Wednesday, March 20, 2013

Los Angeles will be off coal by 2025 at the latest

Kristin Eberhard, Legal Director, Western Energy and Climate Projects, Santa Monica
Today the Los Angeles Department of Water & Power (LADWP) Board unanimously approved its plan to get off of coal by 2025 and replace it with cleaner energy. This is the culmination of years of work and negotiation, and sets the stage for the largest municipal utility in the country to be coal free by 2025 at the latest, but possibly sooner.
LADWP currently has two sources of coal power: Navajo Generating Station in Nevada where LADWP is a 21% owner, and Intermountain Power Project (IPP) in Utah where LADWP purchases approximately 2/3 of the power. California law requires LADWP to stop getting power from these plants when the current contracts end: in 2019 for Navajo, and in 2027 for IPP. LADWP has long planned to get out of Navajo four years early - by 2015. They plan to sell their share in the plant to one of the other co-owners, who will then continue to operate the plant, thus acheiving pollution reductions for LADWP, but not necessarily achieving any pollution reductions from that facility.
Now, the utility has a definitive plan for getting off of coal at IPP early - by 2025 at the latest. This move will achieve significant pollution reductions, as it will shut down the coal plant permanently. Today the board took an important step along that path by voting to approve amending the existing contract with IPP to allow purchase of natural gas power, rather than just coal power, before the contract ends in 2027.
Pending approval by the other 35 smaller utilities (5 in Southern California, and 30 in Utah) who purchase power from IPP, this clears the way for decommissioning the coal plant and building a smaller natural gas plant on the site beginning around 2020.
LADWP plans for a smaller plant because they will first prioritize cleaner resources - energy efficiency and renewables - and build the natural gas plant only as large as necessary to meet power needs and to maintain power on the 500 mile long Direct Current (DC) transmission line that connects the IPP site to Los Angeles. The smaller plant will free up capacity on the transmission line to bring more renewable power into Los Angeles. The line has a capacity of 2,400 MW and currently carries 400 MW of renewable into LA.
Even with conservative assumptions about energy efficiency, the change from coal to natural gas will reduce LADWP's GHG emissions nearly 60% below 1990 levels in 2025.
LADWP's Projected GHG Emissions
LADWP Projected GHG Emissions.png Source: LADWP presentation on LA's Clean Energy Future
Of course the definitive date for exit from coal is big news. But a date certain that locks us in to further pollution would not be a win, so the flexibility around timing and sizing are really important components that make this plan a good one.
Flexibility around timing means that LADWP is locked in to getting out of IPP two years earlier than required, but could get out even sooner. The bonds on IPP will not be paid off until 2023, so it is currently unlikely that LADWP and the other utilities would agree to get out before those are paid off. However, the cost of coal compared to natural gas, renewables and efficiency is in flux, and as that information changes over the next few years, the financial calculation could shift towards it being desirable to get out of the plant sooner.
Flexibility around sizing means that LADWP is locked in to reducing the plant size by 1/3, but could choose to reduce it even more before construction starts. The current IPP coal plant produces 1,800 MW of power, and LADWP purchases about 1,200 MW of that power. The new natural gas plant on the site would produce 1,200 MW with LADWP taking about 600 MW of that power. It plans to replace LADWP and the other utilities will make the final analysis of how big the plant should be in 2018. This gives LADWP the opportunity to continue pushing the bounds on their newly-reinvigorated energy efficiency programs, as well as to continue making progress towards the state requirement to get 33% of their power from renewable by 2020. If those two efforts are going well, it is possible that they will decide to make the natural gas plant even smaller.
Now that the Board has approved amending the existing power sales contract, the next steps are:
  • Get the other 35 utilities to also approve the amendment (summer 2013)
  • Write a new power sales contract from 2027-2077 and get all purchasers to sign (by end of 2013)
  • Analyze power system needs and decide on necessary size of plant (2018)
  • Get proposals for building a natural gas plant with most recent and efficient technology (2019)
  • Get approval for the new plant from the California Energy Commission (2020)
  • Begin construction on the new plant (2020)
  • New plant comes on-line (2025)
Dr. Pickel, the Los Angeles Ratepayer Advocate also gave a presention on the costs of getting out of coal and agreed that "climate change is a key world problem" and that LADWP and California play a n important role in showing that we can achieve GHG emissions reductions in a cost-effective manner.