Putting Our Customers First

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1 Ls Angeles Iw> Department f Water & Pwer Cmmissin MEL LEVINE, President WILLIAM W. FUNDERBURK JR., Vice President TILL BANKS BARAD CHRISTINA E. NNAN AURA VASQUEZ BARBARA E. MSCHS, Secretary ERIC GARCETTI Mayr DAVID H. WRIGHT General Manager The Hnrable City Cuncil c/ ffice f the City Clerk Rm 395, City Hall Mail Stp 160 Attentin: Cuncilmember Nury Martinez Chair, Energy and Envirnment Cmmittee Hnrable Members: Subject: Cuncil File N ptins t Reduce City f Ls Angeles Reliance n Natural Gas Use and Strage Near Lcal Cmmunities This crrespndence is in respnse t the February 8, 2017, Energy and Envirnment Cmmittee Mtin (Englander-Bnin) requesting the Ls Angeles Department f Water and Pwer (LADWP) t review ptins fr reducing the City f Ls Angeles (City) reliance n natural gas use and strage near lcal cmmunities in light f the gas leak incident that ccurred in 2015 at the Alis Canyn Natural Gas Strage Facility. The Ls Angeles City Cuncil Mtin directs LADWP t include in its reprt ptins fr: Purchasing excess pwer frm ther areas f the State (f Califrnia). Energy strage ptins including batteries fr string excess pwer frm renewable surces. Acceleratin f reliance n renewable surces f energy in an effrt t achieve 100 Percent Renewable Prtfli Standard (RPS). Frmulatin and develpment f an aggressive natural gas reductin/eliminatin plan in cnjunctin with lcal utilities, the Califrnia Public Utilities Cmmissin (CPUC), and the Califrnia s Divisin f il, Gas, and Gethermal Resurces (DGGR). Backgrund ver the last ten years, LADWP has aggressively wrked t address the threat f climate change by curbing pllutin and ther greenhuse gases (GHG) thrugh initiatives that eliminate the use f cal as a generatin resurce, imprve generatin system efficiencies, and establish targets and prgrams fr greater reliance n renewable energy. LADWP is transfrming its pwer supply prtfli frm a primarily fssil-fuel, cal-based surce t ne that uses cleaner, natural gas generatin as a bridge fuel that is necessary t maintain lcal in-basin system reliability and help integrate a predminantly renewable and lwer GHG emitting Putting ur Custmers First 111 N. Hpe Street, Ls Angeles, Califrnia Mailing Address: Bx 51111, Ls Angeles, CA Telephne (213)

2 The Hnrable City Cuncil Page 2 prtfli. LADWP is studying the required infrastructure upgrade that ensures grid reliability and investigating prven technlgies that will enable a transitin t a 100 percent RPS. The fllwing table illustrates histric and prjected cal based resurces used t supply the City s pwer needs. Cal Percentage based n Pwer Cntent Label 50% 47% 44% 45% 42% 4i% 42% 41% 40% 39% 40% 37% 35% N 30% 33% \ 25% \ \20%* 20%* 20% 18%* 17%* 17%* 15% 17%* 10% 5% 0% 15%* 15%* 13%* \ \6%* *estimated (2016IRP) ^ 0%* <$3 T T T # 'P' ^ ^ # # # # ^ ^ # ptins fr Reducing Reliance n Natural Gas LADWP will cntinue t expand and cnsider the fllwing ptins t reduce its reliance n natural gas in the lng term: 1. Purchase f Excess Pwer frm ther Areas: A key element f LADWP s renewable energy prgram is the develpment f lcal and utility-scale slar energy prjects. Such prjects have assisted LADWP in meeting its renewable energy targets and reducing its carbn ftprint created by fssil fuel burning pwer plants while serving as vital catalysts fr creating lcal jbs and stimulating the green ecnmy within the greater Ls Angeles area. Participatin in Whlesale Energy Markets: LADWP has histrically purchased and cntinues t purchase energy n a whlesale basis when such purchases can be made belw LADWP s energy prductin csts. Participatin in Califrnia Independent System peratr s (CAIS) Energy Market: T imprve the integratin f renewable energy and assist the City in meeting its renewable energy targets in a reliable and cst-effective manner, LADWP will participate in the CAIS Energy Imbalance Market (EIM). The EIM is a vluntary,

3 The Hnrable City Cuncil Page 3 real-time energy market fr balancing electricity supply and demand. Participating in the EIM helps the State and LADWP: - Minimize ver-generatin. - Maintain pwer reliability. - Reduce GHG emissins. - Increase the use f renewable energy resurces. - Prviding significant ratepayer benefits. Utilize Sylmar Switching Statin fr Energy Markets: LADWP plans t use Sylmar Switching Statin as a scheduling interface and transactin pint fr increased purchase and delivery f whlesale energy frm r t neighbring cntrl areas. Such transactins can assist LADWP purchase lw cst excess renewable energy frm ther markets and reduce its reliance n natural gas fired plants. Amendment f City Administrative Cde: T increase the imprt capability f renewable pwer, manage excess generatin, and reduce its reliance n natural gas-fired plants, LADWP is planning t request the Ls Angeles City Cuncil t amend Sectin f the Ls Angeles City Administrative Cde t prvide its whlesale energy grup the flexibility t participate in larger vlumes f energy transactins that will maximize the purchase and sale f surplus whlesale energy. Building New and Upgrading Existing Transmissin Lines: In rder t cnsistently increase its imprt and exprt capability f energy transactins frm ther regins, while maintaining regulatry system reliability standards, LADWP will need t invest in building new intra- and inter-state high-vltage transmissin lines and upgrading existing transmissin assets. This lng-term slutin realistically requires a minimum f 15 years; hwever, the planning studies fr this effrt have begun. 2. Energy Strage ptins: Energy Strage Prjects: In 2014, LADWP cmmitted t implement 178 megawatts (MW) f cst-effective energy strage by Due t the Alis Canyn challenge, LADWP is accelerating deplyment 50 MW f energy strage at the Barren Ridge Renewable Transmissin Prject that will imprve reliability f thse facilities t better integrate and imprt variable energy resurces. In additin, LADWP is planning t increase its energy strage targets t 404 MW by LADWP is als analyzing energy strage prjects at its lcal Generating Statins in rder t reduce its reliance n gas-fired plants and mitigate the effects f ver-generatin. Ptential challenges with energy strage include: - Battery technlgy is nt mature and is still evlving. - Pricing significantly exceeds cnventinal generatin. - Batteries life significantly less than cnventinal generatin. - Hw t dispse f hazardus waste. - Requires a large ftprint.

4 The Hnrable City Cuncil Page 4 Siting may be in transmissin cnstrained areas. Generally prvides fr a fur hur battery far less than what is required t mitigate resurce intermittency r significant weather events. Batteries require charging and becme anther lad and may be lcated in areas already cnstrained by transmissin limitatins. Cmpressed Air Energy Strage (CAES): LADWP is explring the ptential deplyment f CAES capacity near an existing pwer plant t help integrate renewable resurces and prvide ancillary services needed fr an efficient and reliable electricity grid. As peak lads grw and mre variable resurces cme nline, diverse energy strage technlgies such as CAES will play a pivtal and indispensable rle in balancing resurces and lads. Explring Emerging Technlgies: LADWP is explring advanced emerging technlgies that can be used as alternatives t natural gas such as Hydrgen Turbines and Bi-fuel technlgies. In additin, LADWP is analyzing technlgies fr cupling energy strage systems with gas-fired generatin (such as the recently cmmissined Battery-Gas Turbine Hybrid technlgy) as well as large slar and wind farms t increase grid reliability. 3. Acceleratin f Reliance n Renewable Energy Resurces: 100 Percent Clean Energy Study: n September 16, 2016, the Ls Angeles City Cuncil passed a Mtin directing the LADWP t implement research partnerships with apprpriate entities and t determine what investments are needed t achieve a 100 percent clean energy prtfli. LADWP will begin this stakehlder engagement utreach prcess in spring 2017, as well as targeted research in the areas f system reliability, energy strage, transmissin cnstraints, and expansin f demand-side measures.* * Accelerating the Deplyment f Renewable Energy Resurces: LADWP will cntinue t be a leader by setting renewable energy targets that exceed the State s RPS mandates. The fllwing table shws LADWP's histric and frecasted RPS cmpared with the State s RPS targets. Since 2006, LADWP has increased its renewable supply prtfli by 19 percent, and expects t further increase that by 40 percent in Year 2006 Califrnia RPS LADWP RPS Target 7% % 25% 33% 45% 50% 20% 25% 39% 50% 55% % These targets and achievements demnstrate LADWP s cmmitment t clean energy and reductin f GHG emissins and reliance n fssil fuels.

5 h*ir The Hnrable City Cuncil Page 5 Expand Lcal Renewable Energy and Demand-side Resurces: LADWP is expanding its Energy Efficiency, Demand Respnse, and slar prgrams {Slar Net Metering, Feed-in-Tariff, Cmmunity Slar, and Utility-Built Slar) in a cst-effective manner that advances the implementatin f lcal renewable resurces, grid resiliency, and verall reductin f LADWP s GHG emissins. The fllwing chart shws LADWP s prgress f adding 1599 MW f utility-scale renewable pwer resurces t its generatin prtfli thrugh Renewable Prjects Cmmericial peratin Gethermal Id Slar Wind i -8 Bigas & * excludes lcal s lt i Installed Capacity (MW) «S th D Q Q I I i n 8 jj Small Hydr I 8 : j n 8 r-. 8 ta g S IJ >i i - nj i > cn d i ' a. I -! crt Deplyment f ther Clean and Renewable Energy Resurces: LADWP currently deplys clean, renewable, and zer GHG emitting energy resurces that currently d nt meet the State s current RPS definitin. Such resurces include existing cnventinal hydr-electric plants, a pumped-strage plant, and behind the meter custmer sited slar facilities. As f 2016, LADWP s service territry has 1763 MW f clean energy resurces nt meeting the State's RPS criteria including 27,449 installed slar systems n custmer facilities. Mitigatin Plans: In respnse t the Alis Canyn gas strage facility incident, LADWP will cntinue t implement mitigatin measures t reduce the risk f service interruptins and its verall reliance n natural gas. Such mitigatin measures include: Halting the sales f excess energy t ther market participants.

6 The Hnrable City Cuncil Page 6 Curtailing physical hedging f gas supply t avid being lcked int cmmitments. Curtailing blck energy and frward capacity sales t retain flexibility. Maximizing the use f ther energy resurces including renewable energy. ffering Energy Saving Prgram fr large cmmercial custmers. Calling n all custmers t vluntarily reduce their energy use during peak hurs thrugh a widespread cmmunicatins strategy acrss multiple media channels, including a rbust Flex Alert utreach campaign. 4. Natural Gas Reductin Plan in Cnjunctin with Lcal and State Entities: Cllabratin with Lcal Utilities and Entities: LADWP will cntinue t jin frces with lcal utilities and entities such as the Suthern Califrnia Public Pwer Authrity (SCPPA) fr the jint purchase f renewable energy resurces and transmissin capacity in rder t advance the deplyment f clean energy resurces. Wrking with CPUC, DGGR, and Califrnia Energy Cmmissin (CEC): In respnse t the Alis Canyn incident, LADWP is wrking jintly with CPUC, CAIS, and CEC t identify near-term gas and electricity reliability risks t the Ls Angeles Basin and t develp an actin plan and near-term mitigatin measures. 5. Reductin f GHG Emissins: Cmmitted t GHG Reductin: Senate Bill 32 requires the State t reduce its GHG levels t 40 percent belw the 1990 levels by LADWP is expected t achieve 40 percent reductin in GHG emissins belw 1990 levels by 2018 a full 12 years in advance f the current state mandate. LADWP is practively cmmitted t meet r exceed GHG emissin reductin targets set by the City s Sustainability plan and the State. Imprving Generatin System Efficiency: T help reduce its verall reliance n natural gas and lwer GHG emissins, LADWP plans t rehabilitate its less reliable and inefficient gas-fired generatin statins. Such measures will include efficient technlgies that will enable LADWP t maintain system reliability, accelerate the integratin f renewable energy, meet system demands in the event f system failure, and cmply with federal reliability standards. Fr example, the repwering f cnventinal units 3 and 4 with cmbined cycle units 8, 9, and 10 at Haynes Generating Statin with mre efficient, best available technlgy, prvided increased ramping and turn dwn capability t integrate intermittent resurces, while als reducing emissins by 41 percent n a per MW-hur basis, thereby als imprving air quality in the surrunding cmmunities. The fllwing chart shws LADWPs histric and prjected GHG emissin levels as well as the State s verall gal.

7 - - 8 The Hnrable City Cuncil Page 7 GHG (C02 Emissins) 20 IS 100% Q % f 1990 Level UU 30 'T ' I 'I : -j r- IJ UJ V '*4 J j i cn s 5= i ^ r -j lti- f- fni c r Mil in Metric Tns (MMT) -c* cn c IN I r : I -I i a r 1 Transprtatin Electrificatin: Increased electrificatin f the transprtatin sectr is expected t substantially reduce verall GHG emissins in the Ls Angeles Basin, since gasline fuel is fur times as plluting as clean electricity. The fllwing chart demnstrates the significance f transprtatin electrificatin and LADWP s prpsed prgress ver the next 10 years Carbn Intensity (lbs C02/M W h) u-i in Ln fnj KJ h-1 I 4 t 1 GHG savings rati 590 i v I Current LADWP Fleet Future LADWP Fleet Gasline and Diesel Mix (2014) Mix (2026) Passenger Vehicles

8 The Hnrable City Cuncil Page 8 LADWP is well psitined t meet and exceed the State s current plicy initiatives t reduce GHG emissins, increase energy strage, and renewable prtfli standard targets. Cnclusin Climate change is a majr envirnmental cncern that warrants fcused attentin. LADWP is cmmitted fremst t maintaining electric system reliability, and reducing its GHG emissins t minimize adverse impacts n the envirnment, while cnsidering rate impacts t LADWP cmmunities. As a respnsible municipal utility, LADWP will base its recmmendatins and actins n sund scientific studies and principles. In additin, LADWP will cntinue t make unprecedented investments t transfrm its pwer supply with new and innvative clean energy resurces that reduce its reliance n natural gas while maintaining superir reliability and cmpetitive rates fr its custmers. If yu have any questins r if additinal infrmatin is required, please cntact me at (213) , r yu may have yur staff cntact Ms. Winifred J. Yancy, Directr f Legislative and Intergvernmental Affairs, at (213) Sincerely, David H. Wright General Manager RAK/SZ:ps c: Cuncilmember Bb Blumenfield, Vice Chair, Energy and Envirnment Cmmittee Cuncilmember Gilbert A. Cedill, Member, Energy and Envirnment Cmmittee Cuncilmember Paul Kretz, Member, Energy and Envirnment Cmmittee Cuncilmember Mitch Farrell, Member, Energy and Envirnment Cmmittee Cuncilmember Mitchell Englander, President Pr Tempre, Twelfth District Cuncilmember Mike Bnin, Eleventh District Ms. Zina Cheng, Legislative Assistant, Energy and Envirnment Cmmittee Dr. Frederick H. Pickel, ffice f Public Accuntability Bard f Water and Pwer Cmmissiners Ms. Winifred J. Yancy

9 MTIN ENERGY & ENVIRNMENT The Department f Cnservatin's Divisin f il, Gas, and Gethermal Resurces (DGGR) and the Califrnia Public Utilities Cmmissin (CPUC) recently cnducted public meetings in Wdland Hills regarding the Alis Canyn Strage Facility and the natural gas leak which ccurred in The purpse f these meetings was t btain public cmments regarding the safety f the Strage Facility, its peratins and ptential impacts n lcal cmmunities. Fr thse wh have lived thrugh the largest gas leak in U.S. histry, were remved frm their hmes fr mnths, sickened with nausea, nsebleeds, headaches r wrse and fr thse whse children were frced t attend alternative schls r whse businesses failed - there is n acceptable ptin but a permanent clsure f this facility. Beynd that, the respnsible path frward wuld be t reduce and eliminate the need fr all such facilities in cmmunities by ending ur dependence n natural gas. DGGR and the CPUC are slated t review safety studies and public cmments t determine if the Alis Canyn Strage Facility shuld be allwed t perate. The Suthern Califrnia Gas Cmpany, which wns the Facility, is claiming the Facility is safe t perate. During these meetings, lcal residents expressed strng cncerns abut resuming Facility peratins and the impact n their health and welfare. Simultaneusly, the Ls Angeles Times reprted that Califrnia is experiencing a glut f excess pwer which state residents are paying fr. Accrding t the article, during the last decade the CPUC apprved the cnstructin f numerus pwer plants thrughut the state despite declining energy demand. The Department f Water and Pwer (DWP) and lcal utilities rely, in part, n natural gas supplied by the Suthern Califrnia Gas Cmpany t run their pwer systems. Given health and safety cncerns regarding the peratin f the Alis Canyn Strage Facility, the City shuld lk at ways t reduce its reliance n natural gas; and eliminate its use and strage near cmmunities. T achieve this bjective, the City shuld lk at a variety f ptins such as btaining excess pwer frm ther areas f the state and strage ptins fr excess pwer frm renewables. In additin, the City shuld accelerate implementatin f and reliance n renewable energy surces; and seek t achieve a 100% Renewable Prtfli Standard (RPS) in the near term.

10 These appraches, and thers, can be critical t reducing and eliminating the City's reliance n natural gas and strage near cmmunities. This way, the health and welfare f lcal cmmunities and the envirnment can be preserved. I THEREFRE MVE that the Department f Water and Pwer (DWP) reprt t the City Cuncil in 30 days n ptins t reduce the City's reliance n natural gas use and strage near lcal cmmunities; reviewed ptins shuld include the fllwing: The purchase f excess pwer frm ther areas f the state; Strage ptins including batteries fr excess pwer frm renewable surces; The acceleratin f renewable energy surce reliance in an effrt t achieve 100% RPS; The frmulatin f an aggressive natural gas reductin/eliminatin plan fr the City and regin develped in cnjunctin with lcal utilities and the Califrnia Public Utilities Cmmissin (CPUC) and the Divisin f il, Gas, and Gethermal Resurces (DGGR). I FURTHER MVE that the City and DWP cmmunicate t the CPUC and DGGR, their review f the Alis Canyn Strage Facility matter, and that the City's reprt cnsider the state's established plicy t maximize de-carbnizatin f energy surces in rder t preserve the health and welfare f state residents and the envirnment. PRESENTED BY: MlTCi4 LL ENGLANDER Cuncilmember, 12th District SECNDED BY: ^ / r FEB /