ARE POWER SALES DRAIN ON DWP?

Byline: Rick Orlov Staff Writer

The Los Angeles Department of Water and Power's electricity sales to the state without guarantees of payment have averaged $25 million a week and will top $200 million by April, officials said Tuesday.

Talks are continuing with Gov. Gray Davis and state legislative leaders to work out a plan to try to make sure the city-owned utility is paid as part of a package of measures to solve the energy crisis.

Frank Martinez, DWP assistant general manger for power, told the City Council that power is being sold to the state at its cost plus 15 percent - a fraction of the rate charged by private generators. The DWP charges the market rate for power sold outside the state.

``We are watching this closely and believe the state will make good on what is owed,'' Martinez said.

While DWP ratepayers in Los Angeles had been expecting a rate decrease later this year, Martinez told the council he believed there would not be a need to increase rates. He said the DWP has been able to generate much of its power through cheap sources such as hydro and coal rather than natural gas.

A skeptical Councilman Rudy Svorinich Jr. said he was concerned that the city could be left hung out to dry.

``In reading the newspapers, I'm seeing where there is concern by the private providers on whether they will be paid by the state for the energy they are providing and I am seeing some legislators say that providers of power should have to make some sacrifices,'' Svorinich said.

``What we are doing is selling power as part of a good neighbor policy when there is no guarantee we will be repaid.''

Mayor Richard Riordan has been following the situation and working with state officials to guarantee repayment, aides said.

The DWP has been caught in a political bind in recent days, with Northern California officials accusing it of price gouging and the department being under pressure from local officials to generate more revenue.

On Tuesday, the DWP was not operating at maximum capacity. It had some generating capacity available for use if the market required, a spokesman said.

Up until last week, Martinez said, most of the DWP's sales were covered by a $104 million letter of credit from the state Department of Water Resources, which has been buying electricity for the state's power grid.

But with that amount having been spent, Martinez said, the DWP will be due a payment of $103 million by March 3, plus the additional amounts that will be due as the city utility continues to provide power.

``If this continues, we're looking at $1 billion this year,'' Councilman Mike Hernandez said. ``And, we won't be making any profit.''

ENERGY BREAKDOWN

WHAT'S NEXT:

--Negotiations were scheduled to continue through the week between Davis and representatives of PG&E, Edison and San Diego Gas and Electric Co.

--Today, a federal judge in Sacramento will decide whether to extend his order requiring three major power wholesalers to keep selling to the Independent System Operator, which buys emergency power for utilities to avoid blackouts.

--In a case in U.S. District Court in Los Angeles, a judge plans a hearing Monday on Duke Energy's challenge of Davis' authority to seize long-term electricity contracts owned by Edison and PG&E.

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Box: ENERGY BREAKDOWN (See text)