[Heavy Sigh}

I heard a shocking, amazing story on the radio Friday. The city of Los Angeles is on the verge of bankruptcy, but that was not the shocking, amazing part.  One of the reasons the city is going bankrupt is that one of their large sources of cash has dried up.  The LA Department of Water and Power has helped keep the city afloat by making regular large ($50-100mil per year) payments in lieu of franchise tax.  Now LA DWP has stopped making the payments but don't worry, there is a pretty good reason.


The state of California passed a bill aimed at fixing global warming at a time when the economy was on firm footing.  When you peruse the bill, you find some very aggressive plans for promoting conservation and incorporating renewables into their energy mix.  Admirable goals and something that should be in every utilities plans, but moderation has to be part of the process.  Let's jump to today.  With the economy in trouble it is not a great time to raise rates on customers and the cost of renewables not coming down as fast as hoped.  More cost but no rate increase.  This is not a recipe for success.  Because of the imbalance of rising cost and stagnant revenues, LA DWP no longer has the excess funds to meet their obligation to the City. 


Complicating matters further is the perception that the costs of this policy that have been passed on to business are crippling the California economy and driving business to Nevada and Texas.  Renewable energy is a 'feel good' story and must have a significant place in our energy future but we have to match our desires with financial realities.


As you can see here, here, here, and here there is significant backlash against Smart Meters and the companies that are deploying them.  Some of it may be justified but ultimately these devices will empower the customer and utility to achieve conservation goals that would have been otherwise impossible.  We have a  technology that will allow us all to achieve great improvements in how much energy we use and when we use it.  


I know none of this makes the customer feel better.  "Be patient, it will get better" is hard to hear when the economy is stagnant and prices keep climbing.  The response in most cases has been "We didn't ask for this, we don't want it, and we don't believe in it."   I encourage everyone to heed the words of Henry Ford, as a colleague reminded me last week, when he said "If I had asked my customers what they wanted they would have said a faster horse."