Cities move to swiftly extend dirty-power contracts
Bucking a landmark California law to reduce greenhouse gases, several Southland cities are moving toward accepting a Utah utility’s offer to extend for decades contracts for dirty, coal-fired power before the new law -- which would ban such renewals -- takes effect Jan. 1.
The law, passed by the Legislature last summer, seeks to combat global warming by prohibiting utilities from contracting for power from sources that don’t meet stricter greenhouse gas standards. The law bans power from sources that generate more greenhouse gases than in-state natural gas plants.
Officials noted that the Utah utility’s coal-fired plants are the largest sources of electricity for six Southern California cities, including Los Angeles. Many said that if they didn’t renew their contracts, the power would just be sold elsewhere, not eliminated, and would cost their customers billions.
“We in Burbank don’t believe that law will reduce greenhouse gas emissions,” said Burbank Water and Power Assistant Manager Fred Fletcher, who added that extending its contract with the Intermountain Power Agency in Delta, Utah, would save ratepayers $300 million to $600 million. The mayor and council voted unanimously last week to extend their contract to 2044.
Riverside Public Utilities’ advisory board voted unanimously Friday to ask city officials to renew their pact, said General Manager David Wright, while power managers for Glendale and Pasadena said they would ask their cities to renew their contracts within three weeks. Anaheim officials are weighing what to do, a spokesman said.
The contracts are not set to expire until 2027, but utility officials said they needed to act now to extend them because the new law was looming and because they needed to lock in lower costs in future years.
The officials said that they had been paying off capital costs to construct the Utah power plants since the late 1980s and that if they didn’t renew, they would lose the right to buy power for about 50% less once those costs were paid off in 2027.
“It would be akin to paying off the mortgage to your house only to have it revert to the previous owner,” said Pasadena Water & Power General Manager Phyllis Currie.
But the Los Angeles Department of Water and Power, which buys 66% of the power produced by the Utah plants and uses it to supply nearly half of the city’s power, will not seek to renew its contract, said board of directors President David Nahai.
“I think the Legislature has spoken clearly on this issue,” said Nahai, who added that he did not fault other utilities for their decisions. He said he was not worried about replacing the city’s largest, cheapest power source in 21 years.
“By the time 2027 rolls around we hope to be in a position to have many other options available,” he said. “We’re on the verge of a new paradigm as far as energy supply to this city is concerned. It’s moving away from coal toward more renewable energy sources like wind, geothermal, solar and biomass.”
Environmentalists lambasted the decisions by the smaller cities, while lawmakers expressed concern.
“It’s a giant step backward,” said V. John White, head of the Center for Energy Efficiency and Renewable Technology, a Sacramento-based nonprofit. “This is penny wise and planet foolish.”
He and others said coal’s apparent lower costs might evaporate if state or national regulations changed to impose taxes or costly fees on such power, and they noted that there could be liability issues down the road as well. He said there was ample time for the cities to come up with alternative sources.
Fossil-fuel-fired power plants are the largest producers of greenhouse gases in the U.S., contributing nearly 40%. Most of the nation’s plants are powered by coal and emit a host of other air pollutants. A report this week found that California’s greenhouse emissions grew 14% from 1990 to 2004.
Alicia Trost, press secretary for the law’s author, Sen. Don Perata (D-Oakland), said: “Even though this bill doesn’t take effect until January, that doesn’t mean we’re not trying to send a clear message today.... All the evidence seems to point to [these cities] trying to get around this impending law.... Our main concern is: These were major opponents of the bill, the governor signed the bill, they lost the battle and now they’re trying to win the war.”
She said top staff for Perata had contacted the Southern California Public Power Authority, which represents all six municipal utilities that have contracts with the Utah utility, and voiced their displeasure.
The authority’s executive director, Bill Carnahan, said he couldn’t speak for the individual cities but believed that they were trying to comply by taking action before the law went into effect.
“If a city is interested in doing the extension based on the merits, then it only makes sense for them to try to do it before the 1st of January,” Carnahan said.
He added that even as utilities switched to increasing amounts of renewable energy, Burbank in particular had argued “very logically” that coal would offer a reliable, affordable backup.
“The problem with wind resources is you can’t count on the wind blowing every day. You can’t count on the sun shining every day, plus solar is three or four times more cost,” he said. “If the wind is not blowing, and you’ve got a summer day and the customers are still there, then you have to crank up a conventional resource.”
Perata’s bill, SB1368, was passed as a companion piece to legislation that caps emissions for some industries and requires California to slash greenhouse gases by 25%. Implementation of AB32 will take years, but the Senate law is designed to make an impact sooner.
Southern California municipal power officials who are pursuing renewal contracts insisted that they were fully committed to reducing greenhouse gas emissions in other ways and said efforts to renew their contracts with Intermountain had been underway for years, long before SB1368 was passed.
All the utilities -- including Los Angeles’ -- also want to maintain access to a huge, cross-Western transmission line owned by Intermountain that can be used to ship power from wind as well as coal. Renewal of the cities’ power contracts will include the right to continue transmission use. Officials at L.A.'s DWP said they would try to negotiate a separate agreement for continued transmission line access.