L.A. May Invest in Coal Power

Los Angeles officials, who are pledging to increase investments in clean energy sources amid growing pressure from state politicians and environmentalists, are quietly moving forward with plans to purchase a financial stake in a coal-burning power plant in Utah.

The L.A. Department of Water and Power already derives half of its electricity from coal-fired power plants, which can degrade air quality and contribute to global warming. By contrast, only 2.2% of the city’s electricity comes from renewable energy sources such as wind and solar power.

Now, the city is contemplating buying into another coal-fired power plant being built by the Intermountain Power Agency in Utah, despite assertions by environmental groups that the plant would aggravate haze over Zion National Park and other national parks and monuments on southern Utah’s Colorado Plateau. The DWP currently buys 44% of the power produced by two existing Intermountain Power coal plants. California utilities, including Anaheim, Burbank, Glendale and Pasadena, buy nearly 75% of their output.

From a financial point of view, the plan seems reasonable.

At 2 to 4 cents a kilowatt, coal is 10 times less expensive than the city’s current investments in solar power. Moreover, DWP revenues essentially subsidize roughly 7% of the Los Angeles general fund, paying for important city programs. Los Angeles leaders are leery of losing funding by purchasing more expensive renewable power and are loath to raise utility rates, fearing political fallout.

“You obviously want to be good environmental stewards. The ratepayers want that to happen,” said Bill Carnahan, executive director of the Southern California Public Power Authority, which includes the DWP and 12 other municipal utilities. “But at the same time, they want the lowest reasonable rates. I’m not sure people want to pay for [renewable energy], not when you begin talking a potential increase in rates.”

Conservation groups throughout the West are protesting the DWP’s plan, however, saying it’s high time Los Angeles learned to meet its huge electricity demands without fouling the air elsewhere. Another coal plant partly owned by the DWP in Nevada has been ordered by the U.S. Environmental Protection Agency to reduce emissions by 85% by 2006 because it has diminished visibility at the Grand Canyon.

“It is obnoxious to live in Utah and see our air quality, our potential for tourism, being impacted to bring power to places far away like Los Angeles,” said Kathy Van Dame, a policy coordinator with the Wasatch Clean Air Coalition.

A recent state law requires that privately owned utilities such as Southern California Edison get 20% of their electricity from renewable sources by 2017. But municipal utilities, led by the DWP, lobbied to be exempted from the law, and are again fighting to head off renewed efforts to impose the mandate on them.

Yet despite efforts to be excluded from the law, Los Angeles politicians are promising to try to meet the renewable requirement. Mayor James K. Hahn announced Wednesday that he was committed to increasing the city’s investments in renewable power sources to achieve a goal of producing 20% of the city’s power supply from such sources by 2017. The mayor called for the formation of a “Green Ribbon Commission” to develop a plan to achieve the 20% goal while providing reliable power at competitive rates.

“The health of all Angelenos is too important to stand idle at a time when we have an opportunity to demonstrate leadership in our stewardship of the environment,” Hahn said.

City Councilman Tony Cardenas scheduled a hearing at City Hall today on the same topic.

“I don’t think any utility should say, regardless of cost, we should meet this objective,” Cardenas said. “I want to see what’s real and what’s fantasy. It comes down to what we can afford. I think we have to live up to the single mom who is trying to feed her family and notices a $10 difference in her utility bills.”

The DWP’s commitment to renewable power has come under intense scrutiny. A 2002 city audit found that the department’s Green Power program, which collected roughly $3 a month extra from thousands of customers willing to pay more for renewable energy, failed to purchase nearly any new clean power. On Wednesday, City Controller Laura Chick released a follow-up audit that concluded that the DWP has taken steps to reduce lavish parties, such as a gala to celebrate the renovation of City Hall that cost the utility $100,000, and other wasteful spending, but still has not significantly developed new sources of clean energy.

“The city needs to adopt a renewable energy portfolio,” Chick told reporters at City Hall. “It should be the same as the private sector. We need to find ways to fund it.”

The Public Utilities Commission, legislators and other state regulators have begun debating whether to speed up the state requirement on renewable energy to sooner than 2017 -- and include DWP and other municipal utilities.

Los Angeles is increasingly facing criticism over the consequences of its energy demands on the Colorado Plateau. In a lawsuit last year, for example, dairy ranchers in Utah’s Millard County sued the coal plant owners and the city, alleging that the plants were sending electrical currents through the earth that were killing their cattle. The $100-million suit is pending.

Locally, meanwhile, environmental groups are questioning why Los Angeles has invested in polluting out-of-state coal plants instead of clean solar and wind power in California.

“Why send dirty jobs to Utah when we can have clean power here in Los Angeles?” said Matt Petersen, president of Global Green USA, the American affiliate of Green Cross International, a group headed by former Soviet leader Mikhail Gorbachev.

Reed Searle, general manager of Intermountain Power, said the agency is prepared to move forward with the new coal plant without Los Angeles. At most, he now expects all California utilities combined to buy only a 15% share in the plant. He has asked Los Angeles to inform him of its plans by summer.

“The economics of this unit are about as low as you could look at,” Searle said. “But [California utilities] have political considerations, and those considerations are going to be a big factor in what happens.”