investment in Accelerated Coal Replacement. This involves the early phase out of the coal powered Navajo Generating Station beginning in 2014, five years before the legally required deadline. While the cost will be only $33 million in the fiscal year ending June 30, 2014, the total cost to divest from the Navajo Generating Station is estimated to be $800 million.
The powerful environmental lobby is also campaigning for DWP’s early exit from the Utah based Intermountain Power Project by 2020, seven years before the legally required deadline. However, Ratepayers have not been privy to the financial consequences of the early termination of the Intermountain Power Project, the impact on our electricity rates, and the subsequent reliability of the Power System.
Needless to say, before any rate increase is approved, Ratepayers deserve a thorough understanding of the financial and reliability implications of the early phase out of both Navajo and Intermountain Power.
Likewise, the Water System is subject to new regulations and mandates that will have a significant impact on rates.
For example, the new rules relating to the use of chloramines as opposed to chlorine require that open reservoirs be eliminated at great expense. This is then compounded by efforts of members of the City Council to fleece DWP and the Ratepayers for an extra $200 million to build covered reservoirs in Elysian Park and Upper Stone Canyon.
DWP has also been forced to fund very expensive dust mitigation efforts and other programs in the Owens Valley which are compounded by the need to purchase very expensive water from the Metropolitan Water District.
The Water System is also required to abide by the State’s Water Conservation Act of 2009 which mandates a 20% reduction in per capita usage through greater conservation and the use of expensive recycled water.
While DWP is proposing a three prong rate increase over the next two and a half years, our rates will continue to increase after 2014. For example, for the two years after the proposed rate increases, revenues are projected to increase by another $1 billion, while capital expenditures will be another $5 billion, financed in part by $3 billion in new debt.
Over the next five years, DWP revenues and the Ratepayers’ burden will increase by over 50%.
But the financial well being of the hard working homeowners of Los Angeles does not appear to be a concern to the elitists of the environmental lobby. It was only last year when one environmental hot shot was asked if an increase of 25% a year for the next decade was reasonable. The response: “25% a year is not unreasonable.” (Link)
Ratepayers do not agree. For openers, Ratepayers must have a better understanding of the individual programs and their impact on rates over the next ten years.
This is why we need a well funded, empowered, and truly independent Ratepayers Advocate to oversee the operations, finances, and management of DWP on a timely and continuous basis, an idea supported by 78% of the voters.
NO Ratepayer Advocate, NO Rate Increase.
Tags: Ratepayers, Sierra Club, DWP, Los Angeles City Council, Owens Valley, Elysian Park, Upper Stone Canyon, environment
Vol 9 Issue 59
Pub: July 26, 2011