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Solar perplexus: Charter Amendment B

February 22, 2009 |  7:43 am

Solar_ap_kevork_djansezian "We're asking the people to buy into the idea of DWP being a solar utility and using, first of all, the wherewithal that brought us low-priced electricity in this town, namely DWP ownership of the power plant, the use of low-cost municipal bond financing, the elimination of profit."

-S. David Freeman, city harbor commissioner and former general manager of the Los Angeles Department of Water and Power; Yes on B.

"We all agree that solar power is good for L.A. The issue that we have is Measure B. And ...there is a very good alternative to Measure B, and that's just a City Council ordinance, like they should have done in the beginning: Hearings, get some [Los Angeles Department of Water and Power] input, public input and just pass an ordinance."

-Jack Humphreville, Los Angeles ratepayer; No on B.

Charter Amendment B -- the solar power plan -- is by far the best-known and most controversial of the five measures on the March 3 city ballot, and the Los Angeles Times Editorial Board is putting in plenty of time poring over data and querying the yes and no campaigns before endorsing. We would prefer to have endorsed earlier, but that would have meant rushing through the information and arguments. And in fact, that's one of our biggest problems with the measure -- the degree of complexity and the very short turn-around time that the proponents and the Los Angeles City Council have foisted on the people of Los Angeles. We editorialized our dismay at the process here, here and here.

But we want to make our decision based at least in part on the substance of the measure, and we invite you to read comments from our meetings with proponents and opponents. Read the full transcript of the No on B meeting, which we held first, here, and the Yes on B transcript here. Audio links will follow in a separate post.

There are highlights below, but first, take a look at an outside opinion. Adam Browning of the Vote Solar Initiative writes about things you may never hear in either campaign -- things that are essential to Los Angeles' solar plans. His conclusion: Charter Amendment B may be a good thing for L.A., but only if the Department of Water and Power backs off plans to pursue legislation in Sacramento.

Confused? Let Browning explain. Also, see the multi-part Dust-Up between the Yes and No campaigns on Charter Amendment B. And for good measure here's the website for the Yes people and the one for the No people.

Here are some highlights from the L.A. Times transcripts.

Jack Humphreville, No on B: In terms of the cost, solar energy is going to be expensive no matter how you cut it. It’s simple as that. Now, the DWP has made a number of assumptions; I think the major one of which is they’re going to get all sorts of tax credits and tax subsidies. I don’t know whether those are permissible under the tax code at this point in time. They’ve also made some other huge assumptions, which get them into the range of 17 to 30 cents as opposed to 70 cents. So that is in addition to the tax subsidies and benefits for accelerated depreciation. They’re talking about technological breakthroughs, economies of scale, volume discounts, optimal sighting, none of which has been really vetted or talked through.

Robert Greene, Los Angeles Times: Jack, you’ve mentioned, and several of the other folks against this measure have mentioned, there’s a concern with locking out private enterprise. But the Department of Water and Power – we have municipal power in this city….The Department of Water and Power, for anything that it operates, uses DWP employees. This would basically be the same thing, would it not? Rather than going off in a new direction and locking out private enterprise, we’re actually going on the same direction that municipal power’s been in for decades.

Humphreville: I would disagree. DWP owns the power. DWP owns transmission lines that come in from Novato or Utah, where the coal plants are. They own the local distribution; they also own pieces of these coal plants. What they haven’t done, though, is actually built the coal plants. They haven’t built the generators. So actually building and installing is very different than actually constructing them. So they haven’t been in the construction side of the business.

Jim Newton, L.A. Times: I’d be prepared to accept that this was driven at least in large measure by a union agenda. But if I thought that benefits of it were such that substantively it was a good idea that would generate 400 megawatts of power and it would be a positive in an economic sense as well, I guess I would be prepared to support it despite its history. So I wonder if we can kind of move to the substance of it at least for a bit here and talk about whether it would do what its proponents say.

Ron_kaye_mayo_communications_2 Ron Kaye, No on B: Can I address that in part? My dog Bruno blogged today off of three articles in The Times. One was the city’s efforts at Palmdale airport, to turn it into an airport. Another was the trucks at the port, and how it’s falling down. And then the MTA tax, that the first transit improvement is to raise fares and cut services. Those are three fundamental failures. If you look at the process, which isn’t just a technical process, it’s a defeating of the democratic process that could have brought everybody in, which is why I say there was a better way to do it: Have real planning, send it out to the neighborhoods, let people talk about it, bring it to the DWP, papers write about it, everybody analyzes it, and we’re all aboard.

Kaye: And I think this is really the big issue: Is City Hall under the control of the City Council, which is what the charter reform allows them to change this in any way they want at any time, really the ones to be organizing, leading and guiding this after an election based on no information, no public discussion, no analysis? You’re writing a blank check to people who have failed you in so many ways, and that’s what I think is the core issue for me.

Meeting with Yes on B campaign:

S. David Freeman, Los Angeles harbor commissioner and former DWP general managerSo the issue is, is this a cost-effective, sensible way of doing it? And if you just take a broad view of things, what renewable energy do we have that we can harness? Well, here in Los Angeles, by God we have the sun....

We're asking the people to buy into the idea of DWP being a solar utility and using, first of all, the wherewithal that brought us low-priced electricity in this town, namely DWP ownership of the power plant, the use of low-cost municipal bond financing, the elimination of profit. I mean, I realize that people don't like to talk about this bluntly, but these solar companies are charging $9 a watt; we're going to put this stuff in for $4 a watt or less, and don't tell me that those numbers are not solid. The Edison Company is doing virtually a similar thing right now. I'm not representing the department or anyone else; I'm still in this ballgame, been in it for 20 years and I talk to people. You can get the panels for less than $3 a watt with the new thin-film technology and putting them in one megawatt at a time, not on houses one at a time, the labor costs go tumbling down. And the $4 number is a very solid number; that's with today's technology, and these costs are going down....

And as far as why it's on the ballot, it seems to me that if you're going to do something as innovative as this, it's really not a bad idea to let the people have a voice in it. We would not be sitting here today getting your attention if it weren't put on the ballot, because DWP has done everything from stealing the water of the Owens Valley to building aqueducts to building power plants, and the people have never had a chance to vote on any one thing. I think it's a good thing, what David and Brian and everyone is doing and getting a vote on this. It's a healthy discussion we're having, and I appreciate The Times taking this much of an interest in it.

H. David Nahai, DWP general manager: I would also offer a couple additional thoughts on what David just said. It is part of the solar plan, but it is appropriate for this part of the solar plan to be submitted to the voters and to have the level of scrutiny that it is being subjected to. Why? Because it's a city program. All of the other parts of the solar plan are going to involve direct contracting with the private sector…. This is a DWP program, and it is an undertaking of some size. It's appropriate that the people of Los Angeles have an opportunity to consider it in all of its various aspects.

But there are other reasons why it needs to be put on the ballot and endorsed by the voters. Because once it is approved by the voters, it will become a program; it will have a solid basis. And it will not be subject to changes in composition at the board, for instance, or changes in leadership in the city.

And why is that important? That's important because we are with this program, inviting in an entire industry, and we're asking them, we're telling them, we're going to give them big preferences if they locate to Los Angeles, if they will produce solar facilities and equipment here in Los Angeles, if they will employ our children and our young people. And when you're -- one thing that we learned coming from the private sector is that certainty is one of the most important things. And this is what this will convey to the manufacturing world, that this is a program that will be solid, that is going to be established, that won't be readily changeable, that won't be abandoned, even though there are in the ordinance itself, language that builds in flexibility that enables the department to go back to the City Council to make changes. So I think those are some additional thoughts as to why I think it's a positive thing that this is going before the voters.

Brian D'Arcy, business manager, IBEW Local 18: The problem is not with power supply. Los Angeles has 7,000 megawatts of capacity that it owns or has a piece of outright. The peak load in Los Angeles is around 5,900 megawatts everyday. But the problem is not the power supply; the problem is that the circuits are overloaded. We've built out in every station. You can't -- simply changing our transformers isn't going to fix the problem.

The problem is the same problem as anything else in Los Angeles: It's NIMBYism. You can't build out a station because these stations are built in people's neighborhoods. So the way that you solve the circuit problem is to -- and only the utility can do this, by the way -- which is to target where these solar units are going to go. If they go where the spot that is going to be the worst on the hottest day and you reduce the load at the load center. And that's one of the major, as an architect of this, that was one of the major points in this. I know that it gets lost in the process nonsense, but it's one of the main components, and it needs to be addressed. And some of this stuff in unfixable; you can't fix it. You can change out transformers, but you can't build out stations.

Jon Healey, Los Angeles Times: One big difference in my mind between a jobs program and this is that when the government proposes the new jobs program, you know what it's going to cost. The big missing piece here is that. Maybe I missed it somewhere, but we've asked a couple of times what this ends up costing, and you said, "Well, it's 3 to $4 per kilowatt, and yeah, that's higher than natural gas --"

D'Arcy: Plus around $1.2 billion. But you have to look at it in relation to what you're doing. Take the jobs and all the other questions out of it and say, "What are you really doing." What you're doing here is you're siting -- assuming you can site anything in Los Angeles -- you're siting a 400 megawatt power plant in the city proper of Los Angeles. To build anything -- ask David, he knows -- they're building a wind plant out there in Barren Ridge. The cost on that, just repowering these gas plants, was 400 or 500 million, and that was five years ago. The cost on any of this stuff is on the billion-dollar range.

So here you are, siting a plant for about a billion two, putting people to work, and dealing with the other legs in the stool in this scenario, which isn't going to go away. So the cost is, it's about a $1.2 billion siting of a plant.

Freeman: Jim, where is the meat in this conspiracy argument? Where is the meat in this stuff?

Eddy Hartenstein, publisher, L.A. Times: It's not a conspiracy argument as much as it being a transparency – this thing came up. This [Huron] report is available sort of simultaneously when, you know, absentee ballots were mailed. None of us sitting at this table are non-science believers; we believe in this. I spent a good number of years in my career knowing the virtues of photovoltaic and all of the improvements that have come from that…. The sponsor of this -- while, yes it's the DWP, and you guys have a lot history in, great, you can produce power cheaper than Edison and this and that and the other thing -- you're nevertheless branded as being a government entity. And so, when you present something and the facts aren't made available until the ballots have been mailed, it raises all kinds of questions. That's all I'm saying.

Freeman: And we're just trying to answer them.

Photo: AP / Kevork Djansezian

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