City Council approves DWP settlement to retain half of Mojave stake amid reliability concerns

The Los Angeles City Council on Nov. 20 approved a settlement that will have the Department of Water and Power (DWP) sell half of the city's interest in the Mojave power plant while retaining the remainder, after DWP officials and council members debated reliability, cost and environmental trade-offs.

DWP General Manager David Wiggs told the council, "We are here today to ask the council to approve a settlement with Salt River Project," and described the deal as a conservative step to protect the department's ability to provide reliable, low-cost power. Henry Martinez, assistant general manager for power supply, told members the agreement must be approved by the end of the month to avoid arbitration with Salt River Project.

The council's debate split members over two main arguments. Supporters said holding part of the plant preserves a source of relatively low-cost, dispatchable generation and reduces the risk of having to buy expensive power on the spot market during shortages. Opponents said the city should honor a prior agreement to sell the full 20% interest to avoid remaining a partial owner of one of the country's dirtiest coal-fired plants and instead use proceeds to invest in cleaner local resources.

Councilmember Ruth Galanter moved that the council complete the original sale; several other members called instead for the settlement recommended by DWP. An amendment by Councilmembers Padilla and Garcetti, accepted during final consideration, asked that "some portion of the net earnings of the remaining 50% share be retained and dedicated to the funding of a renewable program" for city power resources; DWP representatives said they would return with a program to identify a specific portion.

DWP told the council the department currently owns a 20% stake in Mojave (stated in the presentation as roughly 316 megawatts of nameplate capacity) and that the negotiated settlement would leave the city with half of its ownership interest (described in debate as roughly a 10% effective stake or about 50 megawatts in some explanations during the meeting). Wiggs said Mojave produced low-cost power during the recent statewide shortage, describing it as a resource that helped keep city rates stable during crisis conditions.

Several council members urged caution about long-term environmental consequences of maintaining any ownership in a coal-fired plant. Galanter and others urged the council to sell the city's entire stake and use proceeds to accelerate cleaner, in-basin projects. Councilmember Padilla and supporters argued the city can be part of cleaning the plant and still protect ratepayers.

After the motions and amendments were resolved, the council approved the department's settlement recommendation as amended; the ordinance implementing the transaction will be carried over for one week for final paperwork. The council directed DWP to return with specifics about the proposed renewable program and with details that would clarify how net proceeds would be reserved and spent.

What the council approved does not itself change state or federal environmental rules, and DWP officials told the council the settlement does not preclude future re-evaluation of ownership as markets and regulations change.

The council hearing also included multiple members asking for more detail on projected cleanup costs at Mojave, the timetable for in-basin capacity projects and the precise megawatt figures associated with the retained and sold interests; staff said they would provide additional written clarifications.

DWP, council staff and the council agreed to preserve opportunities to reassess ownership in future years as market and regulatory conditions evolve.