City of Burbank & Municipal Friends Propose New Power Plant & Power Sharing

A headline in this week's LA Times reads: "Moving to shore

up their energy supplies, eight Southern California cities and agencies may jointly finance construction of a new $180 million power plant in Burbank as part of a proposed power sharing agreement." Please give our readers, if you would, an idea of the goal, the objectives, and approach of Burbank's proposal?

Fred Fletcher

Assistant General Manager

City of Burbank Public Services

With today's state-of-the-art technology, we can build generation that is remarkably less polluting and more efficient than anything previously available. In fact, the new combined cycle heat rates are as efficient as the heat rates projected for fuel cells 15 years from now. And the pollution levels of the combined cycles will be dramatically lower than the power plants in the Los Angeles Basin today. For example, the plants we have now in Burbank produce as much pollution in two weeks as the new plant would produce in a full year.

Additionally, building more generation in Burbank for Burbank has clear advantages. Locating units close to the load center means that in the event of natural disasters, generation is immediately available for the local area. In Burbank, that has been particularly useful in times of earthquakes. But it's also useful when you have major grid outages. The last major one was August 10, 1996. While the entire western United States had a shutdown, Burbank kept its lights on because we had local generation.

The downside of having a large generation like this is that it is big. Burbank can't do it alone. In the future, fuel cells will enable that size to come down, but today, the only way to get the same benefits is by working in concert with other utilities. And we're hoping to finance this project through the Southern California Public Power Authority (SCPPA).

I gather you're hoping the eleven municipal members of the SCPPA will help pay for planning, construction and operational costs in return for a percentage of the power. Mayor Bogaard, is this something that Pasadena's interested in?

Bill Bogaard

Mayor, City of Pasadena

While the issue hasn't yet come before the City Council, Pasadena will agree to be a part of this project. It has received approval at lower levels, and my awareness of the Council's thinking is very much in support of signing on.

The reason Pasadena is interested is that we can both diversify our sources of energy and support this new technology that is so much more efficient and less polluting.

And what are the current sources of power for Pasadena's municipal utility?

Bill Bogaard

Roughly speaking, about a third of our power comes from our local generation and about two-thirds from long-term contracts, primarily the Intermountain Power Project.

We've traditionally purchased some power on the open market because until a year ago, it was possible to purchase energy at less cost than the operation of our own plants. Our plants are old and inefficient; not only do they pollute more compared with new equipment, but they also require expensive upkeep and maintenance. So our plan is to re-power our generation capability. We're also giving some thought to over-powering Pasadena's system so that we can contribute to the solution of California's current energy shortage.

And Fred, you have a 50-year old power plant generating 220 megawatts in Burbank. Is that the site that you intend to rebuild? If so, what are the advantages and disadvantages of building on that site? Are you going to be down for a while?

Fred Fletcher

The new facility will be located on a small portion of the existing 25.5-acre site in an area now used to store transformers and cable. So we won't be interrupting any current generation activity or developing additional land.

Let's turn to the programs and incentives that the Governor and Legislature are talking about to "right the ship" in California's energy picture. As a City and now through the SCPPA, are you able to take advantage of the incentives the Governor is offering for putting more megawatts on-line?

Fred Fletcher

We hope to. In fact, we've actually been considering doing two power plants-not just one-so that we can take advantage of some of those incentives. And we've done some preliminary engineering for both of them.

We're also investing in Glendale, and conducting some studies on what it would take to add more units at our existing sites. Ideally, you want a mix of technologies in order to get the best efficiencies and least pollution emissions.

Both cities are in the Southern California Air Basin and very sensitive to the environmental concerns that result from power generation. The Governor has provided an expedited program to go directly to the Energy Commission and bypass the CEQA process. What are the implications for your constituencies, your cities, and this air basin in terms of moving forward with new plants, even though the crisis demands it?

Bill Bogaard

The kind of pollution reduction that Fred has described indicates how clearly we could benefit if we simply re-power what's presently operating in Southern California. We could even double existing capacity and still be reducing pollution by more than 50% if we use new equipment.

So it's one of those rare situations in public policy where the benefits just pile on-in this case because of: 1) new technology, 2) a tremendous market need for new capacity, and 3) real public attention and political will to allow some good ideas to go forward.

Fred Fletcher

The amount of pollution generated in the Basin from existing power plants is somewhere in the neighborhood of 5,000 tons of NOx per year. And the reductions that the AQMD set out in their January white paper indicate they'd like to get that figure down to between 2,500-2,800 tons per year. Using the new technology-combined cycle plants with improved efficiency and lower emissions-you can actually increase the amount of megawatts in the Los Angeles Basin and still meet that reduction.

The other interesting thing I wanted to point out about Pasadena, Burbank and Glendale is that historically we have used a mix of fuels. California as a whole is very reliant on natural gas, and coal only accounts for 2% of the State's overall energy use. But in our three cities, coal is more like 50%. So while we are using natural gas, it's only one of many fuels that we use.

And Fred, how many of the 11 other cities have signed on?

Fred Fletcher

Well, the project is still in its infant stage. But so far this week, we've gotten Anaheim and Burbank. We look to submit our application to the California Energy Commission at the end of March.

I want you both to comment on the role public power is going to play as we come out of this crisis in California. Two or three years ago, it seemed that public power was the anomaly in the energy provision framework. But now, it seems to be making its comeback. Looking two or three years down the road, give us your thoughts on the role of public power.

Bill Bogaard

In three years, there's no doubt in my mind that public power will not only have maintained its important and credible position in the California marketplace, but will actually be strengthened because the recent crisis has shown it in such favorable light. Generally speaking, public power is still an integrated enterprise of generation, transmission and distribution, and the industry is facing the current crisis with great success. Over the next few years, I think they'll continue to take advantage of the circumstances and expand generation capability with new technology-becoming more efficient and less polluting-and ride the wave of public support and credibility.

Fred Fletcher

Full service cities-like Los Angeles, Pasadena, Glendale and Burbank, which provide electricity, water and other infrastructure-have done an excellent job of providing services to their customers. It isn't just public power; it's water, telecommunications, and all the features and services that make our communities unique. If you look at these cities, each has very specific, world-class industries, from Caltech to Warner Bros.

Let's close with this question. Given the efforts you're undertaking to build your own power plant and generation, give us your perspective on how the State Capitol is working its way through this crisis, and the pros and cons of the ideas that are being floated.

Fred Fletcher

The State has done a very good job in terms of jumping into this business and coming to speed as quickly as possible. It takes an enormous amount of money to solve a problem like this, and there's a tremendous amount of risk. The Governor is going to get criticism because the State has not been set up to operate optimally in a power system, but I think he's done an excellent job under the circumstances.

In terms of the State taking over the transmission lines-the devil is in the details. It could either work out fine, or horribly. It depends in large part on pricing the transmission correctly. Historically, California has taken an easy, postage-stamp rate approach, which unfortunately has subsidized transmission. There's been no incentive to build generation close to the load, so you end up with a lot of generation scattered all over the State, which in turn results in the kind of transmission shortages Northern California is experiencing today.

Bill Bogaard

The Governor has brought a lot of energy and drive to this critical situation, but it's too early to tell exactly how his solutions will work out.

One thing is clear: I don't think that transmission takeover would have been considered absent a crisis, which created the unique requirement that multibillion-dollar obligations on the part of the investor-owned utilities be repaid. So I'm in agreement with Fred that the success of the transmission under State ownership is an open question, and we'll just have to wait and see how it works. The State's involvement in the purchase of power and its resale is another area that may or may not work.

My expectation is that within five or eight years, the energy market will return to what we might have called "normal" a year ago. We're not in that situation now, and we won't be for a period of three to five years. But when we are back in a normal energy market, we will have responded to many of the problems that have contributed to the current crisis. And in my view-when it comes to what really works in delivering reliable power at the best cost to consumers across the country-the institutions being put in place during this crisis do not have staying power for the long-term.

While electric service is a unique and critically important service provided to the American public-and therefore a form of governmental monitoring is appropriate on an ongoing basis-in the end, I have greater confidence in the free market. My sense is that the process of deregulating the electric utility industry across the nation will ultimately go in the direction of the free market rather than the kind of thing we now have underway in California. As far as having extensive governmental involvement in the purchase and resale of power, with transmission and generation that are owned and operated by the State-I view those steps as transitory. My advice would be to start thinking about the takeout strategies now so that in five or ten years, we can smoothly establish a more normal electric utility structure.

Fred: Do you have thoughts you'd like to share in reaction to the work to date for the Governor's Office of L.A. DWP's David Freeman?

Fred Fletcher

I certainly appreciate the work David Freeman has done in terms of helping the Governor, as well as the work he's done at the L.A. DWP for the last four years. But we don't see much of him over here in Burbank, and we certainly would encourage him to work not only with the State, but with other municipals too.