An Article by Christopher Smith
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Abstract
How did the City of Los Angeles convert its electric power generation fuel mix from 3 percent renewable to 20 percent in less than a decade? Disappointing and controversial performance from an early green pricing program led policymakers to shift their policy approach away from commercial sales of renewable power to normative environmental public good provision. Aided by pressure from regulatory changes at the state level and growing support for renewable energy from political leaders and the public, this policy shift enabled The Los Angeles Department of Water and Power to make dramatic gains in the last several years.
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About the Author
Christopher Smith graduated from Cornell University’s Department of City and Regional Planning with a Master of Regional Planning in the spring of 2011. In 2010 he was selected as a Sustainable Energy Fellow and had the opportunity to attend an annual national conference on sustainable energy. Prior to Cornell, Christopher worked as a Political Analyst at the American Association for Justice. He completed his undergraduate studies at the Massachusetts Institute of Technology. He is from Alexandria, Virginia. In the fall of 2011, Christopher plans to join the Cornell Institute for Public Affairs to pursue a Master of Public Administration.
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On January 13, 2011, Los Angeles Mayor Antonio Villaraigosa proclaimed at a City Hall press conference that the Los Angeles Department of Water and Power (DWP), the city-owned water and electric power utility, had achieved an important milestone. The DWP had generated 20% of the electricity it sold to its customers in 2010 from renewable energy sources. The DWP, the nation’s largest municipally-owned electric utility, achieved a renewable energy goal that no other public or private utilities had met during a time when a tumultuous political milieu posed unique challenges. Moreover, the DWP had been generating only 3% of its power from renewables as late as 2003 before dramatically converting from 3% to 20% by the January declaration. How did the City of Los Angeles achieve its renewable portfolio standard goal of 20% by 2010? This paper will trace that path.
The Los Angeles experience is important for two related reasons. First, it is an example of the public sector steering a transition in an important, socially-embedded technological system. Second, as cities like Los Angeles and other jurisdictions mobilize to combat global climate change, much of their task to reduce carbon emissions will involve reforming how the hard technical infrastructure of the built environment uses and produces energy. Los Angeles’s successful energy transition supports the argument for public sector institutions to assert a greater role in managing sustainable change.
The renewable energy transition in Los Angeles was the result of a normative renewable energy policy comprised of public sector decisions, policies, programs, and politics implemented at three different levels of government: city, municipal, and state. Gradually, activity between the levels became more coordinated and intensified with strong political direction from the Mayor of Los Angeles, such that the outcomes from this multi-level renewable energy policy implementation became far greater than anticipated.
In the section “Mandating Green Power” I argue that several landmark State of California legislative acts starting from the 1990s created a regulatory context that forced renewable energy into a higher place on Los Angeles’s policy agenda. These legislative acts also motivated local energy policymakers to pursue renewable energy development in Los Angeles with successively greater ambition.
The sections “Selling Green Power” and “Acquiring Green Power” analyze how Los Angeles, through the operational scale programs of the DWP, responded to state government-level policy stimuli, by employing two frameworks for its renewable energy policies and programs. The first framework was commercial. The commercial framework regarded renewable energy as a private commodity being sold to customers. Under this framework, the recipients of renewable energy are those with the means to purchase renewable power. The DWP operates under this framework as a merchant, only investing in renewable power generation in response to expressed customer demand. The second framework is normative and environmental. It regards renewable energy as a public good which should be distributed to all on an equitable basis. The DWP is not a merchant under this framework but a provider and guarantor. The DWP’s shift from commercial renewable energy policy to normative environmental renewable energy policy led it to strengthen its focus on acquiring renewable power through both purchasing agreements and investments in generation projects. This shift corresponds with significant increases in the renewable energy portion of the DWP fuel mix.
The section “Green Power Politic” shows that the decisions and actions of major political leaders and coalition groups shaped the policies and programs the DWP used to manage its renewable energy operations and influenced their success. In Los Angeles, the city’s mayor has a disproportionate influence on policy formulation, policy decision-making, and policy implementation at the DWP, yet remains dependent on the support of politically influential coalition groups and opposed by other political actors embedded within various coalitions with different agendas. In Los Angeles, current Mayor Antonio Villaraigosaohas presented exemplar leadership on renewable energy and has created a distinct political context in which renewable energy policies and programs haved thrived.
The final section, “Green Power Lessons” identifies several key takeaways from the Los Angeles renewable energy transition experience. The recent experience in Los Angeles suggests that public sector institutions can be uniquely effective in leading renewable energy transitions. However, to maximize these institutions’ effectiveness, there must be a regulatory and policy framework that assigns renewable energy as a high priority on their institutional agendas. This treats renewable energy as a public good and mandates the mobilization of public resources in its provision, assisted by strong support from political leaders and interest group coalitions.
Mandating Green Power
The State of California’s energy and environmental laws and regulations have greatly shaped similar policies and programs in Los Angeles. A series of major California electricity policy and environmental regulation reforms intended to enhance renewable energy development also shaped the local renewable energy policy in Los Angeles.
In 1996, California passed Assembly Bill 1890 (AB 1890), a landmark piece of legislation, in an attempt to create greater choice and lower per unit prices for electricity consumers. The deregulation of California’s electricity markets forced local electric utilities to adjust to greater market competition and to find new models of commercial viability. A key provision of the law eliminated legal protection for utilities’ geographic monopolies, allowing electric utilities, independent power producers, and energy companies to compete for customers everywhere in the state for the first time. This state law allowed electricity consumers to choose from a greater number of possible electricity providers than ever before.
The tepid performance of the state’s renewable power industry during the 2000-2001 Electricity Crisis coupled with environmental concerns motivated state policymakers to push for legislation compelling systemic reform of how the industry dealt with renewables. In 2002, then-Governor Gray Davis signed into law California’s first renewable portfolio standard legislation, which committed the state’s investor-owned utilities to produce 20% of their electricity from renewable sources by 2017.1 The significance of the renewable portfolio standard, which only issued hard requirements for investor-owned utilities, was that it challenged the established orthodoxy to define renewable power as a niche product, the production of which would be determined by discernable market demand. The 2002 Renewable Portfolio Standard insisted that energy, particularly renewable energy, be treated as a “common good” rather than as a commodity.2
Governor Arnold Schwarzenegger and the California Legislature dramatically punctuated this philosophical shift with the enactment of a set of bills in 2006, most notably Assembly Bill 32 (AB 32),“The Global Warming Solutions Act of 2006” AB 32 was comprehensive environmental legislation designed to address the state’s responsibilities in abating global climate change. The Act specifically made both investor-owned and municipally-owned electric utilities subject to future obligations for greenhouse gas emissions reductions. The legislature enacted Senate Bill 107 that year, which modified the 2002 Renewable Portfolio Standard to move its deadline of generating 20% of the state’s electricity by renewable fuels from 2017 to 2010.3 California also passed a law, Senate Bill 1368, that forbade electric utilities, public and private, from signing power purchasing contracts lasting five years or longer unless the electricity was produced in compliance with greenhouse gas emissions standards.4 The unstated, but direct consequence of the design of this law was that electric utilities could only buy electricity at least as “clean” as that generated from natural gas plants, effectively banning future contractual purchases from coal-fired power generators.5 For an electric utility like the DWP, which began the decade drawing 49% of its electricity from coal power plants, the 2006 laws were a reminder that transition was mandatory. There would be no going back.6
Selling Green Power
Los Angeles’s transition to renewable energy began with a commercial renewable energy policy adopted in response to changes in state electric utility regulations. Los Angeles energy policymakers believed that in the aftermath of California’s 1996 electric utility deregulation law, competitor utilities and power producers would exploit the niche demand for environmentally-conscious products to gain a foothold in the Los Angeles market. They decided to crowd out competition by selling renewable electricity as a boutique product to customers.
In May 1999 the Los Angeles Department of Water and Power (DWP) started offering customers the option of purchasing power generated from renewable energy sources.7 The DWP acknowledged that green power would cost more but also argued that the additional cost was modest ($3 additional for every $50 of billing for residential ratepayers; $6 per $50 billing for commercial ratepayers).8 It also offered customers two high-efficiency light bulbs for free. Called “Green Power for a Green L.A.”, the program’s earliest participants included then-Mayor Richard Riordan, the Los Angeles Dodgers, and the University of Southern California.9
As a “green pricing” program, “Green Power for a Green had ample company. Green pricing programs provide a way for electricity ratepayers to pay a premium rate in addition to their standard bill to support their utility’s efforts to develop renewable energy resources. Not being a wholesale substitute for concerted renewable energy development programs, green pricing programs serve as a training phase that allow utilities to make their initial entry into developing green power generation assets. These programs also serve an education function by giving customers information about competitive electric retail choice and the overall environmental impact of electricity generation.10 Many energy companies entered the alternative energy sector in anticipation of a rising public consciousness of the environmental externalities caused by electric power generation and a growing consumer demand for electricity not produced from dirty fossil fuels.11
Energy companies’ anticipation of a rising market for “green” power among ratepayers was well-placed. A 1996 poll by the California League of Conservation Voters indicated that 30% of California ratepayers were willing to pay higher rates in exchange for cleaner energy.12 In conjunction with the official start of deregulated electricity markets and a new law requiring that electric utilities provide their customers with information about the energy sources from which utilities generated their power.13 Major investor-owned utilities in California, such as Southern California Edison and Pacific Gas and Electric, launched green pricing programs in late 1997 and early 1998. Publicly-owned utilities were similarly compelled, though traditionally concerned with keeping electricity rates as low as possible, they felt threatened by the deregulation of California’s electricity markets and they received political pressure from influential environmental groups to generate power from cleaner energy sources.
The Green Power for a Green LA program’s commercial approach achieved early success. By November, 2000, the program had by far the largest number of customer participants of any green pricing program in the nation, and the highest number of new megawatts (25 MW) generated from renewable sources.14 In keeping with a commercial approach, DWP formed a number of partnerships to expand its green power customer base. In October 1999, the Los Angeles Board of Airport Commissioners agreed to a ten-year deal to have two Los Angeles area airports, Los Angeles International (LAX) and the Van Nuys Airport, purchase green power from the DWP at a reduced rate.15 In early 2003, Kinko’s, The national office supply chain, announced that nineteen branches in the DWP service area would participate in the green power program by purchasing between 10 and 20% of their electricity in the form of renewable power.16
The DWP even struck a deal with the city itself. In 2001, the Los Angeles City Council approved a program to have 10% of the electricity the city uses for municipal operations come from renewable sources.17 The DWP received national and international recognition for its efforts. The Financial Times honored the DWP the same year as the “Renewable Company of the Year” for the “high level of diversification in its energy portfolio, offering customers a solid choice within the renewable energy space.”18
However, the Green Power for a Green LA program’s early success was hollow. The program’s impressive participation numbers were the result of the DWP using a different standard for participation than other utilities with green pricing programs. Further, the program’s decline in rank from 1st in 2000 to 3rd in 2001 in the category of “New Renewable Resources Supported Through Green Pricing — the amount in megawatts of new renewable power generation paid for through green pricing receipts — indicated that the DWP was not earning revenue from the program commensurate with its participation levels.
To make matters worse, the DWP failed to find its way effectively into a reinvestment in new renewable power generation capacity. A 2003 review of the DWP programs by the Los Angeles City Council’s Chief Legislative Analyst reported “DWP’s renewable energy investments account for approximately 1% of the utility’s 7,200 MW of total available capacity.”19 Even including older small-scale hydroelectric facilities, the DWP’s renewable power generation had only marginally increased even 5 years after the debut of Green Power for a Green LA”20 This is in part a function of the commercial philosophy that then guided city renewable energy policy.
This conclusion is further supported by the fact that despite its high nominal number of customer participants, the DWP’s 3 cents/kWh price placed it outside the Department of Energy’s ranking of the ten utilities with the lowest green power prices, and that green premiums have fallen over the course of the decade throughout the nation while the 3 cents/kWh rate for participation in Green Power for a Green L” has remained constant.21 For other utilities’ green pricing programs, prices fell as they invested in green generating capacity and their customer participation levels rose. By 2003, Green Power for a Green LA had stalled as an engine for the transformation of Los Angeles’s electric power generation, and had now become a stable if unremarkable profit center for the DWP.
A public investigation into the Green Power for a Green LA program further revealed that its assumed progress in customer recruitment and renewable energy development was an illusion. The capable reputation of the program first unraveled when City Controller Laura Chick began investigating the program in March 2002. Chick’s investigation into the program revealed controversial spending practices by the DWP, including sponsorship of a promotional party for the green power program to the tune of $27,000 and multi-million dollar contracts with local advertising agencies to promote green power usage and subscribership. Failure to produce significant amounts of renewable energy made this increasingly questionable. Chick noted that a program to generate electricity from landfill gas had not produced any electricity in a year of operation, only seven of twenty-seven electric buses purchased for the city three years prior were actually in service, ant the DWP had only distributed twenty percent of $370,000 fin energy-efficient refrigerators.22
Chick publicly challenged the DWP’s green marketing program for its excess, explaining that “there is no real competition” with the DWP and therefore less of a need to promote green power products and services. Chick’s “no competition” argument against the necessity of public relations services for the DWP’s green power program is evidence of the perspective of policymakers and regulators on the DWP’s green power initiatives and Los Angeles’s renewable energy policy. Policymakers and regulators outside of the renewable policy arena, like Chick, regarded green power as an energy product designed only to generate greater revenues for the DWP rather than as the tip of a larger, transformative environmental program.
Although Chick would later observe that the DWP had “gotten their act together,” by 2004, it was clear that on commercial grounds the Green Power for a Green LA program had stalled.23 At the peak of the program, it had approximately 100,000 customers participating. By 2009, the number of clean power customers had fallen to 18,300, or less than 2% of the DWP’s customer base.24 Most importantly, the renewable energy content of the DWP’s power generation mix increased only an approximate 3% to 5% during the program’s first five and most relevant years.
Acquiring Green Power
The Green Power for a Green LA program faded into lingering controversy and stagnation. Los Angeles policymakers responded by changing the previous commercial approach to renewable energy to a normative and environmental approach that treated renewable power as a public good. This new normative environmental approach meant that the DWP figuratively stopped selling green power and focused its programs on acquiring and integrating new renewable power generation capacity for equal distribution to all ratepayers.
The DWP pursued acquisition in two forms. It struck power purchasing deals with other regional utilities and independent power producers. It also invested in green power generation projects to create and enhance its own internal capacity to produce electricity from renewable sources. The DWP’s acquisition strategies succeeded in growing the renewable portion of its power generation mix.
The DWP began acquiring renewable power assets during its commercial policy phase. Early green power purchasing deals allowed the DWP to meet the needs of green power program participants but they were not concerted in an effort to reach power portfolio goals. By the time the Green Power for a Green LA program was launched, environmentally conscious power consumers (or those in search of green branding) in Los Angeles were already seeking out renewable power providers. For example, in 1999, three Los Angeles-based Lucky Brand Jeans stores contracted for its renewable electricity with clean energy provider Commonwealth Energy, which claimed 50,000 renewable energy customers.25 Shortly after launching its green pricing program, the DWP struck deals to expand its renewable power assets to meet expected green power demand. In early 2000, the DWP successfully negotiated an agreement with the municipally-owned electric utility Seattle City Light in which the DWP would sell green power in the winter and buy green power in the summer.26 By 2001, the DWP also offered the chance to earn a rebate of five dollars per watt in exchange for generating solar power and selling it back to the DWP.27
The 2002 California Renewable Energy Portfolio Standard (RPS) triggered a big change in the DWP’s renewable energy operations. Although the legislation exempted municipally-owned electric utilities from being formally required to adopt the statewide renewable energy standard, it did require municipalities to develop their own local standards. The City of Los Angeles formally adopted a renewable portfolio standard policy in 2005, which required the DWP to generate 13% of its power from renewable energy sources by 2010, and 20% by 2017.28 The state and local renewable portfolio standards redefined the DWP’s operating mission with respect to electric power services. Since its inception, the DWP has operated under the guiding principles of keeping power costs as low as possible and ensuring maximum grid reliability. The new standards created a formal regulatory requirement that the DWP integrate other public policy goals into its strategy and management.
After city energy policymakers shifted to a normative environmental renewable energy policy, the DWP’s renewable power deal-making became more aggressive. In 2003, the DWP began work on a $162 million dollar effort to erect a 120-megawatt, 80-turbine wind farm capable of serving 100,000 city residents in the high-elevation Tehachapi Mountains area northwest of the city. The DWP expected the project to boost the city’s renewable power quotient to 3.7%. (The project started daily operations in 2009.) In 2005, the DWP became involved in an ambitious effort to build a major electric power transmission line from a power plant fueled by renewable geothermal, solar, and wind resources near the Salton Sea in Imperial County, California. Although estimated to produce enough renewable power to supply 1.5 million homes, the project did not survive intense political opposition from environmentalists and private landowners. In 2006, the DWP brokered a deal valued at $280 million to purchase 82 megawatts of electricity from a wind farm in Wyoming. The DWP procured hydroelectric, wind-generated and landfill biogas generated power from British Columbia-based Powerex Corporation in 2007.29 In 2009, the DWP negotiated an agreement to purchase 75 megawatts of geothermal power from Comision Federal de Electricidad — the power authority of Mexico. 30 The DWP partnered with the City of Glendale, California’s Department of Water and Power, through the bond-issuing capacity of the Southern California Public Power Authority, to borrow $140 million to finance the Linden Wind Energy Project, a large wind farm in Washington State.31 The DWP also announced the completion of a 10 megawatt solar panel installation on the roof of the World Cruise Center at the Port of Los Angeles.32
The environmental renewable energy policy also facilitated DWP’s divestment from coal plants. In 2000, under pressure from environmental groups and the federal government to install exhaust “scrubber,” the DWP sold its 20% stake in the Mohave Generating Station, a major regional coal-fired power plant based in Southern Nevada.33 Following the Chick investigation, in August 2004, then-Mayor James Hahn moved against the DWP’s coal dependency when he ordered the DWP to halt its plans to invest $400 million into an expansion of the Intermountain facility.34 The DWP was a major investor in the $5.5 billion, Southern Utah-based Intermountain Power Project generation facility which completed construction in 1987.35 Intermountain specializes in low-cost coal-fired electricity production, and as of 2004, the DWP was its biggest customer, consuming approximately 44% of its power output (approximately one third of the DWP’s power generation). The DWP, through the Southern California Public Power Authority, had even heavily invested in a major transmission link from Intermountain to its Southern California substations called the Southern Transmission System. 36 Mayor Antonio Villaraigosa intensified the coal generation divestment policy by pledging in 2009 to ensure that the DWP’s electricity generation would be “coal-free” by 2020.37 Although the announcement had limited impact on the immediate effort to achieve the 2010 renewable portfolio standard objective, the goal was lofty. As of 2010, the DWP derived 39% of its power from two coal power plants: the Navajo Generating Station in Arizona and the Intermountain Power Project in Utah. The Renewable Portfolio Standard, perhaps the cornerstone of the DWP’s normative environmental policy approach to renewable energy, obligated the DWP to divest.
Green Power Politics
Political actors and coalitions influenced the DWP as it shifted policy approaches and pursued renewable energy development projects. The Mayor of Los Angeles, by statute, is disproportionately influential in setting renewable energy policy. The Los Angeles City Charter grants the Mayor of Los Angeles authority to appoint the members of the DWP’s General Manager and its Board of Commissioners.38 Although the City Council must confirm the General Manager and DWP Board members, the DWP is effectively structured to operate according to the Mayor’s policy decisions. The direct consequence of this structure is that the Mayor largely determines the scope of renewable energy policy. The ambition of Los Angeles energy policy and the aggressiveness of its pursuit are certainly a function of mayoral decision-making.
Current Los Angeles Mayor Antonio Villaraigosa’s policy decision-making and advocacy have uniquely affected renewable energy development in Los Angeles. Villaraigosa’s contributions have followed those of two predecessors whose policy differences are reflected in the mixed efficacy of the early years of the transition to renewable energy. Villaraigosa distinguished his administration through unrelenting dedication to the normative environmental approach to renewable energy policy. Villaraigosa, in some ways, has actually defined his administration through renewable energy policy, and he is the only Mayor to serve his entire tenure under the policy regime of the city’s Renewable Portfolio Standard. Further, Villaraigosa mobilized public support for his effort to set the city’s renewable energy policy agenda through heavy campaigning, his publication of renewable energy plans, and highly-publicized clashes with the Los Angeles City Council over the issue.
Villaraigosa’s campaign for mayor defined him as a strong environmentalist and made clear his intent to push the DWP more aggressively in the direction of a sustainable energy transition than his predecessors. Villaraigosa made clear his intent to approach renewable energy through a normative environmental framework. During the 2005 Los Angeles City Mayoral Election, Villaraigosa heightened attention on renewable energy policy by making his own transformative pledges central to his platform and by contrasting himself with then-incumbent Mayor James Hahn. Villaraigosa attacked Hahn for claiming credit for redirecting the DWP toward pursuing renewable energy and for proposing to close the City’s Environmental Affairs Department.39 Through his chairmanship of the City Council Committee on Transportation, Villaraigosa publicly questioned Hahn Administration officials on their failure to install energy-saving light-emitting diodes in city street lights.40
In addition, Villaraigosa’s personal characteristics, including his Mexican-American heritage, strong history of pro-environment policy positions, and background in labor organizing made him an attractive figure for progressive constituencies. Environmental group, in particular, regarded Villaraigosa as “an opportunity to shift the political dynamics of the city,” and they heavily mobilized behind his candidacy.41 A few months after Villaraigosa took office these groups united to form Green L.A., an umbrella coalition group whose aim was to help the mayor achieve his environmental goals by applying pressure on his administration as well as the City Council from the outside. Green L.A.’s relationship with Villaraigosa was so close, the Mayor appointed its executive director to the DBP Board of Commissioners.42 For its part, Green L.A. endorsed Villaraigosa’s controversial solar power ballot measure, Measure B, and organized in support of the Mayor’s successful effort to impose a “carbon surcharge” on the DWP customers.
Shortly after taking office Villaraigosa appointed a new Board of Commissioners for the DWP described as “aggressive and highly skeptical” in its posture toward existing DWP senior personnel and “relentless” in its intent to push DWP to add renewable energy to its fuel mix.43 Villaraigosa also accelerated the Hahn-era renewable portfolio goal of 20% renewable by 2017 to a more aggressive pace of 20% by 2010. When, in 2006, complaints surfaced again about the stagnation of the Green Power for a Green LA program and the Pine Tree Wind farm, Villaraigosa’s new Board of Commissioners called the lack of progress “unacceptable,” and threatened to restructure DWP so that its principal manager of green power programs reported directly to the Board.44
Villaraigosa further raised the profile of renewable energy policy when he published L.A.’s first climate action plan,“Green LA: An Action Plan to Lead the Nation in Fighting Global Warming” in 2007.45 The plan revealed a comprehensive sustainability vision and a sweeping ambition: “to transform Los Angeles into the greenest big city in America.46 It also set forth new renewable energy goals, such as a new declaration that the DWP would “transition to 35% of total electricity being from renewable sources by 2020.” 47 The plan made clear that the Villaraigosa Administration saw DWP public status as an asset that allowed them to be more aggressive in developing renewable energy resources than investor-owned counterparts. ‘Green L.A’ drew public support even from Republican California Governor Arnold Schwarzenegger.48 Villaraigosa repeated this stratagem in 2008 when he published a sweeping “Solar L.A” plan, self-described as “the largest solar project undertaken by any single city in the world,” which pledged the DWP to generate 10% of peak summer electricity demand from solar power by 2020.49
Villaraigosa’s leadership heavily influenced later renewable energy policy debates and political clashes. In the case of Los Angeles’s solar energy programs, Villaraigosa’s policy influence was not always positive or successful. Even before Villaraigosa published his solar plan, his allies on the City Council moved to have legislation, “Green Energy and Good Jobs for Los Angeles Act” requiring the DWP to generate 400 megawatts from solar power installations across the city by 2014.50 Measure B’s backers — which included much of the city’s political elite including Mayor Villaraigosa, the DWP Board of Commissioners and City Council President Eric Garcetti — saw it as a way of creating new jobs, growing a new emergent industry, meeting growing energy demand, and achieving environmental protection goals.
Measure B’s opposition, which included City Controller Laura Chick, viewed it as an “end run” around the normal municipal legislative process made necessary because of the poor track record of city leaders in delivering on their green promises. Measure B opponents believed that Villaraigosa’s solar plan lacked sufficient detail and analysis and believed that it would suffer from poor implementation as a result. Ultimately, voters narrowly rejected Measure B at the polls in March 2009. After its defeat, defenders of Measure B claimed that the ballot initiative’s failure did not constitute a total rejection of future investment in solar power or renewable energy.
However, critics’ attacks on the ballot measure — that it represented backroom politics, was poorly thought-out, and was not affordable — took hold. Measure B’s defeat was Villaraigosa’s first major setback to any of his renewable energy policy proposals. Villaraigosa’s decision to bypass normal city council channels clearly hurt public perception of his mass solar installation proposal. The measure’s failure hurt the near-term development of solar power in Los Angeles.
Measure B’s failure, ultimately had limited impact on Villaraigosa’s political clout and stature. On the same day Los Angeles voters blocked Measure B’s passage they solidly reelected Villaraigosa to a second term as mayor.51 Villaraigosa retained substantial political strength and continued to press for his aggressive renewable energy policy agenda. For example, in his second Inaugural address in July 2009, Villaraigosa showed few signs of backing away from his ambitious renewable energy goals when he claimed Los Angeles would be “aiming to get 40% of our power from renewable sources by 2020 and go 60% carbon-free by the end of the next decade.” 52
In a reflection of his commitment to his bold renewable energy goals and his confidence in his ability to win the support of the City Council and the public, Villaraigosa made an unconventional decision to deal head-on with the issue of financing his renewable energy agenda. This was in spite of the growing reality that the global economic recession was affecting the Los Angeles economy, and city government itself was facing a budget shortfall. Even the DWP was running a budget deficit of $6 million per week. Villaraigosa and the DWP spent months pressing the City Council to authorize increases in the base electricity rates charged to customers. The City Council, led by Council President Eric Garcetti, resisted repeatedly. In the course of the public debate and negotiations over the proposed rate increases, the DWP, which annually transfers some of its revenue to the City of Los Angeles’s general fund, threatened to withhold a transfer of $73 million, and Villaraigosa threatened to furlough city workers. In the end, Villaraigosa and the DWP prevailed.53 In April 2010, the City Council authorized a politically difficult 4.5% rate increase, which would raise residential electricity bills on average $2.50 per month.54
Villaraigosa’s consistent advocacy for aggressive renewable energy development measures,sand his constant work to mobilize the public behind his ideas, enabled him to make remarkable progress in growing the city’s renewable energy assets. His political strength allowed him to overcome obstacles to his renewable energy policies that might have prevented the city from achieving its renewable energy goals.
Lessons
The Los Angeles example provides lessons for those interested in local and regional transitions to renewable energy. One key lesson from the Los Angeles example is that approaches to renewable energy policy that depend on individualized, private demand to stimulate investment in renewable energy generation facilities face limitations in terms of the pace and scale at which they develop renewable energy resources and displace nonrenewable fuels. In Los Angeles, city officials developed a system in which electricity consumers volunteered to pay a special fee for renewable power and, in turn, that revenue was reinvested in developing renewable power generation capacity. Although the program was financially self-sustaining, it was constrained by low customer participation rates.
Ultimately, few people were willing to volunteer to pay higher rates for renewable power, and the program did not lead to substantial investment in renewable power generation capacity. However, this understates the value of renewable energy to the city as a whole and it underestimates the institutional means of the DWP, as the city’s electric power provider, to pursue renewable energy development when compelled to do so as a part of its core mission. When city leaders began approaching renewable energy as a matter of public interest and adopted policies that more fully leveraged public resources to develop renewable energy resources, the city made much more substantial progress in converting its generation mix from hydrocarbons to renewables.
Another lesson is that regulation can accelerate change. State regulation helped trigger the DWP’s entry into renewable energy service. When state officials enacted a Renewable Portfolio Standard (RPS), it included a requirement that publicly-owned utilities develop their own RPS. State regulation shaped the thinking of city leaders who used this information to shape their local laws to extend state laws. California Renewable Portfolio Standard laws passed in 2002 and 2006 both provoked the enactment of similar legislation in Los Angeles. The RPS laws added regulatory teeth to what were previously goals in rhetoric only. These laws changed the DWP’s mission and forced it to take more aggressive action to develop renewable generation capacity.
An additional lesson is that political context affects the efficacy of the public sector. In Los Angeles, Mayor Antonio Villaraigosa’s personal popularity, his coalition group alliances, and his direct advocacy for renewable energy policies combined have played an important role in helping Villaraigosa to push the DWP to pursue a heightened pace and scale of renewable energy policy implementation. They also have helped him to win approval for controversial policies from a sometimes-resistant City Council. This contrasts with the example of former Los Angeles Mayor James Hahn whose political struggles over the course of his term prevented him from being as aggressive in implementation as Villaraigosa, even though he was responsible for repositioning renewable energy policy as a public and citywide environmental concern as opposed to a private preference. So policymakers must work, like Villaraigosa and his environmental coalition allies, to optimize the political circumstances for successful implementation of renewable energy policies.
Lastly, as is suggested by Van den Bergh and Bruinsma, well-managed transitions tend to happen only when the socio-technical regime to be changed is of limited complexity. 55 This has value for explaining why a transition happened in Los Angeles. Los Angeles’s electricity regime is relatively unique in its administrative structure. Electric power in Los Angeles is exclusively provided and managed by the DWP. The DWP is managed and overseen by direct appointees of the city’s mayor, and he plays a major role in determining the public policy mission of the organization. Effectively, in Los Angeles, both electricity policymaking and implementation are highly centralized, making them simpler regime structures.
Herbert Girardet elaborates on this idea. In considering cities’ solar energy prospects, Girardet identifies what he sees as a central obstacle to the proliferation of clean energy. The problem is that electricity production based on coal and gas consumption has already reached their economies of scale and have been nurtured and protected by decades of government subsidies. Thus fossil-fuel based electricity is cheap to make, cheap to get to market and distribute, and more-or-less plentiful. Girardet concludes that only by equalizing the “playing field” can renewable energy technologies complete effectively withyhydrocarbons. Here Giradet implies that through a state intervention in energy markets, in the form of a subsidy, governments can reduce the complexity of the system (by effectively eliminating the uncertainty of market competition dynamics) and make it easier to push the pace and scale of renewable energy development.56 Girardet also states that reforming a city’s energy supply depends substantially on who controls it, asserting that “the largest improvements in power distribution and consumption are realized by cities with a municipality-owned electricity company.” 57
Although Giradet’s analysis references a European context, his conclusion about the advantages that publicly-owned electric utilities have over privately-held utilities is confirmed by the Los Angeles example, and is instructive for U.S. cities pursuing renewable energy transitions. Publicly-owned utilities can achieve fast progress in developing and deploying renewable energy systems because they are able to quickly achieve economies of scale by drawing on public treasuries and incorporating knowledge and resources normally used to run other, related public infrastructure systems. Essentially, this is what happened in Los Angeles. The DWP, as the U.S.’s largest publicly-owned utility with nearly 4 million customers, had large financial assets to apply to developing renewable energy resources. It also had extensive pre-existing personnel and electric power infrastructure assets giving it the ability to quickly plan and integrate renewable energy sources into its supply. Cities pursuing their own renewable energy transitions may find that they can move more quickly to integrate renewable energy resources into their power systems by designing it as a public enterprise.
Conclusion
The contextual change of a new state electric utility law created the motivation for local policy activity. However, it did not determine the nature of that activity in full. Policy actors in Los Angeles made their own policy choices. They chose between two different approaches: whether to treat renewable energy as a private chosen commodity or an environmental public good demanded by community norms. The Los Angeles DWP operated under the former policy approach in earliest phase of the transition, but under the leadership of Mayor Antonio Villaraigosa, DWP has shifted to the latter approach.
Villaraigosa’s aggressive public goal-setting in combination with landmark state climate change legislation mobilized public support for the normative environmental renewable energy policy. Public disputes over a solar power ballot measure and proposed electricity rate increases showed the limits of the normative environmental approach but also underline the influence of public opinion and institutional politics on renewable energy policy outcomes.
The energy transition in Los Angeles suggests that the public sector has a role to play in leading sustainable change in the natural and engineered systems that undergird social and economic life. This paper argues that, for renewable energy transitions, in order for the public sector to fulfill its role in steering change it ought to operate within a policy framework that understands renewable energy as a public good. Regulatory action at its broadest levels, such as state and federal regulation, remains a powerful but blunt tool for compelling local policy action. Political actors and coalitions do critical contextual work to convert broad regulatory mandates into actual policies, programs, and observable implementation. Cities pursuing their own renewable energy transitions might learn from the Los Angeles example by conferring greater responsibility on the public sector for implementing renewable energy policies, they can draw on existing public economies of scale to achieve a faster and greater pace of renewable energy development than is possible when done privately.
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Endnotes
1 Although municipally owned utilities were not the recipients of hard portfolio requirements by the 2002 law, they were forced to develop their own renewable portfolio standard.
2 Clark, Woodrow, “The California Challenge: energy and the environmental consequences for public utilities,” Utilities Policy, Volume 10, Issue 2, June 2001, Pages 57-61.
3 “Arnie’s Uphill Climb,” The Economist, June 23, 2007.
4 Carlson, Ann E., “Implementing Greenhouse Gas Emissions Caps: A Case Study of the Los Angeles Department of Water and Power,” Issue 55:6, UCLA Law Review, pg. 1485, 2008.
5 The bill left in place, but not to be renewed, existing coal-fired power purchasing agreements with the Navajo Generating Station (contract ending in 2019) and the Intermountain Power Project (contract ending in 2027).
6 For a contrasting example, see Betsill, Michele and Bulkeley, Harriet. Cities and Climate Change: Urban Sustainability and Global Environmental Governance. London: Routledge, 2003. In their case study analysis of sustainable energy policies in the City of Denver, Colorado, they show how Colorado state government undermined Denver’s sustainable energy policies by denying it funding for energy programs and by passing laws loosening restrictions on greenhouse gases.
7 “DWP to Offer ‘Green Power’,” Daily News of Los Angeles, May 14, 1999.
8 Ibid.
9 “Green Power: CA City Is First To Use All Renewable,” National Journal’s Daily Energy Briefing, June 2, 1999.
10 Blair Swezey and Lori Bird, “Utility Green-Pricing Programs: What Defines Success?” National Renewable Energy Laboratory, NREL/TP.620.29831, September 2001, pp. 1-2.
11 Fine, Howard, “Environment-Friendly Power Proves Popular with Angelenos,” Los Angeles Business Journal, May 1, 2000. Quote: “In fact, the green-power market is by far the fastest growing segment of California’s electricity marketplace.”
12 Steinman, Jon, “Green Power May Be Too Pricey for the People,” Los Angeles Times, 18, 1997; http://articles.latimes.com/print/1997/nov/18/local/me-55201.
13 “Retailers to Disclose Sources of Electricity Under Deregulation,” California Energy Commission Press Release, October 15, 1997, http://www.energy.ca.gov/releases/1997_releases/97-10-15_retailers.html.
14 “Top Ten Utility Green Pricing Programs, November 2000,” U.S. Department of Energy Office of Energy Efficiency and Renewable Energy, http://apps3.eere.energy.gov/greenpower/resources/tables/topten1100.html [Last Updated: 03/31/2004; Last Accessed: 04/20/2011].
15 “Airports to Use ‘Green’ Power Under New Agreement,” City News Service, October 19, 1999; “L.A. International and Van Nuys Airports Go Green Under 10-Year Deal With DWP,” Platts Power Markets Week, October 25, 1999.
16 “Kinko’s Joins DWP’s Green Power Program,” Kinko’s Press Release, PrNewsWire.com, February 12, 2003.
17 “City Approves Green Power Purchase — Among Largest in Nation,” Los Angeles Department of Water and Power press release, Businesswire.com, March 9, 2001.
18 “DWP renewables program wins worldwide acclaim,” Energy Services Bulletin, Western Area Power Administration, Vol. 21, No. 1, February 2002, http://www.wapa.gov/es/pubs/esb/2002/02Feb/febesb3.htm.
19 Deaton, Ronald F., “Report on the Department of Water and Power’s RPS Programs,” Report of the Chief Legislative Analyst, December 9, 2003, p.9, http://www.DWP.com/DWP/cms/DWP005880.pdf.
20 McGreevy, Patrick, “20% Energy Goal is Proposed,” Los Angeles Times, June 5, 2004. Quote: “Only 2.2% of Los Angeles’s electricity now comes from renewable energy sources, including solar, wind, geothermal and biomass power.”
21 ‘3 cents per kWh’: Deaton, “Report On The Department Of Water And Power’s RpsPrograms,” p.11.
22 Barrett, Beth, “DWP Audit: Millions Wasted With Few Results,” Daily News of Los Angeles, August 30, 2002, pg. N1.
23 Nash, James, “Audit Shows Las Angeles Public Utility Lags in Adding Clean Energy Sources,” Daily News of Los Angeles, January 29, 2004.
24 Nash, James, “Los Angeles agency’s touted ‘Green Power’ program is running out of steam,” Los Angeles Daily News, January 5, 2005.
25 Earnest, Leslie, “Lucky Brand Electrified by Green Power,” Los Angeles Times, June 22, 1999 http://articles.latimes.com/print/1999/jun/22/business/fi-48889.
26 Freeman, S. David and Zarker, Gary. “ ’Green-Power’ Trade Colors This Tale of Two Cities,” Seattle Post-Intelligencer, February 23, 2000, pg. A11.
27 Pendleton, Jennifer, “Valley Residents Warming Up to Local Solar Power Options,” Los Angeles Times, March 6, 2001, http://articles.latimes.com/2001/mar/06/local/me-33933.
28 “Renewable Energy Policy,” Los Angeles Department of Water and Power, DWPnews.com, http://www.DWPnews.com/go/doc/1475/162047/Renewable-Energy-Policy [last accessed, 04/17/2011].
29 Cavanaugh, Kerry, “2 `Green’ Electricity Contracts Get Ok,” Daily News of Los Angeles, March 24, 2007.
30 Zahniser, David, “Green Power From Mexico,” GreenSpace blog, latimes.com, February 3, 2009, http://latimesblogs.latimes.com/greenspace/2009/02/green-power-fro.html?cid=147302430.
31 Ward, Andrew, “A Green Wind Is Blowing for California Utilities,” The Bond Buyer, October 2, 2009, p.13, Vol. 75, No. 37.
32 “Port of Los Angeles Completes One Megawatt Solar Project on Rooftop of World Cruise Center,” Business Wire, December 9, 2010.
33 Martin, Hugo, “L.A. to Sell Share of Coal-Burning Plant,” Los Angeles Times, August 16, 2000, http://articles.latimes.com/2000/aug/16/local/me-5171; The LA City Council later decided to sell on half of its stake: Times Staff Writer, “L.A. to Retain 10% Stake in Power Station,” Los Angeles Times, November 28, 2001, http://articles.latimes.com/2001/nov/28/local/me-9032; On January 1, 2006, the Mohave Station was shut down after Southern California Edison, which owned 56% of the Mohave Generating Station, refused to invest in upgrades to the plant: Bustillo, Miguel, “Edison to Shut Down Polluting Coal Plant,” Los Angeles Times, December 30, 2005, http://articles.latimes.com/2005/dec/30/local/me-mohave30.
34 “DWP Ditches Plant Expansion; Hahn Shuns Coal For Cleaner Energy Source,” Daily News of Los Angeles, August 25, 2004.
35 Roderick, Kevin, “Coal-Fired Generating Plant : Power to the People–L.A. Reaps Bounty From Utah,” Los Angeles Times, June 12, 1987, http://articles.latimes.com/1987-06-12/news/mn-3933_1_intermountain-power-project.
36 “Southern Transmission System Project,” Southern California Public Power Authority website, http://www.scppa.org/pages/projects/sts.html [Last updated: 2008]; “Request for Recommendations for Southern Transmission System Project Upgrade Financing,” Southern California Public Power Authority, September 23, 2008, http://www.energy.ca.gov/2005publications/CEC-700-2005-019/CEC-700-2005-019.PDF.
37 Woodall, Bernie, “Los Angeles will end use of coal-fired power,” Reuters, July 2, 2009, http://www.reuters.com/article/2009/07/02/us-coal-losangeles-idUSTRE56165X20090702?pageNumber=1.
38 Baer, Walter; Mahnovski, Sergej; Edelman, Edmund; and Ingram III, James. “Chapter 2: The Current DWP Governance Structure,” in Governance in a Changing Market, The RAND Corporation Enterprise Analysis. 2001. http://www.rand.org/pubs/monograph_reports/2007/MR1189.pdf.
39 Orlov, Rick, “Mayoral Hopefuls Take Shots at Hahn,” Daily News of Los Angeles, December 22, 2004.
40 Nash, James, “Signal is Green on Lights,” Daily News of Los Angeles, September 9, 2004.
41 Zimmerman, Kristen, “Dare to Change: Environmental Justice Leadership For Climate Justice, Sustainable Communities And A Deep Green Economy,” Movement Strategy Center, 2010, http://www.movementstrategy.org/media/docs/1378_Dare_To-Change.pdf. Many of the groups that supported his campaign formed the “Green LA Coalition” organization after the campaign to lobby and work with the Villaraigosa Administration on energy and environmental policy.
42 Zahniser, David, “DWP, planning panelists picked,” Los Angeles Times, December 13, 2008, http://articles.latimes.com/2008/dec/13/local/me-briefs13.S6.
43 Laidman, Dan, “Antonio’s DWP Picks Approved; Panel Sets Aggressive Tone,” Daily News of Los Angeles, September 24, 2005; McGreevy, Patrick, “Villaraigosa Appoints New DWP Board,” Los Angeles Times, August 1, 2005.
44 Laidman, Dan, “Peeved Commissioner Proposes City ‘Green Power Czar’; Critics Say Utility Moving Too Slowly,” Daily News of Los Angeles, March 28, 2006.
45 Notably, the ‘Green L.A.’ plan was released approximately one month after New York City Mayor Michael Bloomberg published is own comprehensive sustainability plan, “PlaNYC 2030.”
46 Villaraigosa, Antonio. “GREEN LA: An Action Plan to Lead the Nation In Fighting Global Warming,” City of Los Angeles, May 2007, p.9.
47 Villaraigosa, Antonio. “GREEN LA: An Action Plan to Lead the Nation In Fighting Global Warming,” City of Los Angeles, May 2007, p.4.
48 Cavanaugh, Kerry, “Mayor’s Plan To Curtail Warming; City Agenda Called Most Ambitious In U.S.,” Daily News of Los Angeles, May 16, 2007.
49 Villaraigosa, Antonio, “The Los Angeles Solar Energy Plan,” City of Los Angeles, November 24, 2008, pp. 3-6; http://www.ci.la.ca.us/Mayor/stellent/groups/electedofficials/@myr_ch_contributor/documents/contributor_web_content/lacity_004982.pdf; “Mayor Villaraigosa Unveils Largest Solar Power Plan In America,” LA Mayor’s Website, http://www.ci.la.ca.us/Mayor/villaraigosaplan/EnergyandEnvironment/ClimateChange/LACITY_004983.htm.
50 “Scanning the Area: Council to Push for Solar Power,” Daily News of Los Angeles, October 15, 2008.
51 Zahniser, David and Willon, Phil, “L.A. Mayor Villaraigosa reelected; city attorney race in runoff,” Los Angeles Times, March 5, 2009, http://articles.latimes.com/print/2009/mar/05/local/me-villaraigosa5.
52 “Second Inaugural Address,” Mayor of the City of Los Angeles website, July 1, 2009, http://mayor.lacity.org/PressRoom/INAUGURATION/index.htm.
53 Zahniser, David and Willon, Phil, “L.A. council approves 4.5% electricity rate increase,” Los Angeles Times, April 15, 2010; http://articles.latimes.com/2010/apr/15/local/la-me-la-budget15-2010apr15.
54 “Los Angeles takes new step toward renewable energy,” Xinhua General News Service, March 19, 2010.
55 Van den Bergh, Jeroen and Bruinsma, Frank, “The transition to renewable energy: background and summary,” in Managing the Transition to Renewable Energy. Cheltenham, UK: Edward Elgar. 2008. Print.
56 For another take on the benefits of reducing system complexity for easing the governance of renewable energy transitions, see Betsill, Michele and Bulkeley, Harriet. Cities and Climate Change: Urban Sustainability and Global Environmental Governance. London: Routledge, 2003. Print. In their case study of the city of Denver, Colorado, city energy policymakers achieved success at implementing renewable energy policies when they applied to programs within Denver’s regulatory boundaries and applied to city government. They were less successful extending those policies outside of the city or even outside of city government because of policy incoherence and expanding political complexity.
57 Giradet, Herbert. Cities, People, Planet. Hoboken, NJ: Wiley Academy. 2004. Pp.181.