Saying it needs a partner for the new deregulated power market, the Los Angeles Board of Water and Power Commissioners has approved a wholesale and retail power marketing alliance between the Department of Water and Power and Duke/Louis Dreyfus.
Opponents of the proposed pact most visibly Southern California Edison of Rosemead are crying foul over the choice of partners, and pressing the City Council to reopen the bidding process that began last spring.
“What we can put on the table is a much more attractive and comprehensive offer than Duke/Louis Dreyfus can give,” said Edison spokesman Clarence Brown. “It goes beyond the scope of what’s being put forth in the proposed alliance.”
But City Councilwoman Ruth Galanter, who chairs an ad hoc committee on energy deregulation, said she is inclined to back the commission’s recommendation.
“What you have is a very thorough review process, and when those processes happen there are winners and losers, and the losers are going to cry foul, foul, foul,” Galanter said.
Galanter’s committee is currently studying the possibility of reopening the alliance bidding process.
The ad-hoc committee met Jan. 31 and heard testimony about why the bidding process should be reopened. No decision was made on the matter, and the issue is slated for further discussion at the next committee meeting Feb. 20.
“I had a long meeting with Edison at their request, and it’s very clear to me why it’s in Edison’s interest (to be the alliance partner),” said Galanter. “It’s not nearly so clear to me why it’s in DWP’s interest to have Edison as a partner.”
While the issue of reopening the bidding process drags on in committee, the City Council will begin to study the Duke/Louis Dreyfus alliance proposal, according to Galanter.
Under the proposed alliance, DWP would contribute its power-generating resources, while Duke/Louis Dreyfus would contribute personnel and expertise to help set up an energy-trading facility to sell off DWP’s excess energy on the open market.
In addition to the wholesaling agreement, Duke Louis/Dreyfus would also come to California to help the DWP develop and sell retail products and services in the state.
DWP General Manager Bill McCarley said Duke/Louis Dreyfus is the best partner for the alliance. Still, he expressed hope that Edison will compete in the bidding process for other future alliances with DWP.
“I hope we can go forward soon with the next request for proposal process (for another strategic alliance),” said McCarley. “We’ll attempt to make up a draft RFP in the next 30 days.”
Last week’s proposed deal is the first of several alliances the DWP hopes to make with outside utilities in the next few years, as the department readies itself for a deregulated power industry in California beginning next year.