LADWP Approves New Wind Project
As Part of Strategic Plan

LOS ANGELES — The Los Angeles Department of Water and Power (LADWP) Board of Water and Power Commissioners approved a long-term agreement to receive over 100 megawatts of new wind energy from Milford Wind Farm Phase II at its meeting on July 22, 2010. The project is consistent with the LADWP’s long-term strategy and marks a strategic shift in the LADWP’s renewable energy program, which seeks to tap into existing resources, transmission and generation plants, and focus on more cost effective investments in new renewable energy projects that are closer to its customers.

Under the strategy, LADWP will continue to pursue new renewable energy investments to shift from carbon intense resources while balancing the overall costs to residents and businesses in Los Angeles. Focusing on a smarter use of existing transmission lines within the LADWP system, choosing new sites that are in or near California and maximizing land owned by LADWP will help trim costs and keep LADWP on target to meet renewable energy and greenhouse gas emission reduction goals.

The Milford Wind Farm Phase II is an expansion of a 200 megawatt wind farm – of which LADWP already receives 185 megawatts -- that began delivering renewable energy to Los Angeles in November 2009. In alignment with LADWP’s Long-Term Strategic Plan, the Milford Phase II project will benefit from existing infrastructure built for Milford Phase I in Beaver and Millard Counties, Utah. It will also connect to an existing High Voltage Direct Current (HVDC) transmission system that brings power to Los Angeles. The agreement requires approval by the City Council.

The Milford Phase II project will provide enough renewable energy to serve 33,660 Los Angeles residents and represents about 0.8 percent of LADWP’s renewable energy goal. The project was identified in the Long-Term Strategic Plan presented by General Manager Austin Beutner in June, and highlights a new strategic approach to pursuing renewable energy through consistent and sustainable investment.

"This renewable energy project maximizes LADWP assets such as land, generation facilities, and transmission lines. With it, we are being more prudent with our customers’ dollars by maximizing efficiency, while staying the course for adding new renewable generation to our portfolio," Mr. Beutner said.

"We are very pleased to advance this and other projects that reflect a new strategic approach to renewable energy projects," said Lee Kanon Alpert, President of the Board of Water and Power Commissioners. "Smart investments near existing generation and transmission, smarter use of technology, and renewable energy investments closer to our customers will help us keep rates low for our customers. It is those types of advances that our commission has been seeking and encouraging for the benefit of the City and our rate payers."

Strategic aspects of the project include using new technology in the LADWP transmission system to accommodate wind energy, which is produced intermittently. The technology that the LADWP will begin using was a result of studying uses in Europe to support the increased amounts of wind and solar energy moved through their transmission system.

More specifically, LADWP is expanding capacity of the existing HVDC transmission line, known as the Southern Transmission System (STS) by using the cutting-edge technology to deliver energy from Milford II and other proposed renewable projects in Utah to Los Angeles and other Southern California cities at about 1/10th of the cost of building a new transmission system. The STS is owned by the Intermountain Power Authority and operated by LADWP.

Strategies to incorporate wind and solar into the transmission grid in a consistent or "firm" manner include using storage or shaping the wind and solar energy with nearby natural gas plants, which produce a constant stream of electricity into the transmission system. However, new technology investments in LADWP's transmission system that allow the wind and solar energy to move onto the transmission lines without using natural gas electrons to firm the wind and solar energy avoids the related emissions. LADWP's transmission system is ideally suited for this new technology, which is a fraction of the cost of a new transmission line or a new natural gas plant.

"We’re pleased to see LADWP make smart investments in renewable energy projects that are efficient, strategic and place a significant priority on its customers’ and our members’ limited pocketbooks, during these difficult economic times," said Gary L. Toebben, President & CEO of the Los Angeles Area Chamber of Commerce. "We’re especially pleased to see a new focus on cost-effective technological upgrades being pursued, instead of very costly new transmission lines."

"Last week the LADWP board approved several clean energy projects and the beginning of a long-term planning process that should provide a thoughtful and clear roadmap to a secure and smart energy future. We’re delighted. This is an important and intelligent step forward. We look forward to more," said Felicia Marcus, NRDC Western Director.

"Approval of the Milford wind development demonstrates that progress continues to be made to provide reliable and affordable clean energy to Los Angeles. Wind, solar, and geothermal energy are essential to reducing our city's dependence on dirty and increasingly expensive coal," said Bill Corcoran, Western Region Director for the Sierra Club's Beyond Coal Campaign.

"The STS transmission project that supports the new Milford wind farm will allow LADWP and our sister municipal utilities to bring home more renewable power without the expense and environmental impact of building new transmission or adding new fossil-fuel based generation," said Aram Benyamin, Senior Assistant General Manager, Power System, "We are excited about this new strategic approach -- it is a win for our customers in Los Angeles and a win for the environment."

LADWP plans to increase capacity of the STS from 1,920 megawatts to 2,400 megawatts by upgrading and modifying high-voltage direct current (HVDC) electrical equipment that converts power between alternating current and direct current at both ends of the line. The project will cost roughly $100 million.

The Milford Phase II project is made possible through an agreement between LADWP, the Southern California Public Power Authority (SCPPA) and Milford Wind Corridor Phase II, LLC (owned by First Wind Holdings, LLC). LADWP will prepay for guaranteed energy to be delivered during the 20-year term at a reduced price—approximately 9 cents per kilowatt-hour— when the plant begins commercial operation, slated for July 2011. SCPPA, nonprofit joint powers agency of Southern California municipal utilities, will finance the project by issuing $157.4 million of low-cost tax-exempt bonds. The agreement has been structured to benefit from American Recovery and Reinvestment Act economic stimulus grants. The indirect benefits of the cash grants, along with the prepayment of power, are estimated to reduce the cost of the project by $53.6 million in current dollars. The agreement includes an ownership option by LADWP.

The Board also moved forward with two new solar projects consistent with the strategy of consolidating renewable generation and maximizing use of existing assets.

The projects include solar photovoltaic power projects at the Adelanto Switching Station near Victorville and at the Pine Tree Wind Power Plant in the Tehachapi mountains. Located in California, both projects will provide 10 megawatts of solar power and take advantage of existing transmission lines and other electrical infrastructure. Both projects will be constructed, owned and operated by LADWP.

The Board adopted a Mitigated Negative Declaration for the Adelanto solar project in accordance with the California Environmental Quality Act (CEQA). The Pine Tree solar project is being built at the site of an existing wind farm that has already been evaluated under CEQA.

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