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(1) Notwithstanding any other provision of this Code to the contrary, the Board of Water and Power Commissioners and the General Manager of the Department of Water and Power shall have the authority to enter into contracts and financial transactions for environmental credits and Renewable Energy Credits (RECs), subject to the following:
(a) Definitions.
“Environmental Credit” means any environmental credit, attribute, allowance or benefit as may be defined by law, regulation, industry practice or convention, including, but not limited to, emissions credits or alternative fuel vehicle credits used for the purposes of compliance with environmental or energy laws, regulations and policies.
“Renewable Energy Credit” or “REC” means any credit, attribute, allowance or benefit that is an environmental certificate representing proof that a certain quantity of energy was generated or purchased from a renewable energy resource, often denominated in units of megawatt-hours (MWh), although other units may be used.
(b) This section applies only to the purchase, sale or exchange of Environmental Credits and RECs by the Department of Water and Power for compliance with environmental or energy laws, regulations and policies that support its production of electricity to serve its retail customers or for environmental purposes. The Department shall not participate in the environmental markets to engage in speculative activities but rather to maintain compliance with environmental laws, regulations and policies.
(c) Contracts and financial transactions entered into pursuant to this section shall be subject to the following limitations:
(1) RECLAIM Trading Credits or RTCs: Spot purchase of single-year vintage credits shall not exceed $60.00 per pound.
(2) Emission Reduction Credits or ERCs: purchase of PM10/PM2.5, sulfur oxides (SOx), reactive organic gases (ROG), and carbon monoxide (CO) ERCs shall not exceed the following: $700,000/lb/day for PM10/PM2.5, $200,000/lb/day for SOx, $40,000/lb/day for ROG, and $15,000/lb/day for CO.
(3) Energy Policy Act Alternative Fuel Vehicle Credits: Purchase shall not exceed $5,000.00 per credit.
(4) Greenhouse Gas (GHG) Allowances, Offsets and Low Carbon Fuel Standard Credits: Purchase shall not exceed $150.00 per allowance. Greenhouse gases include, but are not limited to, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and hydrocarbons.
(5) Renewable Energy Credits: Purchase shall not exceed $100/REC.
(6) Contracts and financial transactions entered into pursuant to this section shall be for a period not to exceed five (5) years in duration from the date of execution, except that purchases for a longer term may be entered into in order to match or offset the likely duration of specific output from specific facilities owned or contracted for by the Department.
(d) Prior to entering into any contract or financial transaction, the Board of Water and Power Commissioners, by resolution, shall do the following:
(1) Establish an environmental and emission credit policy (Policy) relating to the purchase, sale and exchange of Environmental Credits and RECs. The Policy will address the mechanisms by which the Department of Water and Power will control business-related risks.
(2) Authorize the general payment, security, default, remedy and other terms and conditions as specified by the Board of Water and Power Commissioners to be utilized in every contract or financial transaction.
(e) The Board of Water and Power Commissioners under the authority of Charter Section 604(c) is authorized to delegate to the General Manager of the Department of Water and Power the authority to enter into contracts and financial transactions pursuant to this section, provided such transactions comply with the limitations set forth herein.
(f) The Department of Water and Power shall perform an annual audit using either an outside auditor or a comparable third party approved by the Board of Water and Power Commissioners relating to the activities authorized under this section. This audit need not be performed separately, but may be conducted in conjunction with other audits performed for the Department. The audit report shall provide, but is not limited to, an assessment of the adequacy of risk management controls and compliance with the provisions set forth in this section. Within five (5) days after receipt of the audit report, the audit report shall be distributed to the Board of Water and Power Commissioners, the City Council and the Mayor.
SECTION HISTORY
Added by Ord. No. 182,949, Eff. 4-28-14.
(a) Legislative Findings. On March 8, 2011, the voters of the City of Los Angeles adopted Charter Amendment I to establish an Office of Public Accountability for the Department of Water and Power (DWP). Charter Amendment I provides in Charter Section 683(a) that “[t]he role of the Office of Public Accountability (OPA) shall be to provide public independent analysis of department [DWP] actions as they relate to water and electricity rates.” The ballot argument in favor of the measure argued that it would establish the OPA “to shed greater light on the DWP’s operations and finances” and that the OPA would be “charged with analyzing proposed increases in our water and power rates on a timely and continuous basis.”
Charter Amendment I intended that the OPA function independently of the DWP and City officials. The measure in Charter Section 683(c)(1) provides that while the Executive Director is to “report directly” to the Board of Water and Power Commissioners (Board), the Executive Director is “not to be instructed” by the Board. The ballot argument in favor of the measure argued that the OPA is to serve as an “independent watchdog.” Critical to the OPA’s independence is that it exists outside of the DWP and other City departments and offices.
The ballot argument in favor of Charter Amendment I argued that consumer protection would be increased by authorizing the OPA “to investigate legitimate complaints” from customers and “to propose recommendations” to address these issues.
(b) Mission of the OPA.
(1) The OPA shall seek to improve the performance of the DWP by analyzing and reporting on the reasonableness of water and power utility rates, the DWP’s long-term strategic planning documents, and other DWP policies, procedures, decisions, contracts, and programs, including assessing the reasonableness of such proposals and the assumptions upon which they are based.
(2) The OPA shall provide information and make recommendations to the Board, the City Council, the Mayor, Neighborhood Councils, and the public to assure the DWP’s transparency and accountability to its customers and reasonableness of its policies and rates.
(3) The OPA shall provide information and advice, as opposed to direction, to the DWP, the Mayor and Council.
(c) Independence of the OPA.
(1) While substantively the OPA shall function independently of the DWP and its management structure, and of the City Council, Mayor and Controller, administratively the OPA shall be given ongoing support by City departments and offices in a manner that does not compromise the OPA’s independence.
(2) The Office of the City Clerk shall provide the OPA with ongoing support and advice on administrative matters, including, but not limited to, personnel, payroll, administrative, budgetary and other general matters.
(d) Authority of the Executive Director. Consistent with the Charter Section 683(c) prescription of the authority of the Executive Director, the Executive Director shall have the following powers and duties:
(1) Report to, but not be instructed by, the Board.
(2) Have full charge and control of all the OPA’s work and be responsible for the proper administration of its affairs.
(3) Appoint, discharge, suspend, or transfer its employees, subject to the Civil Service provisions of the Charter.
(4) Issue instructions to OPA employees in the line of their duties, subject to the Civil Service provisions of the Charter.
(5) Prior to the beginning of each fiscal year and in accordance with a schedule prescribed by ordinance, submit to the CAO, in accordance with City procedures, a proposed annual budget covering the anticipated expenditures of the OPA. The CAO shall review the proposed budget and submit it with recommendations to the Mayor and City Council for approval by ordinance. The approved budget will be forwarded to the DWP for funding. The budget shall be set at a level not less than 0.025 of DWP annual revenues from the sale of water and electric energy for the previous fiscal year.
(6) Expend the funds of the OPA (including, without limitation, awarding contracts), in accordance with the provisions of the adopted budget, any subsequent budget amendments, and subject to applicable City provisions.
(7) Perform other related duties as may be prescribed by ordinance.
(e) Reporting Obligations.
(1) The OPA shall provide reports to the Board, the City Council, the Mayor, the Neighborhood Councils, and the public on the reasonableness of rate actions and any modifications to them.
(2) The OPA shall provide information to the Board, the City Council, the Mayor, the Neighborhood Councils, and the public regarding the development of the DWP’s long-term strategic plans (e.g., Integrated Resource Plan), the annual proposed DWP budget, and DWP policies, practices, programs, contracts, agreements, and other actions that may impact rates.
(3) The OPA shall have the discretion to make recommendations to the Board, the City Council, the Mayor, and the public on ways to improve the reasonableness and transparency of DWP policies and rates.
(4) The OPA shall provide information to the public and maintain a repository for all reports produced by the Office.
(f) Consumer Protection and Complaint Procedures. The OPA shall have the discretion to audit individual ratepayer cases and obtain customer data to develop analyses of customer service performance at the DWP. Reports of waste, fraud and abuse will be coordinated with the City Controller, the City Ethics Commission and other concerned departments, offices or governmental agencies, as applicable.
SECTION HISTORY
Added by Ord. No. 181,768, Eff. 8-7-11; Ord. No. 182,494, Eff. 5-10-13.
Amended by: Subsec. (c)(2), Ord. No. 185,269, Eff. 1-10-18.
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