DWP to Pay Pollution Penalty of $14 Million

After running its power plants full-bore to meet surging demand for electricity, the Los Angeles Department of Water and Power has agreed to pay a record $14-million penalty and slash power plant emissions to comply with clean-air laws.

In an agreement approved Tuesday by air quality officials, the DWP, which supplies power to most Los Angeles residents, will install state-of-the-art scrubbers on several plants. The scrubbers are expected to cut emissions by more than 90%.

Three plants--near Long Beach, in the San Fernando Valley and at Los Angeles International Airport--are among the dirtiest the city-run utility operates, but they have been used extensively this summer to help meet peak energy demand across the region.

The $14 million will go into a trust fund used to promote other anti-smog measures, such as converting smoky diesel trucks to clean fuels and developing nonpolluting fuel cells to produce electricity for cars and buildings.

“We’ve reconciled two major interests, keeping the lights on and keeping the air clean. This agreement does both,” said S. David Freeman, general manager of the DWP.

The fine is the largest ever assessed by the South Coast Air Quality Management District, AQMD officials said. But selling its excess electricity outside Los Angeles already has brought the DWP about $45 million in extra net revenue this year, Freeman said.

With electricity supplies extremely tight statewide this summer, the DWP fired up three plants that had been mothballed five years ago. That gave the agency an extra 960 megawatts of generating capacity. Those plants, however, are big polluters, producing about 50% more smog-forming emissions than more modern plants, Freeman said.

A few weeks ago, he contacted air quality officials and warned that the extra energy production was going to cause the department to exceed its emissions allocation for 2000.

If the current pace of energy production continues as expected, DWP power plants are on course to emit up to 100 tons more nitrogen oxide than smog-control regulations allow.

Nitrogen oxide is a brownish gas produced by combustion that turns the sky hazy, adds acids and microscopic particles to the air, and contributes to lung-scarring ozone.

In recent years, the DWP, which supplies power to 3.8 million users, would have been able to buy pollution credits from other companies to offset the extra pollution it has produced. But that has not worked out this year.

The credits are part of a pioneering program that regional air quality officials created seven years ago called RECLAIM.

The program enrolled 400 of the Southland’s largest polluters in a trading market that allowed manufacturers, utilities and other businesses to buy and sell pollution credits. The idea was that creating a market in credits would lead companies to find the cheapest way to reach clean-air goals.

But as companies have steadily reduced their emissions, the supply of credits has dwindled. Since January, the price of credits has soared, forcing utilities and other businesses to scramble for ways to cut emissions while maintaining production.

“The DWP had a significant amount of headroom between what they need to serve their native [local] load and the [credit] allocation they had under RECLAIM, even on peak summer days, to provide a lot of excess capacity to support the electric grid,” said Peter Mieras, South Coast district prosecutor. “But the RECLAIM rules do not excuse any operator from exceeding its allocations.”

Although the new scrubbers and other pollution-control equipment will cost about $40 million, that is now substantially cheaper than buying pollution credits in the RECLAIM market, Freeman said.

All the power plants will be rebuilt or fitted with the clean technology between 2001 and 2008, air quality officials said.

Southern California Edison also is grappling with ways to comply with clean-air laws while keeping electricity flowing. Reliant Energy Co. of Houston struck a deal with the Ventura County Air Pollution Control District earlier this month to keep power flowing from its two plants in Oxnard, according to air quality officials.