T Hoffarth/Flickr (Creative Commons-licensed)
The LADWP's John Ferraro Building
The citizens’ committee for a new office of public accountability in Los Angeles will name a ratepayer advocate soon for the L.A. Department of Water and Power. L.A. City Council members have delayed efforts to raise rates until that watchdog is selected. Leaders of the DWP say that's harmed funding for programs including energy efficiency.
Publicly owned utilities must, by law, regularly report their energy efficiency to the state Energy Commission. They don’t always do that on time. DWP’s senior assistant general manager for sustainability, Lorraine Paskett, told DWP's board the utility missed its last deadline.
"I’m frustrated that we’re a year late, but we are where we are and we’re not alone," she said.
At a hearing of the board of water and power commissioners last month, Paskett said the DWP is also missing its state-mandated goal for energy efficiency. California requires utilities to cut consumption 10 percent over 10 years. Paskett said that because the DWP is short on money, she’s not comfortable setting a goal beyond an 8.5 percent reduction over a decade.
"Our situation is compounded by the budget and rate situation," Paskett said. "Our programs, the complexity of what’s offered, don’t match up to the rest, because of the funding constraints and the staffing constraints."
Water and power commissioners voted, with frustration, to support Paskett’s plan. But they said they also wanted to do better. Commissioner Richard Moss told Paskett he thought commercial energy efficiency programs were hard to find and complicated to apply for.
"We really need to streamline these things to make them user friendly," said Moss. "I’ve not used some of the programs available that I’m aware of because I just didn’t want to go through the hassle of doing the work to qualify for the program."
Paskett says the DWP has less than a billion dollars guaranteed for energy efficiency programs in the next three years. That’s a third of what big investor-owned utilities spend. The Natural Resources Defense Council’s Kristin Eberhard says money’s been tight for a while. As a result, the utility's been spending more to get less.
"Unfortunately because their budget keeps getting cut...they have to stop the programs, or pull the programs back or curtail them," said Eberhard. "And so they never take advantage of that economy of scale of really like pushing forward. They have to like keep restarting and restarting. So their estimated costs are twice as high as other estimated utilities."
The DWP has paid for efficiency programs piecemeal, using federal recovery act money and revenue from the energy cost adjustment factor – a pot of money meant to cover volatility costs in fossil fuel markets. Eberhard says that’s a problem – even as she argues that money’s not the root of DWP’s problems.
Eberhard argues that LADWP hasn't integrated energy efficiency well with other departments.
"They are first looking at, what’s the power plant that we can turn on and off. Well, now do we have any money left over to do energy efficiency," she says. "So because it’s last, when budgets are tight, as they are right now, because LADWP hasn’t been able to get a rate increase because the ratepayer advocate has not been appointed…When budgets are tight, energy efficiency ends up being first thing to go rather than the first thing that they get."
Efficiency measures are the cheapest energy, she says: less than 3 cents a kilowatt, against around 4 for coal, 10 cents for natural gas. Renewables, in the short run, are the most expensive energy of all. General Manager Ron Nichols says their cost is one of several good incentives to improve energy efficiency.
"We’re not doing what we should be doing for the size, for the position we hold in the industry, for those things that are most cost effective to help us meet renewable energy requirements and to meet state policies as well as our own," Nichols told the board.
The DWP knows it’s being watched, and what the utility does about energy efficiency may matter to the whole state, says Ed Vine, an expert in energy efficiency programs at Lawrence Berkeley National Lab.
Vine says that since California’s energy crisis, some efficiency programs aim to transform the marketplace, not just switch out old light bulbs. DWP's size makes it a big part of that marketplace, Vine says.
"So, changing the vision: instead of what we can save now, let’s say in the long run, how can we change the market so that the market becomes more energy efficient," he says.
It’s sort of all short run for Los Angeles these days. Its city council won’t approve more cash for the DWP without a ratepayer advocate to comb through the utility’s rate proposal.