Jolted by the threat of rolling blackouts and soaring energy bills hitting its huge manufacturing base, the City of Industry has become the first city in L.A. County in 12 years to set up its own municipal utility.

The city has also purchased a vacant warehouse on the west end of town and is now studying whether to build a 500-megawatt power plant on the 12-acre site. Such a power plant, if owned by the city and run by the city’s utility, would give Industry a measure of independence from the power grid.

“This is a city that’s virtually all industry. And our businesses are very concerned about the reliability of their power and the price they have to pay for that power,” said Frank Hill, a former state senator and the project manager for the power plant proposal. “That’s why, when the first rolling blackouts swept through the state back in January, these businesses came to the city and wanted to know what the city could do to reassure them about their power supply.”

Among the businesses that came to the city, Hill said, were California Steel And Tube, Tropicana Products Inc., Little Tykes Co. (a toy manufacturer), and Cacique USA, a cheese processing company.

“These companies can’t afford to rely on the power that Southern California Edison now provides,” said Donald Sachs, executive director of the Industry Chamber of Commerce. “When there is a power blackout, it causes huge disruptions to the manufacturing process.”

The City Council promptly ordered city staff to set up the utility and ordered a feasibility study for a power plant. The governing board of the utility, which is known as the Industry Public Utilities Commission, held its first meeting two weeks ago.

According to Industry City Manager Phil Iriarte, the utility would not only be responsible for power, but also would oversee the city’s water system (the city is building a 270,000 acre-foot reservoir) and could even expand its jurisdiction to cover telecommunications services.

Other cities in L.A. County, such as West Hollywood, have looked into setting up their own utilities, but have not done so, in part because there are financial and regulatory hurdles to establishing a municipal utility that is truly independent of Southern California Edison. A city would have to pay Edison a substantial fee to get out of power supply contracts, for example.

The last time a city sought to create a municipal utility independent of Edison was Vernon, back in the late 1980s, according to Larry Kosmont, an L.A.-based economic development consultant. That city won the right to form its utility, but only after a protracted court battle with SCE. However, Vernon remains tied to the grid and is thus subject to rolling blackouts.

The City of Industry, though, is not seeking complete independence from Edison and the grid. According to Hill, the city is looking more toward the model of Anaheim or Pasadena, which have their own utilities and their own power plants but still remain part of the overall grid. As long as a city owns its own power plant and has a utility set up to operate that plant, the city gets first call on the power generated by the plant, Hill said.

But whether the city would actually want a power plant built on the site it just purchased, let alone own that plant, are still open questions.