The Los Angeles Department of Water and Power (the “LADWP”) recently held a meeting to discuss its strategic plan. As the nation’s largest public utility, its actions will have an immediate economic impact and significant influence on other utilities.
The news stories of today focused more on the high profile elements of the strategic plan, including LADWP general manager, Austin Buetner’s intentions to sell and leaseback the utility’s iconic downtown headquarters and Buetner’s plan to sell a stake in the utility’s Arizona coal-fired power plant. These, of course, deserve attention, but underlying the grand plans were subtle clues about Buetner’s plans for the utility. My own observations follow.
First, Buetner announced that the utility planned to increase its spending on energy efficiency by 50%, from $50 million in the 2009/2010 fiscal year to $73 million next year. He did not specify where or how and I have a call into the utility to determine how these resources will be deployed. I think this is significant because the sexier elements of the renewable movement such as solar and wind often receive much more attention. But in reality, electricity we never need reduces our carbon emissions immediately. I also tend to believe that the creation of technologies which reduce energy usage in our day-to-day lives can generally be achieved with less capital and fit more neatly into the classic venture capital mold.
Second, Buetner announced that he had invited a German delegation to Los Angeles to discuss feed-in tariffs. This is a very positive step in the right direction. As most of you are probably aware, solar installations in Germany have skyrocketed as a result of the feed-in tariffs and government policy. Germany has become a solar leader, and the adoption of feed-in tariffs similar to those in Germany could lead to similar positive results in Los Angeles, provided that LADWP is committed to providing the necessary funding to incentivize installations.
On the water side of the equation, Buetner announced plans to spend $2 billion over the next ten years to invest in efforts for recycled water, groundwater clean-up, stormwater capture and groundwater storage. He intends for LADWP to capture and develop more water inside of the Los Angeles basin rather than pursuing more water outside of the basin. On the more interesting subjects of how and what technologies might be used to reach these goals, he did not provide any further details or direction. According to LADWP, almost 90% of the water for the city is brought by aqueduct.
For the most ardent proponents of Clean Technology and renewable energy, Buetner’s strategic vision for the LADWP may disappoint. His emphasis on investing in existing infrastructure is well placed and it’s hard to argue against a more studied and continuous approach of investing in renewables. The uncertain existence of the production tax credit for wind energy, for example, has always operated as a cloud over further wind development. With that said, however, Buetner seemed to lack passion on the subject. If transported back to Mulholland’s time, it’s hard to imagine Buetner making a case for a project with the chutzpah and vision of the Owens River Valley. He seemed more concerned on keeping the lowest rates possible rather than bold plans for the future.
Joe Huser is a corporate and securities attorney who has established a practice in Los Angeles, California and has advised various Cleantech and Renewable Energy Clients. His website is www.joehuser.com
photo: Edgar Zuniga Jr.
