LADWP Takes Historic Action Toward Clean Energy Future for Los Angeles

LADWP Announces Negotiations to Sell and Divest from Navajo Generating Station and Board Approves Contract to Enable LADWP to Completely Transition Out of Coal from Intermountain Power Plant by 2025

“The era of coal is over. Today we affirm our commitment to make Los Angeles a cleaner, greener, more sustainable city,” said Mayor Villaraigosa. “By divesting from coal and investing in renewable energy and energy efficiency, we reduce our carbon footprint and set a precedent for the national power market.”

Thomas R. Sayles, President of the Board of Water and Power Commissioners, said, “Today we continued the Board’s efforts to meet environmental mandates efficiently and in a cost effective manner while maintaining a reliable power supply for our customers.”

LADWP currently owns a 21% interest in the 2250 megawatt (MW) Navajo Generating Station, receiving 477 MW of coal-fired power from the plant.  Today, the Board directed staff to develop the final transaction agreement, which is expected to be approved by both parties later this summer, with consideration by the Los Angeles City Council thereafter.

“We are very pleased that we have made progress with Salt River Project to enable moving forward with the negotiation of the final agreements that would enable LADWP to fully divest of coal power from Navajo by the end of 2015,” said Ronald O. Nichols, LADWP General Manager.  “This will close a chapter on our reliance on coal-fired power in Los Angeles.  Our efforts to create a clear path to ending our use of coal-fired power from the Intermountain Power Project is also a major achievement for a complex arrangement involving 30 Utah public power utilities and 6 California municipal utilities who receive power from that project.  This allows us to focus on the new low-carbon future of Los Angeles.”  

Eliminating coal power from Intermountain Power Plant (IPP) was more complex than negotiating the terms of sale of Navajo because LADWP does not own any part of IPP.  LADWP is one of six Southern California municipal utilities that purchase coal power from the 1,800-megawatt (MW) Intermountain Power Project located in Delta, Utah under a long-term power purchase agreement that expires in 2027.  IPP is owned by 23 municipal utilities in Utah and supplies power to 30 utilities in Utah and six utilities in Southern California, including LADWP.  Under California law, SB 1368, electric utilities will not be allowed to import power into the state that exceeds a fossil fuel emissions cap after their current contracts expire. The emissions cap is set at the level of an efficient, combined cycle natural gas power plant.

The Board’s action today approves LADWP’s portion of the amendment to the long-term power sales agreement to stop taking coal power from IPP earlier than 2027 and build a smaller natural gas plant that complies with California emission standards.  LADWP and other Southern California municipal utilities will continue to receive renewable energy from Southern Utah from the Milford Wind project; with power delivered over the same transmission line that presently also delivers power from the Intermountain Power Project.  The contract provides for beginning LADWP’s transition out of coal power from IPP with the commencement of engineering, design and construction of the smaller natural gas-fired generating plant by 2020 and completely eliminating coal power from IPP no later than 2025.  The smaller plant, estimated at between 600 – 1200 megawatts, will allow LADWP and the other local municipal customers to develop more renewables and bring it to Southern California along existing transmission lines.

“Working with IPP and its other customers, we have developed a win-win-win solution that is good for Southern California and good for Utah,” said Aram Benyamin, LADWP Senior Assistant General Manager – Power.  “Siting and building a new power plant and the transmission lines to deliver replacement power to Los Angeles would have cost at least twice that of rebuilding at IPP.  By using an existing power plant site and existing DC Southern Transmission System  for delivery of power from the future project and transforming it we will save money, time, reduce emissions by over 2/3 that of the existing plant, be able to build more renewables and bring that power home to Los Angeles.  That’s a home run.”

The amendment is subject to approval by the Los Angeles City Council, will be considered by the other municipal purchasers and is currently being ratified by the 23 Utah owners.

Today’s actions by the Board are the latest steps taken to transform LA’s energy supply and create a clean energy future.  Other major accomplishments include reaching 20% renewables in 2010, establishing and implementing a 150 MW Solar Feed-In Tariff program, approving the largest utility-scale solar developments of any municipal utility in the country, completing the utility-built Adelanto and Pine Tree Solar Plants and more than doubling the LADWP’s investment in energy efficiency, among others.

The transformation of LADWP’s historic energy supply is well-underway. “Eliminating coal is one leg of our transformation, but we can’t stand on that leg alone – we have to replace that power supply,” said Ronald O. Nichols, LADWP General Manager. “That is why for several years now and for several more to come, LADWP has been taking steps to replace coal power with a combination of greatly increased commitment to energy efficiency, expanded renewable energy, and balancing that with a necessary amount of low-carbon natural gas power. “All of these elements will come together to ensure a reliable, cost effective power supply transformation.”

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