Pasadena Water and Power is recommending an amendment of the City’s Transmission Service Agreement (TSA) with the Los Angeles Department of Water and Power (LADWP) to extend it for a period of 47 years after it expires on September 30.
The Municipal Services Committee will be discussing the recommendation Tuesday, before passing it on to the City Council next week.
This proposed amendment will be the last of four one-year extensions of the contract that was signed in October 1991 and first expired in 2017.
Pasadena has been receiving electricity from the Boulder Canyon Project, also known as the Hoover project, since it signed the Hoover Electric Service contract in 1941. In 1987, the contract was amended to continue up to 2017. In 2017, the Hoover Power contract was amended to extend to 2067.
The TSA that PWP signed with LADWP in 1991 provides 26 megawatts of transmission service through which Pasadena imports 20 MW of energy and capacity from PWP’s Hoover Dam hydroelectric power entitlement, as well as energy from short-term purchases from various southwest utilities into the California Independent System Operator (CAISO) grid to meet customer load.
The 26 MW transmission service provides PWP with additional flexibility to received excess energy from Hoover if available.
The PWP recommends that the extension be up to September 30, 2067. This would match the term of the Hoover Electric Service contract. PWP said the water and power departments of both Burbank and Glendale are also executing similar transmission service agreements with the LADWP.
As to rates, PWP said LADWP has not increased its rates over the past 30 years even when it was allowed, under provisions in the contract, to implement yearly increases. Up to Amendment 4 which ends in September, the combined rate has been $1.20 per kilowatt-month (kw-mo).
The new proposed long-term TSA amendment has offered a rate of $2.30 per kw-mo with a biennial escalator, which is the Los Angeles Bureau of Labor Statistics Consumer Price Index, PWP said. The LA CPI is tied to the long-term inflation rate, currently forecast at about 2.65 percent.
PWP said the proposed rate is lower than the current Open Access Transmission Tariff (OATT) rate which is $2.936 per kw-mo as of July.
“This long term TSA rate will provide price stability into the future, and roughly four percent of the City load will be transmitted via this TSA,” PWP said in the report. “As there are currently transitory inflationary pressures, it is recommended to secure the rate before Amendment 4 of the TSA terminates on September 30, 2021.”
The report also said that, compared to the current LADWP OATT, the City could save an average of 28 percent annually, or about $250,000, over the 47-year term of the proposed amendment.
Assessing the fiscal impact, PWP said the total cost of the action will range from $652,740 per year during the initial term of the amendment, to an estimated $1,066,740 per year by the end of the amended term in 2067.