CommentsLA WATCHDOG--On Tuesday, the Board of Water and Power Commissioners approved the expansion of the Feed-in-Tariff program by 300 megawatts, contrary to the recommendation of the Ratepayers Advocate.
Under this program, the Department of Water and Power will enter into long term commercial contracts to purchase solar energy generated within the City from third parties for 14.5 cents per kilowatt hour. Third parties include solar companies, landlords, investors, or real estate developers, but not residential households with small solar systems on their roofs.
However, the purchase price of 14.5 cents per kilowatt hour is almost six times the price of utility built solar in the desert of 2.5 cent per kwh. This higher price will cost Ratepayers more than $50 million a year and $1.1 billion over the twenty-year life of the contracts. This will increase our ever-escalating rates by 1.4% a year.
The 14.5 cents price purchase price paid by DWP is only 2.2 cents below the average retail price of 16.7 cents paid by Ratepayers, an insufficient amount to pay for DWP’s massive overhead. This demonstrates that the Feed-in-Tariff program is big loser and must be subsidized by the Ratepayers.
[Note: Speaking of overhead, the Feed-in-Tariff Program Guidelines brochure is a staggering 145 pages. This user-unfriendly document should be enough to scare off any and all participants.]
While the Department listed a number of benefits, this program is just another pet project of Mayor Eric Garcetti who has not met a renewables program he does not like, regardless of the cost.
The Department claims that the Feed-in-Tariff program will create local jobs and spur economic development within the City. While this may be true, many more jobs will be created using the $50 million in annual savings.
DWP is also pitching that the development of these in-basin solar projects will defer the construction of expensive transmission lines into the City. However, this “grasping at straws” argument does not fly as there is significant excess capacity on the Department’s transmission system, especially given the limited amount of energy that will be generated by this program.
This “wasteful” deal that “discredits” DWP is not final as it must be approved by the City Council’s Energy Committee chaired by Nury Martinez who, in the past, has shown good judgement by questioning some of the Department’s more uneconomic projects.
Rather than proceeding with the Feed-in-Tariff program that was approved by the politically appointed Board of Commissioners, the Energy Committee should protect the Ratepayers and follow up on the recommendation of the Ratepayers Advocate which calls for the rejection of this deal until the program “1) no longer relies on investment returns determined by third or interested parties to be necessary for real estate owners and banks, 2) is bid in some manner, or 3) addresses the reliability needs of the distribution system.”
$1.1 billion of Ratepayer money is worth the fight.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)
-cw
