Wind Power Agreement Breezes Ahead

The Los Angeles Department of Water and Power (LADWP), which serves as the project manager, would receive most of the wind energy – 92.5% – produced by a new 200-megawatt capacity wind generation facility being developed in Millard County, Utah by UPC Wind. The agreement with UPC Wind was approved today by the Southern California Public Power Authority (SCPPA), acting on behalf of LADWP and the cities of Burbank and Pasadena, and is expected to go to the LADWP Board of Water and Power Commissioners and the Los Angeles City Council for approval in the next 90 days. The wind project is expected to be ready for commercial operation by Dec. 31, 2008.

“The Milford project is another important step forward in our efforts to meet the Board’s policy of obtaining 20% renewable energy by 2010,” said H. David Nahai, president of the LADWP Board of Water and Power Commissioners.  Together with other recent agreements, we’re making progress toward our goal.  The Board looks forward to considering this matter and forwarding it to the City Council and Mayor for approval.”

LADWP General Manager Ron Deaton said that the LADWP’s 185-megawatt share of the Milford Wind Corridor Phase 1 project represents enough power to serve about 39,000 homes and meets 1.9% of the City’s renewable energy goal of 20% by 2010.

“We are also very pleased that this agreement has an early buyout option to enable LADWP, along with Burbank and Pasadena, to acquire ownership of the facility after 10 years,” Deaton said, adding, “Ownership is a key part of our renewable energy strategy going forward. Through ownership, we gain control of a valuable renewable energy asset, as well as the ability to control costs, operations and jobs.”

Another unique aspect of the agreement is that SCPPA, acting on behalf of LADWP, Burbank and Pasadena, will prepay for the energy to be delivered during the 20-year term with proceeds from an upcoming bond sale. By prepaying up to $270 million for a guaranteed amount of energy, due when the plant begins commercial operation, LADWP, Burbank and Pasadena will save at least $42 million compared to the cost of constructing and financing the plant themselves.

SCPPA Executive Director Bill D. Carnahan said; “as far as we know this is the first agreement of its type for a publicly owned utility.” SCPPA will contract with UPC Wind for the 20-year term, provide the project financing once the project is complete, and sign power sales agreements with LADWP and the other participants for the output of the project at SCPPA’s cost to retire the debt and pay for the ongoing operating expenses.

LADWP and other SCPPA members are also currently working to upgrade the Southern Transmission System, a +/- 500-kilovolt DC line that delivers power from the Intermountain Power Project station in Utah to Southern California. The IPP station will be the connection point for wind power generated by the Milford facility.

The Milford Wind agreement will increase LADWP’s renewable energy supply to about 8% of the power being served to customers. The agreement evolved from a request for proposals (RFP) issued by SCPPA on behalf of LADWP and other member cities to help reach their goals for increased supply of renewable energy to customers. Utilities throughout the state are seeking to increase their supply of renewable energy, such as wind, solar or geothermal power, which are free of greenhouse gases that contribute to global warming and other pollution-causing emissions.

LADWP recently issued its own RFP for 2,200 gigawatt hours of renewable energy per year, worth about $176 million annually, for “green power” proposals that offer immediate facility ownership or to long-term purchase agreements that have an ownership option. Additionally, LADWP is targeting proposals for renewable energy resources that would be constructed on LADWP-owned land located in the Salton Sea area of California. The Department owns about 5,800 acres of land in the Salton Sea, which has fertile opportunities for solar and geothermal power.

The Los Angeles Department of Water and Power, the nation’s largest municipal utility, provides reliable, low-cost water and power services to Los Angeles residents and businesses in an environmentally responsible manner. LADWP services about 1.4 million electric customers and 680,000 water customers in Los Angeles.

SCPPA is a California nonprofit joint action agency whose members include; the cities of Anaheim, Azusa, Banning, Burbank, Cerritos, Colton, Glendale, Los Angeles, Pasadena, Riverside, and Vernon plus the Imperial Irrigation District.

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LADWP,
Carol Tucker, (213) 367-1815