City approves DWP reliability contracts item; staff say measure aimed at grid reliability and debt reduction plan

The Los Angeles City Council approved an item from the Department of Water and Power (DWP) related to reliability contracts and the utility's financial strategy. DWP representatives said the action addresses contractual relationships needed to protect grid reliability amid broader market changes.

Wendy Yancey of the Department of Water and Power opened the presentation and said the item pertained to reliability contracts for the grid. Penny Staros, manager of regulatory affairs at DWP, explained California's electricity market changes and said investor‑owned utilities' restructuring required the city utility to update contractual arrangements: "The investor owned utilities have changed, but Los Angeles, we have not changed. And the contracts that we had in place with, for example, Edison, those are null and void, and we're having to get into new agreements." Staros said the item before council related to reliability arrangements and not a wholesale move to deregulate the DWP.

Councilmember Holden raised ratepayer concerns and questioned stranded‑debt impacts. DWP officials described the utility's generation‑related financed debt historically referenced as about $4,000,000,000 and said the city had paid down a substantial portion, with an updated figure discussed in the chamber of approximately $2.4 billion remaining. DWP staff said the department's goal—stated during the presentation—was to be free of generation debt by 2003, to position the utility for competitive conditions in the marketplace.

Councilmember Galanter and others emphasized the goal of protecting reliable service for residents and said the item would have a generally positive financial effect on reliability and operations if implemented. After discussion and questions from councilmembers about stranded debt and reliability, the clerk recorded the vote as "15 ayes," and the council approved the item.