After Energy Jolt, Cities Think Small
During last summer’s drenching heat, residents in the desert towns of the Coachella Valley were paying more than ever to keep their air conditioners humming at 85 degrees--the result of California’s collapsing power industry.
Homeowners in San Marcos in San Diego County watched their bills triple. And few cities in the state were immune to threats of rolling blackouts.
But in La Quinta, a desert town powered by the Imperial Irrigation District, the rates and power supply remained steady during the crisis, even as residents in neighboring Indian Wells paid three times as much for their electricity from Southern California Edison Co. And in Los Angeles, where residents saw no price increase, the city-owned Department of Water and Power was able to sell excess electricity at a profit.
In the aftermath of the power crisis, more than a dozen communities around California have considered abandoning large investor-owned utilities such as Edison and San Diego Gas & Electric. Of those, Irvine in south Orange County may be best poised to make the break.
Irvine hopes to create a utility to serve what is now a large, undeveloped area along its northern boundary. The city plans to annex the land, on which the Irvine Co. plans to build 12,350 homes along with a mix of businesses and industrial uses.
By creating what is termed a “spot utility” to serve a specific area, leaders in the master-planned community are hoping to avoid some of the hurdles that have tripped up other cities dreaming of freeing themselves from soaring energy costs and the tangle of the state’s power grid.
Because the area under consideration is raw land and bean fields, Irvine can avoid the difficulty of luring away Edison customers and negotiating to use--or even buy--distribution systems. And its size--roughly 3,600 acres that border the closed El Toro Marine base--is large enough to support its own power plant, meaning the area would be immune to outages that might flare up on the larger distribution grid.
Nor would the city be at the mercy of Edison or any other utility to help bring in the electricity from suppliers, which might be out of state.
Irvine Stands to Benefit From Better Technology
Irvine also could take advantage of the latest technology in the power industry.
There are noiseless neighborhood generators that service about a dozen homes or one small business, and larger plants that could service the entire area. Some modern plants also harness the heat that’s created during electricity production to cool or heat homes and businesses.
“In Irvine, it’s a recipe that’s worth looking at,” said Ted Flanigan, managing director of the California Energy Coalition, a nonprofit group that promotes energy conservation
The biggest problem city officials might face would be trying to explain to residents elsewhere in Irvine why their new neighbors to the north are paying less for electricity.
“That would be an interesting and, quite frankly, a welcome occurrence,” said Larry Agran, the city’s mayor.
The area also has the right mix of uses--homes account for only about 15% of the development. The rest is commercial, office and industrial--big energy users.
“It is an attractive load to serve,” said Len Viejo, president of Astrum Utility Services, which is conducting feasibility studies for six California cities, including Irvine.
Few cities have such ingredients, however.
The Coachella Valley, for instance, would have to bargain for as many as 120,000 existing Edison customers.
Palmdale is eyeing 93,000 Edison customers as it considers letting the area’s water district provide the city’s power.
“If you take away thousands of customers, it puts pressure on the rest of the system to increase costs,” said Charles Wilson, an Edison project specialist.
Experts agree that managing a utility is no easy trick--operations are around the clock, maintenance costs can be enormous, and there’s no guarantee a new municipal district would be able to buy power from suppliers any cheaper than Edison or other investor-owned utilities.
On the other hand, the municipal districts don’t have to pay income taxes or dividends to investors.
“In the long run, municipal utilities have done a better job for their customers, and that can happen even in today’s market,” said Jerry Jordan, executive director of the California Municipal Utilities Assn.
San Marcos, Chino and Chino Hills have all considered spot utilities in their undeveloped areas.
San Marcos joined several other cities two years ago in proposing to build a 250-megawatt plant in Burbank they hoped could supply some of the town’s power and hold off another energy crunch.
But San Diego Gas & Electric was unwilling to help San Marcos bring in the power and the city gave up its efforts last month, though it is holding onto its stake in the project.
Chino and Chino Hills also dropped their efforts after concluding that the risks outweighed the benefits.
The areas were to be predominantly residential, and the customer base would have amounted to just a few thousand households, lacking the heavy energy users that would make the effort financially sound.
Coachella Valley Cities Want More Control
Officials in Indian Wells, however, believe there is power in numbers. A councilman there is leading a movement among six Coachella Valley cities to form their own power utility district.
“When the rate goes from 13 cents to 26 cents per kilowatt hour, there’s motivation,” said Indian Wells Councilman Percy Byrd, who says his electricity bill averaged $700 a month last summer, almost triple from the year before. “My concern is forming a municipal utility district so we can begin to get a handle on our own destiny.”
So far, four cities--Indian Wells, Cathedral City, Palm Desert and Desert Hot Springs--support the plan. If Palm Springs and Rancho Mirage buy into the plan, the matter will be brought before voters in November.
But even then, the effort could face a tough road.
The Coachella Valley communities aren’t interested in generating their own power, so the district would have to secure supply contracts, figure out how to transmit the electricity to the desert, and negotiate the purchase of the infrastructure from Edison, which would probably be an unwilling seller.
“Whenever there’s talk about a community wanting to take over an existing system, as with Palmdale and Coachella Valley, you’re talking about a government takeover,” Edison’s Wilson said. “We’re part of the fabric of California, and we want to remain so.”
