LADWP TO RECEIVE $146.5 MILLION FOR ENERGY
|LOS ANGELES — The Los Angeles Department of Water and Power (LADWP) will receive a $146.5 million settlement payment for electricity that LADWP sold on credit to other utilities in the state during the 2000-2001 energy crisis.
The LADWP has sought payment for electricity sales made from January 1, 2000 through June 20, 2001, when it responded to urgent requests to aid neighboring utilities to help them avoid rolling blackouts that resulted from the state’s energy deregulation.
“This is a success for our ratepayers who are rightly owed reimbursement for the cost of surplus energy generation we produced to help the state survive the worst energy shortage in its history,” said Lee Kanon Alpert, President of the Board of Water and Power Commissioners.
The settlement agreement, which was approved by the LADWP Board of Water and Power Commissioners on October 6, 2009, received final approval yesterday by the Federal Energy Regulatory Commission (FERC). This month, the LADWP will receive $146,463,210, plus interest accrued from October 1, 2009, the date the agreement was finalized.
The settlement concludes an 8-year dispute over about $166 million for energy sales made by LADWP in the Western Energy Markets. LADWP was not paid for these transactions because of pending claims brought by the “California Parties,” a group of California power companies and state agencies.
In 2004, after an extensive investigation, FERC rejected allegations brought by the California Parties that LADWP was engaged in illegal bidding practices and attempting to manipulate the energy market during the state’s energy crisis. FERC had previously exonerated LADWP of all other allegations that the utility participated in market manipulation schemes or violated any law, tariff provisions or market rules.
“It is now abundantly clear that the DWP behaved appropriately. The truth is, during the energy crisis, we kept the lights on for Angelenos and helped Californians during an unprecedented time for our state. This settlement is a win for our ratepayers and the City and I take great pride in knowing that we did the right thing,” said S. David Freeman, current LADWP Interim General Manager and former LADWP General Manager during the 2000-01 energy crisis.
The agreement settles all claims by the California Parties in this matter involving the LADWP.
The funds recovered through this settlement were anticipated in the development of the LADWP’s Fiscal Year 2009 – 10 budget and will be used to improve cash flow while the Department undergoes a cost-cutting review initiated by Mr. Freeman at the request of Mayor Antonio Villaraigosa upon his appointment as Interim General Manager.