LA JUMPS ELECTRIC RATE FOR NEW ENERGY

Los Angeles Electric Rate Linked to Solar Power
Jennifer Steinhauer, March 10, 2010 (LA Times)

"Los Angeles averages more than 300 days of sunshine a year, and it often seems as if environmentalists outnumber rattlesnakes in many parts of the sprawling city. It would seem, then, that solar energy would be a thriving local industry here…But that has never been the case, and experts cite cost as the main reason.

"Now, the Los Angeles Department of Water and Power, the largest municipal utility in the United States, is poised to pass a roughly 5 percent rate increase on electricity use. The proceeds would be earmarked for renewable energy purchases and programs…The commission that governs the utility, which is losing about $6 million a week or an estimated $500 million by the end of the 2011 fiscal year, is expected to vote next week to increase by seven-tenths of 1 cent the current user rate of 12 cents per kilowatt hour…[It] is subject to a City Council vote if the Council chooses to do so…"

click to enlarge

"…[Part of the money] would go to renewable energy sources, like wind farms, and to help subsidize a program that would essentially repay solar-panel users for feeding energy into the power grid…[T]he rate increase…is equivalent to a carbon tax because all consumers will see rates fall as the city becomes less reliant on coal-powered energy…Tax increases are a political third rail right now in California, where unemployment remains high, wages flat and the economy still sluggish. But Mayor Antonio R. Villaraigosa and his staff are billing the increase as a move that will bring jobs to the city…There are so few solar panel manufacturing companies in the city, mayoral aides have had to scramble to find an appropriate place to announce the new plan later this week…

"Under the proposed program, Los Angeles would take a big step toward Gov. Arnold Schwarzeneggar’s larger goal of one million solar roofs in California by 2018, through state incentive programs. Between $150 million and $160 million per year of the new tax proceeds would be put aside to invest in coal-alternatives for energy use in the city…The money would also be used to help pay for what is known as a feed-in tariff, under which the utility will pay a set rate for electricity from customers who install solar panels. European countries have had mixed results…with feed-in tariffs."

The Mayor is counting on the fact that LA is willing to pay for New Energy. (click to enlarge)

"The city would also offer more incentives to users who get solar panels from panel makers in Los Angeles — a practice known as local preference — which…would give such companies incentive to open up shop here…The city would adopt an increasingly popular program in which homes undergo an energy audit and their owners borrow money from the government to make them more efficient.

"…Severin Borenstein, a co-director of the Energy Institute at the Haas School of Business at the University of California… gave the proposed tax increase a mixed review…[approving of] long-term contracts for renewable energy…[but saying the feed-in tariff for solar power is not a good use of money because of the high costs]…Californians have been squeezed by high unemployment and fee increases, and Los Angelenos may not cotton easily to a rate increase…"