LAWATCHDOG - On Friday, Mayor Villaraigosa and the very prosperous looking Al Gore held a “really big deal” press conference to celebrate the Department of Water and Power’s plan to eliminate coal as a source of power by 2025, two years earlier than planned. [VIDEO LINK]
However, for some strange reason, there was no discussion about the impact on Ratepayers’ wallets.
DWP is proposing to sell its 21% stake (representing 477 megawatts of capacity) in the Arizona based Navajo Generating Station to Salt River Project, a 22% owner. This deal would end DWP’s use of coal-fired power from Navajo by the end of 2015, four years ahead of the expiration of its existing contract.
The cost of this early phase out of the Navajo facility was estimated to be $800 million, although revised estimates may be lower as a result of the decline in natural gas prices, at least for the time being.
The early phase out by 2025 of the Intermountain Power Plant and DWP’s obligation to buy 1,100 megawatts of capacity prior to the expiration of power purchase agreement in 2027 is more problematic given the complexity of IPP’s ownership structure. However, the current DWP plan appears to be well conceived as the construction of a smaller gas-fired generating plant in Utah allows DWP to take advantage of IPP’s existing infrastructure and the 500 miles of transmission lines.
But once again, there was no discussion of cost of the early phase out of the IPP coal fired facility which was previously estimated to be in the range of $1 billion.
There also appears to be an issue as to the cost effectiveness of the early phase out of IPP. According to a preliminary analysis by the Ratepayers Advocate, the cost to eliminate a ton of IPP carbon dioxide soars to $109 a metric ton. This compares to “only” $26 per ton for the Navajo early phase out, an amount that is considerably higher than the current market price.
Overall, by 2025, DWP will reduce its emissions of carbon dioxide by over 10.6 million tons a year (60% below 1990 levels) by eliminating coal fired facilities that currently supply 39% of our power. By 2025, DWP will rely on natural gas and renewables for 47% and 33%, respectively, of its power supply. However, DWP’s dependence on renewable energy may create significant reliability issues that will need to be addressed.
But how much more can the DWP Ratepayers afford?
Over the next two years, our power rates will increase by 11% and are projected to increase by 36% over the next five years and double over the next decade. This will increase the average homeowner’s bill by $1,500 to $2,000 a year.
At the same time, we are being hit up for over $1 billion by our Elected Elite and their cronies.
There is the 10% City Utility Tax; the potentially illegal 8% Power Transfer Fee; the IBEW Labor Premium; the cost of 1,600 City employees dumped on DWP (along with their $200 million pension liability); and the cost of numerous pet projects involving such goodies as the LA River, Elysian Park, Griffith Park, the Children’s Museum, the million dollar views of the Silver Lake Reservoir, and the Fire Department.
As opposed to doubling our power rates over the next ten years and then sticking the Ratepayers with the entire burden of the early phase out of coal, the City needs to do its fair share.
To begin with, the City should lessen the burden on Ratepayers by eliminating the hated and less than transparent $250 million, 8% Power Transfer Fee over a 15 year period, starting in 2016, the first year after the elimination of coal fired power from the Navajo Generating Station.
As it is, there are serious questions regarding the legality of this Transfer Fee under Proposition 26 (The Supermajority Vote to Pass New Taxes and Fees Act) that was passed by California voters in November of 2010.
City Hall should also eliminate all pet projects, no matter how worthy, unless they are approved by the voters pursuant to Proposition 26.
DWP should also require all DWP employees to contribute to the cost of their healthcare and pension plans in manner consistent with private sector utility workers.
DWP should also hold the line on any wage and benefit increases as DWP workers enjoy wage premiums of up to 40% compared to other regional utilities.
DWP should also embrace the work place reforms recommended by PA Consulting in its August 23 report involving the “efficiency” of DWP’s work force, including benchmarking its operations with other regional utilities.
DWP and the Water and Power Employees Retirement Plan should also pursue the litigation (Romero v The City of Los Angeles) to rescind the reciprocal arrangement with the Los Angeles City Employees Retirement System and the dumping of $200 million of unfunded pension obligations on DWP and its Ratepayers.
While the environmental goals of the Mayor and the City Council to eliminate out of state coal fired power plants as a source of energy are commendable, City Hall needs to realize that Ratepayers are not an endless of cash, especially when our Elected Elite are ripping off Ratepayers for over $1 billion a year.
It is time for our Elected Elite to clean up their act if they ever want to regain the trust and confidence of hard working Angelenos that will be necessary to approve any tax increases.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected]. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)
-cw
CityWatch
Vol 11 Issue 25
Pub: Mar 26, 2013
