LADWP Commissioners Launch Review of 2007-08 Budget

NEWS RELEASE
May 1, 2007

LADWP Commissioners Launch Review of 2007-08 Budget

LOS ANGELES — The Board of Water and Power Commissioners began an intensive month-long scrutiny of the Los Angeles Department of Water and Power’s (LADWP) proposed Fiscal Year 2007-08 budget today, when LADWP General Manager Ron Deaton provided Commissioners with an overview of the proposed spending plan at their board meeting. The FY 2007-08 budget provides for significant investments in power and water system reliability, renewable energy, energy conservation, water quality, and other strategic initiatives.

“This Board is committed to a very open and exhaustive public process in the determination of our spending plan for the 2007-08 fiscal year and into the future,” Board President H. David Nahai said. “We will be scrutinizing every dollar to be spent and drilling down into all aspects of this budget to ensure that it makes the necessary investments toward providing reliable, high quality energy and water services in the most efficient manner possible. At the same time, we will be implementing cost and quality controls, and cutting unnecessary spending wherever possible.”

In a presentation today to the Board, General Manager Deaton said the over $4 billion budget includes $1.57 billion for power system capital, operations and maintenance, and $672 million for water system capital projects, operations and maintenance. The presentation began the Board’s formal review process, which will include a series of five budget workshops conducted weekly in May, including a presentation of the Department’s Financial Plan and Rate Restructuring Proposal on May 15.

The proposed budget includes $652 million for replacement, maintenance and repair of critical electric infrastructure that is now 40 to 90 years old as part of a proposed multi-year Power Reliability Program to begin in 2007, a 20 percent increase over the current fiscal year. The program calls for increases of $110 million to $260 million in expenditures above past spending levels each year through 2011-12 to escalate the replacement of aging infrastructure, such as power poles, underground cables, distribution transformers, and high-voltage station transformers. The program also will increase investment in training, recruitment and staffing to fill vacancies and boost the number of electrical personnel to expedite new installations, repairs, and upgrades.

“Our existing power system has served this City well for decades. But if we are to continue providing exceptional service to our customers, we will need to step-up investment in our infrastructure now to provide reliable power in the future,” Deaton said.

The budget also reflects the LADWP’s strong commitment to expanding its supply of renewable energy along with other alternative power programs and energy efficiency measures. The Board has adopted a goal of achieving 20 percent of its retail power from renewable energy resources by 2010. Renewable energy includes wind, solar, and geothermal energy and other clean, sustainable resources that do not produce CO2 and other greenhouse gases that contribute to global warming.

To support the renewable portfolio standard (RPS) goal, the budget identifies $181 million for 2007-08, and increases to nearly $413 million in 2008-09 and to $599 million in 2009-10. The majority is for capital costs associated with building and upgrading transmission systems and development of solar, geothermal, wind and other renewable projects. The RPS initiative also includes $30 million for the LADWP’s solar rebate program—more than double the level funded 2006-07. The increase reflects a target goal of 280 megawatts of solar installations by 2017 to meet recent state legislation SB1, also known as the Million Solar Roofs Plan.

Along with renewable generation, the LADWP seeks to increase investments in energy efficiency measures, such as energy efficient refrigerators, light bulbs and other appliances and equipment that assist residential and business customers in saving energy. The budget proposes $79 million – more than double the current year level – for energy efficiency programs. In all, the energy efficiency programs will save 300 gigawatt-hours annually, which is greater than LADWP’s projected growth, meaning that LADWP’s net energy sales will be reduced. Additionally, these energy savings will result in the elimination of nearly 200,000 tons of CO2, which is the equivalent of removing 40,000 cars from the road.

Two major initiatives include a large-scale distribution of compact fluorescent light bulbs (CFLs), which can reduce energy use by 67 percent compared to a traditional incandescent light bulb while lasting about 10 times longer. Following the distribution of free bulbs, LADWP will be offsetting the cost of the bulbs and other energy efficient appliances through point-of-purchase incentives. The energy efficiency budget also includes distribution of 50,000 energy-saving refrigerators to low-income customers and $3.5 million for shade trees as part of the DWP Trees for A Green L.A. collaboration with the Mayor’s Million Trees LA initiative.

On the water side, the LADWP plans further investment in water quality improvements, primarily to meet state and federal requirements that pertain to storing water in open-air reservoirs and other new mandates. The water system budget calls for steadily increasing spending from $218 million in 2007-08 up to $280 million in 2011-12 on projects to enhance reliability and infrastructure. The cost of water quality improvements also is expected to increase from $162 million in 2007-08 to $275 million in 2010-11 and then will drop to $211 million in 2011-12 as major capital projects are completed.

The proposed budget addresses a number of long-term issues that came to light following an independent review of spending and revenue requirements by the Barrington-Wellesley Group in March 2006. For instance, the study recommended increasing capital spending to improve and maintain the power transmission and distribution systems.

Throughout the budget review process, budget documents will be posted for public access on the LADWP website at http://www.ladwp.com. A link to the budget will be available on the LADWP homepage throughout the duration of budget deliberations.

Following is a detailed list of scheduled budget workshops open to the public to attend:

• Tuesday May 8, 2007: Jointly Funded Budget Presentation

• Thursday May 10, 2007: Power Reliability Program Budget Presentation

• Tuesday May 15, 2007: Presentation of Financial Plan and Rate Restructuring

• Saturday May 19, 2007: Power Budget

• Tuesday May 22, 2007: Water Budget

Final approval of the budget by the Board of Water and Power Commissioners is expected in June.

The Los Angeles Department of Water and Power, the nation’s largest municipal utility, provides reliable, low-cost water and power services to Los Angeles residents and businesses in an environmentally responsible manner. LADWP services about 1.4 million electric customers and 680,000 water customers in Los Angeles.

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LADWP,
Joe Ramallo, 213-367-1395 (office)
213-792-8555 (cell)