LADWP board approves agreements to phase out coal

Los Angeles (Platts)--19Mar2013/622 pm EDT/2222 GMT

The Los Angeles Department of Water and Power Board of Commissioners approved Tuesday an amended power sales contract with the Intermountain Power Agency that will lead to replacing the 1,800-MW coal plant in Delta, Utah, with a smaller natural gas-fired plant that complies with California's emission standards.

LADWP does not own any portion of the Intermountain Power Plant, but buys 44.6% of its coal-fired power. It holds a long-term power purchase agreement that expires in 2027 that cannot be renewed as California law does not allow coal power imports into the state because of their high carbon-dioxide emissions.

The amended sales contract that the Board of Commissioners approved will replace the expiring agreement. The Los Angeles City Council must also approve the amended contract.

IPP is owned by 23 Utah municipalities. It sells power to five other Southern California municipal utilities as well as additional munis in Utah and one investor-owned utility. All 36 IPP owners and coal buyers must eventually agree to the amended contract and to convert IPP to natural gas from coal. LADWP hopes to finalize those deals by this summer.

The size of the plant still needs to be negotiated. Initial plans estimate its size will be somewhere between 600 MW and 1,200 MW. The plan is to start building it in 2020 with an online date of 2025.

Coal currently supplies 39% of Los Angeles' power. To replace it, LADWP is transforming its power supplies by investing in energy efficiency with a goal of 10% of total supplies and increase renewables from the current 20% to 33%. By the time its coal-power supplies are phased out, LADWP's supply of gas-fired power will have increased to more than 40% from the current 20%.

LADWP's board also directed staff to develop the final transaction agreement to sell its 21% stake in the 2,250-MW Navajo Generating Station in Page, Arizona, to Salt River Project. Both parties are expected to approve the sale later this summer. The city council also must approve that sale.

--Lyn Corum, newsdesk@platts.com

--Edited by Valarie Jackson, valarie_jackson@platts.com

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