Switch in Power Puts DWP on a New Road

The team of environmentalists appointed by Mayor Tom Bradley to head the city’s giant Department of Water and Power plans to champion an activist agenda ranging from a ban on new coal-fired power plants to tree planting to improving air quality.

The new commissioners, led by Bradley’s former chief deputy Michael Gage, say they will pull the DWP out of a major fossil fuel-burning power project in Utah, now on the drawing boards, and instead invest in solar, wind and geothermal energy.

Handpicked by Bradley to become president of the DWP Board of Commissioners later this month, Gage said he envisions that much of the city’s future power needs will be satisfied through greater conservation and construction of mini, cogeneration power facilities owned by private companies.

“The DWP is the best-run department in the city,” said Gage in an interview. “But like any organization, it has its blind spots. They’ll be getting more in touch now. The dialogue has changed.”

Some commissioners and analysts see Gage’s agenda as everything from benign environmentalist platitudes to a dangerous direction that could jeopardize the city’s water and power supplies.

A few City Council members say they support many of the individual goals but are concerned that the positions are too strident. “You cannot totally eliminate your current reliable energy source (coal) from your future planning,” said Councilman Zev Yaroslavsky.

Rick Caruso, the current DWP board president, said he hopes the new appointees will soon “have a better appreciation of what the DWP has done” and will change little at the nation’s largest municipally owned utility.

He fears that the appointees, facing confirmation this month, have not “shown their true colors” and may be harboring an even more sweeping agenda.

In January, Bradley appointed Gage, a self-styled environmentalist, and Dorothy Green, of the environmentalist group Heal the Bay.

To form a three-vote environmentalist majority on the five-member board, Bradley two weeks ago nominated Mary Nichols, senior staff attorney with the Natural Resources Defense Council. Her appointment was approved by a City Council committee last week and she awaits confirmation by the full council.

Caruso, an attorney and real estate developer who has been at odds with Gage, said some of the new plans, such as abandoning the option of new coal plants, are “unrealistic.”

“Those types of decisions can cost us a lot of money,” said Caruso. “To say we are not going to do it, period, puts the city in jeopardy. I don’t think he knows what he is talking about.”

City Council members are also growing increasingly skeptical as the new environmental agenda unfolds.

“You should look at this as a well-run department and not come in there and think that you’re going to change the whole course of it,” council President John Ferraro cautioned commission nominee Nichols at her recent confirmation hearing.

One financial analyst expressed concern that Bradley wants to turn the $3-billion utility into what the mayor called an “environmental trend-setter.”

“It’s been well-documented that when politics play a role in utilities, it can cause severe problems,” said John Costagliola, assistant vice president and primary DWP analyst for Standard & Poor’s Corp., one of the nation’s two most influential credit rating agencies.

Gage insists his plans won’t lead to increased water or electric rates in Los Angeles--now among the state’s lowest--or affect supplies.

In an interview, Gage said that the alternative energy sources he wants pursued will cost less in the long and short runs. Gage said alternative sources, such as wind, “once were thought to be flaky. Now they are seen as efficient.”

Commissioner Green said that seemingly small conservation measures could save DWP money. “Just by using more efficient light bulbs (citywide) we could eliminate the need for a new power plant,” Green said. She was unable to cite figures to back up the assertion.

Utility analyst Costagliola said many energy innovations have been disappointing to disastrous for other utilities. “To be dependent on them is not prudent utility practice,” he said.

Gage maintains that--when future costs of cleaning up pollution from coal-fired plants are considered--wind, solar and geothermal are more economical energy sources.

“Do we have a responsibility to remove some of the (pollutants) we put into the air?” Gage said. “The answer is yes.”

Currently, about 50% of the DWP’s energy comes from coal-fired plants, 20% from oil and gas burning facilities, 10% from nuclear generation, 10% from hydroelectric and 10% is purchased from other utilities.

Less than 1% of the DWP’s power comes from the alternative sources being championed by Gage.

“I don’t think most of this is ‘out there,’ ” he said. “Most of this has been around for a long time.”

Board President Caruso said that some alternative energy sources have been explored, but are not feasible on a large scale. Others worked and are already incorporated in DWP’s programs, he said.

DWP has spent millions of dollars experimenting with solar and geothermal energy over the last 10 years and found both to be troublesome, expensive and unreliable, officials said. One geothermal plant, for instance, was an efficient provider of power, but the liquids in the hot springs were so corrosive that engineers “couldn’t keep pipes in the ground,” said Dennis B. Whitney, assistant engineer of systems development.

The department has another geothermal project on the boards and has spent $15 million on its development, Whitney said.

DWP also spends $4.5 million a year on solar power development, and in the mid-1980s, operated an experimental solar-powered house in the San Fernando Valley. So far, the technology is not efficient enough for commercial use, Whitney said.

A test of Gage’s agenda, which is endorsed by the mayor, may come soon. The DWP is seeking 600 megawatts of additional energy by 1995--enough to handle projected population growth through the year 2000.

On the water side of the DWP, Gage’s agenda generally is less controversial than on the power side.

Gage wants the department to do a better job on water conservation and to pay farmers to use more efficient irrigation.

But his position on the use of Mono Lake water clashes with that of DWP management.

Gage says he wants to “negotiate, rather than litigate” to find a solution to the lawsuits brought by environmentalists who allege that DWP is destroying the lake’s fragile ecosystem.

Caruso said the department recently was close to settling the dispute, after seven years of negotiations, but the agreement was scuttled when commission nominees inadvertently gave environmentalists hope of getting a better deal with the new board.

Gage said that “the discussions have gotten substantially more serious” since he and Green joined the board.