Reliability
Energy Efficiency

LADWP energy savings program for C&I customers responds to Aliso Canyon

The Los Angeles Department of Water and Power is offering a new energy savings program for large commercial and industrial customers to lower the risk of outages this summer resulting from the limited availability of natural gas from the Aliso Canyon Natural Gas Storage Facility.

The LADWP's Board of Water and Power Commissioners approved the program, which is called SummerShift, on June 21, with the program going into effect immediately.

The program provides a monthly electric price incentive of $10 per kilowatt to participating customers for energy saved or shifted away from the critical hours of 3 p.m. to 5 p.m. on weekdays from July through September 2016.

Michael S. Webster, LADWP's executive director of power system engineering and technical services, said that there are various large commercial and industrial customers that have signed up as of the morning of June 27, noting that their total load is 86 MW.

"We have several dozen more applications that we have to process, so the participation is overwhelming," he said.

Webster also detailed other steps the utility has taken to reduce the risk of outages.

Those steps include making operational changes to increase the flexibility of LADWP's power plants and to preserve the natural gas supply for the most critical generation needs.

The changes include halting the sales of excess energy to other market participants when LADWP is able to generate electricity at a lower cost than others, and curtailing physical hedging of gas supply to avoid being locked in to gas purchases in advance and preserve it for critical periods.

In addition, LADWP is maximizing the use of renewable energy sources, accelerating solar projects currently being constructed, exploring alternative types of fuel for use at its in-basin power plants, battery or other energy storage technology, and purchased power agreements.

LADWP is also working with other state agencies, other electric utilities and Southern California Gas Company to mitigate the risk of electrical interruptions this summer.

Moreover, Webster said that LADWP is expanding demand-response programs through price incentives and discounted rates, focusing efforts on the top 1,000 commercial, industrial, and institutional customers.

The utility is also calling on all customers to voluntarily reduce their energy use through a widespread communications strategy across multiple media channels, including a robust "Flex Alert" outreach campaign coordinated jointly with energy agencies in the region.

LADWP, SCPPA announced steps in April

The LADWP and the Southern California Public Power Authority in April announced steps they were taking to reduce the likelihood of electricity shortages this summer due to continuing problems at the huge Aliso Canyon underground natural gas storage facility.

A draft action plan and a companion risk assessment technical report drawn up by the California Public Utilities Commission, the California Energy Commission, California Independent System Operator, and LADWP said the greater Los Angeles region faces up to 14 days of natural gas shortages this summer that could be large enough to cause power outages to millions of people.

"With the current moratorium on new injections of natural gas from Aliso Canyon there is a heightened threat of outages this summer, especially during times of extreme heat when gas and electricity are in higher demand," said LADWP Board President Mel Levine in a June 21 LADWP news release.

He said that customer participation in SummerShift will help minimize the risk of rotating outages, "which could result in serious health and safety risks, as well as create financial impacts to our customers."

"We greatly appreciate our customers' enthusiasm for this program and willingness to partner with us in reducing the risk of outages summer," said General Manager Marcie Edwards. "We have introduced the program to several groups of large commercial customers over the past few weeks and received a positive response."

LADWP noted that it has identified a potential savings of up to 1,000 megawatts if all 5,000 eligible medium and large commercial and industrial customers were to participate in reducing or shifting their electricity use away from high demand, peak hours.

If only 20 to 30 percent participated, it would save from 200 to 300 MW at an estimated cost of $3 million per month.

Conversely, LADWP pointed out, a power outage has a significant cost for all businesses. For example, a medium or large commercial or industrial customer could lose $13,000 from a one-minute outage and over $84,000 from an eight-hour outage, it said.

LADWP noted that Aliso Canyon plays an essential role in maintaining both natural gas and electric service reliability in the greater Los Angeles area. LADWP and other utilities serving the region depend upon this facility to maintain power reliability when energy use spikes during hot weather.

Aliso Canyon is the only gas storage facility that can immediately respond to rapid changes in gas demand for 17 gas-fired generating plants, including four generating stations operated by LADWP in the Los Angeles basin.

Other actions being taken

Meanwhile, state utility regulators and other utilities in California are also working to address the Aliso Canyon situation.

In late May, the CPUC authorized investor-owned utility Southern California Edison to expedite its purchase of energy storage as part of the CPUC's continued efforts to ensure reliable natural gas and electricity supply to areas impacted by Southern California Gas Company's Aliso Canyon Storage Facility leak.

The CPUC noted at the time that it is pursuing activities that could be quickly implemented to alleviate the electric reliability risks to the Los Angeles Basin, such as the expedited procurement authority granted to Southern California Edison on May 26.

Meanwhile, the Federal Energy Regulatory Commission in early June agreed to tariff revisions requested by the Cal-ISO to address the limited availability of natural gas this summer due to the problems at the Aliso Canyon facility.

But in the June 1 order, FERC imposed conditions on its acceptance of the tariff revisions and directed its staff to convene a technical conference later this year to discuss the effectiveness of the revisions and the need for additional and/or longer-term measures (Docket ER16-1649-000).