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

The Los Angeles City Council voted to approve a settlement with Salt River Project that preserves half of the Department of Water and Power’s (DWP) existing stake in the Mohave (Mojave) Power Plant and allows the sale of the remaining half.

DWP General Manager David Wiggs told the council the department’s recommendation reflects a balance between reliability and cost, noting the plant supplies low-cost generation: “This plant provides low cost power at about 2¢.” He and the department’s power staff urged the council that, given recent market uncertainty and delays in other local projects, retaining a portion of Mojave was the “prudent conservative alternative.”

The settlement resolves a multi‑party bargaining process after earlier attempts to sell the full DWP interest to a private buyer triggered the exercise of rights by Salt River Project and related contractual payments. Council discussion focused on three themes: short-term reliability and the risk of purchasing replacement power on volatile spot markets; the environmental and long-term policy implications of remaining partially invested in a coal-fired plant undergoing required emissions upgrades; and the legal/financial history that produced settlement offers.

Council members urging approval said temporarily holding a portion of the plant hedges against supply shortfalls while the department pursues renewables and basin upgrades. “We must at all cost hold on to any power that we own,” Councilmember Garcetti said, arguing retention gives the city leverage to fund cleanup and maintain lower rates. DWP staff, including Assistant General Manager Henry Martinez, highlighted the time pressure: the Salt River Project agreement requires council action by November 30 to avoid arbitration.

Opponents contended the city should honor earlier commitments to divest from Mojave, citing environmental concerns and earlier legislative steps aimed at reducing coal exposure. Councilmember Galanter said the city had once agreed to sell its full interest and that backing away had already cost the city in contract payments; she moved to fulfill the original sale agreement. Several speakers pressed for more time to digest costs of emissions controls and the effect on DWP rates and on plans to convert local plants to cleaner fuels.

The council ultimately approved the department-backed settlement by roll-call vote (tally: 10 ayes, 4 noes). Council action approved the settlement motion while carrying over final ordinance language for one week so staff can return with conforming documents and the amendments members requested. The council also adopted an amendment asking that a portion of net proceeds from any sale be dedicated to a DWP renewable-energy program; DWP staff indicated they would return with a programmatic plan and possible funding percentage for council guidance.

Key factual points reflected in the council record and staff presentations: - DWP described its original interest as 20% of the Mojave unit (about 316 megawatts), and the settlement would leave the city with roughly half of that interest (approximately a 10% ownership, ~158 megawatts). (David Wiggs, Henry Martinez) - DWP staff said Mojave’s operating costs had been about 2–2.5 cents per kilowatt-hour during the recent crisis, versus spot-market spikes that reached substantially higher prices. (David Wiggs) - The city has already paid contract-related sums tied to earlier sale negotiations; council discussion referenced roughly $3.8 million paid under prior contract terms and other transactional costs that were part of the dispute record. (Councilmember Galanter) - DWP reported an internal estimate that plant cleanup and related capital needs could be in the tens of millions of dollars (one council speaker cited a range of $50–$70 million for related basin plant work), and stressed that renewables and conservation remain department priorities for medium- and long-term demand reductions. (DWP staff) - DWP said the deadline in its negotiations with Salt River Project required council action by November 30 to avoid arbitration. (Henry Martinez)

The council’s decision preserves partial city ownership for now and directs staff to return with the ordinance and details, including a program plan for dedicating some sale proceeds to renewable projects. Pending documents will specify final transaction mechanics, the percentage of revenue to be set aside for renewables, and any other commitments tied to emissions-control investments at Mohave.

The council’s debate underscored the trade-offs local officials face in balancing near-term service reliability and rate stability versus environmental policy goals and long-term energy strategy.

Outlook: DWP staff said the city can revisit ownership choices in coming years as gas prices, project schedules and market conditions evolve. The settlement moves the dispute away from immediate arbitration but does not foreclose future decisions on ownership or further divestiture.