- Written by Evan Gillespie
07 Oct 2011
ENERGY PRIORITIES - Last week on this site, Jack Humphreville assailed a forward-thinking proposal to redirect LADWP customer bills away from an out-of-state, dirty, dangerous and increasingly expensive coal-fired power plant and toward job-creating and money-saving local clean energy. (Link)
Tossing around unverified cost estimates and poorly rationalized arguments, Mr. Humphreville’s misguided and short-sighted stubbornness would keep Los Angeles tied to coal through the rest of this decade, putting customers at risk of paying more than we have to and limiting job growth here in LA.
Los Angeles currently relies on out-of-state coal-fired power for roughly 40% of our electricity – more than we get from any other source. Getting power from coal is damaging to public health, the environment and DWP customer’s pocketbooks. As LADWP maps out where it will get power from in coming years, there is an opportunity to protect customers from avoidable rate increases and to create jobs in Los Angeles by wisely investing in energy-saving measures and sustainable energy sources.
As has been previously pointed out on CityWatch, the cost of dirty energy is rising across the nation, which means that continued dependence on dirty fuels will cause our customer bills to continue to increase.
When power rates were considered last year, we saw an excellent example of how our pocketbooks are put at risk by fossil fuels. Our reliance on increasingly expensive fossil fuels was one of the primary reasons that LADWP fell into debt (and was thus requesting a rate increase).
Even worse, a report commissioned by Councilmember Jan Perry found that our continued reliance on dirty energy was also going to create financial troubles for us all going forward. From PA Consulting’s February 2010 ECAF report:
The current undercollection in the ECAF account is approximately $125 million. This undercollection resulted from the cap on ECAF changes that failed to allow rates to keep up with rising costs. The majority of the current undercollection resulted from a sharp increase in natural gas prices that was experienced in 2008.
Put another way, the reason LADWP ran up its debt and went looking to customers for a rate increase was over dependence on fossil fuels.
Looking ahead to assess future financial risk, the Councilmember Perry-commissioned PA Consulting report had the following to say:
Coal prices are projected to increase substantially over the next five years, especially at IPP. This has a very strong impact on ECAF costs. While these prices are strongly influenced by market forces, minimizing the extent of these increases should be a major strategic focus of the Department.
So, let’s review. Looking back, our over-dependence on fossil fuels was the primary reason the utility fell into debt. Looking ahead, our reliance on out-of-state and increasingly expensive coal is projected to have a “very strong” impact on rates.
The Navajo Generating Station, due to its ignominious status as one of the largest sources of smog pollution in the country, is facing a ruling by the EPA to mandate upwards of $700 million in pollution controls. This same ruling at SCE’s neighboring Four Corners plant was enough to send the investor owned utility running from the plant, and should likewise inform LADWP’s outlook for its ownership status at NGS.
Rather than shipping more money out of Los Angeles to keep a dirty and increasingly expensive coal plant open, LADWP should invest that same money – your money – in local clean energy resources that will create needed jobs right here in Los Angeles.
The longer we wait to do what needs to be done and move beyond coal, the more expensive coal power will become and the less valuable our stake in Navajo Generating Station will be.
Los Angeles cannot afford to keep wasting money on dirty, dangerous and increasingly expensive coal-fired power. Change can be scary to some, but a change in how we get power in LA is necessary if we are going to save money and put people to work.
Find out more about the effort to move Los Angeles beyond coal at www.labeyondcoal.org.
(Evan Gillespie is the Beyond Coal Campaign Representative for the Sierra Club. Reach him at Twitter: Twitter.com/LABeyondCoal) -cw
Tags: coal, coal fired power, fossil fuels, smog, LADWP, Jack Humphreville, ECAF, Jan Perry, energy, DWP rates, jobs
Vol 9 Issue 80
Pub: Oct 7, 2011