L.A. Buys Pine Tree Wind, Builds Transmission

In a scramble to develop renewable resources, the Los Angeles Department of Water & Power this week took two steps-in advance of a more comprehensive plan-toward meeting a 20 percent renewables portfolio standard by 2010. At its November 15 meeting, the LADWP board of commissioners okayed a plan to purchase and operate the 120 MW Pine Tree Wind Project in Kern County under an agreement with the developer, Wind Turbine Prometheus, at a cost of up to $239 million. The project has been under development for years (Circuit, Dec. 1, 2003). In another move, Los Angeles mayor Antonio Villaraigosa announced that the muni will spend $200 million to build a new transmission line, dubbed "Green Path," to tap renewable energy from the Salton Sea area. The area is rich in geothermal fields and sunshine. Under the planned agreement on Pine Tree, developer Wind Turbine Prometheus will build the project using union labor. LADWP will take over long-term operation. Meanwhile, LADWP said it will build its own 230 kV transmission line to tie the wind field into a substation, which could raise the total cost of the project to $278 million. The wind line would be separate from the Green Path line. The move-which still must be approved by the Los Angeles City Council-came amid rising pressure from the department's new board of commissioners to accelerate the pace of renewable energy development (Circuit, Nov. 11, 2005). "The mayor asked us to achieve 20 percent renewables by 2010," said Nikolas Patsaouras, LADWP board member. "This is the most urgent thing to get through." The muni may be able to defray part of the cost of the project by using renewable energy bonds authorized by the sweeping federal energy policy legislation enacted earlier this year (Circuit, July 29, 2005). LADWP would have to seek federal authority to issue the bonds, which would carry no interest but allow purchasers to claim a tax credit. Investment advisers told LADWP that the muni likely will be able to gain authority to issue $25 million to $75 million in bonds. "The wind project definitely qualifies" for the new federal bonds, said Henry Martinez, LADWP assistant general manager for power. He said that a potential geothermal deal the department is discussing also may qualify for the new bond program. The Green Path transmission line would upgrade existing transmission lines and create new interconnection points. It is being carried out in cooperation with the Imperial Irrigation District and Citizens Energy, which will invest in the project for an unspecified return. The nonprofit corporation, founded by Joseph P. Kennedy II, will donate 50 percent of its return to subsidize electricity rates for low-income customers of the two munis. LADWP's board is interested in looking for additional partnerships and creative financing arrangements to accelerate renewable energy. The department's staff is expected to present a plan for the board to consider at a December 13 meeting outlining options for reaching the 20 percent renewables goal by 2010. "I am looking at what we can build and operate on a short-term basis as well as power-purchase agreements," said Martinez. He said that meeting the 20 percent goal quickly raises the issue of how much risk the department wants to take. In the past, he explained, the department has sought to have renewable power project developers take most of the risk. To accelerate projects, however, the department may have to assume more risk. "The important thing is to get started and be on a path," said Mary Nichols, LADWP chair.

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L.A. Buys Pine Tree Wind, Builds Transmission

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