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Council approves DWP reliability contracts tied to long-term debt strategy
Summary
The council approved an item from the Department of Water and Power on reliability contracts and planning tied to the department’s effort to reduce generation-related stranded debt. DWP staff said the department aims to be debt-free for generation by 2003 and noted contracts before the council are limited to reliability-related grid agreements.
The Los Angeles City Council approved an item from the Department of Water and Power concerning reliability contracts and related agreements intended to support grid reliability and the department’s longer-term financial strategy.
Wendy Yancey of the Department of Water and Power told the council the item relates only to the department’s reliability contracts and does not represent an entry into a deregulated electricity market. Penny Staros, manager of regulatory affairs at the department, explained that changes in state law and investor-owned utility contracting practices have altered how the city must contract for certain services. Staros said the DWP’s goal is to be free of generation-related stranded debt by 2003 and described the agenda item as relating to contractual arrangements that support reliability of the grid.
Councilmember Holden and others asked about the size and causes of the department’s stranded debt. DWP staff said stranded debt had been about $4,000,000,000 and that the city had accelerated repayment and reduced that amount to about $2,400,000,000. Staff described the contract actions before the council as designed to ensure reliable service and said any financial impact would likely be indirect and “generally positive,” according to the city administrative officer’s note on the agenda.
Councilmember Fuhr (moved) and other members pressed for prompt action; the clerk recorded a unanimous vote of 15 ayes to approve the item.
The item as presented was framed by DWP staff as a step to protect grid reliability, not a move into broader market deregulation. The council approved the measure 15–0.
