South Coast Air Quality Management District

Establish LADWP Settlement Projects Fund; Authorize Receipt of LADWP Funds and Microturbines; and Execute Contracts for Microturbine Equipment Purchase and Installation

SYNOPSIS: 

At the February 16, 2001 Board meeting, the Board approved projects for the Los Angeles Department of Water and Power (LADWP) settlement agreement. This action will establish a LADWP Settlement Projects Fund; authorize receipt of 59 microturbines and $2 million from LADWP; and execute contracts for additional equipment purchase and microturbine installation in an amount up to $1 million.

COMMITTEE: 

Technology, May 25, 2001, Recommended for Approval

RECOMMENDED ACTIONS:

1. Establish the LADWP Settlement Projects Fund;
   
   
2. Authorize the Executive Officer to receive up to 59 microturbines and $2 million from LADWP for the LADWP Settlement Projects Fund;
   
   
3. Authorize the Executive Officer to distribute the microturbines to facilities in Los Angeles County in accordance with agreements reached with LADWP; and
   
   
4. Authorize the Executive Officer to expend up to $1 million from the LADWP Settlement Projects Fund to either reimburse facilities for the acquisition of auxiliary equipment and installation of microturbine systems, or contract for the acquisition of auxiliary equipment and installation of the microturbine systems.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As a result of a stipulated Order of Abatement with the Los Angeles Department of Water and Power (LADWP) related to RECLAIM last year, LADWP agreed to pay $14 million for environmental projects. At the February 16, 2001 Board meeting, the Board approved a plan for specific projects, and $6 million was designated for microturbine projects. The proposed actions contained herein implement the Board's previous directive.

While natural gas-fired turbines have been commercially used for large-scale power generation for a long time, microturbine technology (typically less than 100 kW) for distributed power generation is a relatively new development. Microturbines can be installed and operational in a matter of weeks, and produce clean power. Because of their low emissions, they are a much preferred option to diesel engines. The energy crisis in California has forced many public and private entities to look for alternative solutions for their power needs.

Based on agreements between LADWP and AQMD, consistent with Board direction, LADWP purchased 116 30-kW Capstone microturbines for $4 million. LADWP will locate 57 of the microturbines at LADWP and other City of L.A. facilities. LADWP will also provide AQMD with the remaining 59 microturbines not used by LADWP or L.A. City, along with $1 million for installation of the microturbines and purchase and installation of auxiliary equipment. In addition, the 59 microturbines will be distributed as follows: 25 for colleges and universities in the LADWP service area, 25 for other LADWP customers and 9 for other locations in Los Angeles County. It is staff's intention to locate the 25 microturbines for LADWP customers primarily at public facilities and essential public services. The remaining nine 30-kW microturbines will be installed at appropriate locations outside the City of L. A.

This microturbine program will be similar to another microturbine program for Orange, Riverside and San Bernardino Counties approved by the Board using monies from the AES Settlement Fund.

LADWP will also provide AQMD with the remaining $1 million of the $6 million designated for microturbine projects for hybrid electric vehicle (HEV) applications, for which the project RFP was approved at the May Board meeting.

Proposal

Staff recommends that the Board establish a LADWP Settlement Projects Fund for the purpose of funding microturbine projects. Staff also recommends that the Board authorize the Executive Officer to receive from LADWP the $2 million for stationary and mobile microturbine projects, to be placed in the LADWP Settlement Projects Fund, and up to 59 microturbines for distribution as outlined above. Finally, staff recommends that the Board authorize the Executive Officer to expend up to $1 million from the fund to acquire auxiliary equipment, such as heat exchangers, and to install microturbine and associated equipment. The Executive Officer will either contract for the acquisition of auxiliary equipment and installation of the microturbine system at a facility, or reimburse the facility for these costs. Staff will prepare an installation vendors list on an expedited basis through a public solicitation.

Fiscal Impacts

Funding for the proposed projects is from unanticipated settlement revenue.

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