Electric utilities take environmental turn: Edison-DWP plan to CO2 signals new policy tilt.

Electric utilities take environmental turn

John E. Bryson put his stamp on Southern California Edison last week.

The accomplished environmentalist, who became the electric utility's chief executive only seven months ago, pushed forward a plan to trim emissions of carbon dioxide from Edison power plants.

Rosemead-based Edison, which serves most of L.A. County, would reduce CO2 output from its power plants 10 percent by the year 2000 and 20 percent by 2010.

The plan was not forced on Edison by air-quality regulators. Rather, it was a voluntary pledge no other U.S. utility had made before last week's announcement.

Meanwhile, at the Los Angeles Department of Water and Power, a new pro-environment board of commissioners put its stamp on the city agency that sells electricity to L.A. city businesses. The DWP simultaneously pledged the same reduction in a joint effort with Edison. DWP officials also said any growth in electrical demand will be met with energy efficiency and conservation programs, and with renewable power resources.

Both utilities pledged to modernize older, fuel- or gas-burning generators and to phase out fuel-oil burning. Edison would pare its CO2 output from the current 31.8 million tons a year, and the DWP would drop from its 1989 level of 17.7 million tons. (Together they account for an estimated one out of every 480 tons produced worldwide.)

The pro-environment moves came in the wake of a gloomy scientific analysis of the possible role CO2 is playing to heat up the Earth's atmospher. The report by the National Academy of Sciences, titled "Policy Implications of Greenhouse Warming," was released in April. By trapping the sun's infrared radiation, CO2 could lead to global warming, according to one side of the scientific debate.

"It is sound scientific, utility and business policy for us to take actions now that are not unreasonably costly to reduce CO2 emissions over the next two decades," said Bryson in a statement. "This |no regrets' approach means that, whether or not CO2 emissions are eventually determined to cause global warming, Edison will not be sorry it took early action."

The new policy had not been championed by Bryson's predecessor, ex-CEO and 37-years Edison veteran Howard P. Allen.

The announcement occurred four days after Edison said it will not appeal the denial by state regulators of its bid to merge with San Diego Gas & Electric Co. Edison had spent roughly $100 million chasing the merger, a devout cause of Bryson's predecessor.

"It's time to put the merger behind us and to focus our efforts on other approaches to providing environmentally responsible, dependable and economical electricity and energy services for Southern California," Bryson said in a written statement.

The environmental accent did not come as a surprise to anyone familiar with Bryson's background. He was unorthodox choice to run a $7 billion (revenues) utility when he became its chief executive at 47.

The Oregon native was co-founder and four-year staff lawyer of the National Resources Defense Council, an arch foe of some utilities and corporate polluters. The NRDC was born battling to save a scenic forest from a hydroelectric plant on the Hudson River in 1970. It later sued the Tennessee Valley Authority and extracted a $1 billion acid-rain remediation pledge in 1978. The NRDC is considered one of the more effective and aggressive environmental lobbies in the United States.

"We were young, and energetic and eager to have an impact on the world ..." Bryson told the Business Journal in a recent interview when recalling his NRDC days. He could not be reached for comment last week.

Some observers said the CO2 moves were altruistic.

"We welcomes this as a positive and voluntary step," said Bill Kelly, spokesman for the Southern California Air Quality Management District, which regulates Southern California businesses to protect the region's air quality. "The general perception of the energy industry is that global warming is something that we should further research before taking actions to reduce emissions."

Nevertheless, some observers said there was a measure of self-interest motivating the moves by Edison and DWP.

Two anti-CO2 measures were already in the works at AQMD. The air quality agency had already called on Edison to replace older, dirtier boilers with more efficient turbines.

Under the plan, Edison would stop burning fuel oil to generate electricity by 1996. Oil produces more CO2 than does natural gas, when burned to generate

electricity.

AQMD, however, had been moving towards banning fuel burning by 1994, two years earlier. That regulation could have come to a vote by AQMD directors as early as this July. Edison Manager of Environmental Affair Mike Hertel turned away the suggestion that the CO2 policy's timing was intended to thwart or weaken AQMD's forthcoming action.

"I don't think we'd buy that reasoning," he said. With an extra two years, new gas pipelines will be ready to bring more natural gas, said Hertel. "Until then, it would be premature to pass an all-gas rule, and I think the AQMD board understands that," he said.

Oil comprised only 2 percent of Edison's fuel needs last year, versus 17 percent for natural gas. But oil throws off much more CO2 when burned. (The remaining sources are nuclear, coal, hydorelectric and those used by independent power producers under contract to Edison.)

"By agreeing to reductions ... they (Edison and DWP) are hoping to forestall more Draconian measures that could be forced on them," said Mary Nichols, a DWP director. "They may as well start before some legislative body tells them to do it," said the environmental attorney on staff with the L.A. office of the National Resources Defense Council.

Nichols became a DWP commissioner last July and formed a pro-environment majority, of sorts, with commissioners Dorothy Green and Mike Gage. They expanded DWP energy-conservation campaigns and prodded the development of the CO2 reduction measures, following the November defeat of "Big Green." That voter initiative would have mandated CO2-emission cuts of 40 percent by 2010.

DWP's motives were altruistic, said DWP spokeswoman Stacy Geere. The National Academy of Sciences report, coming on the heels of other studies of "harmful greenhouse gasses," prompted the DWP "to take a proactive approach to combat the threat of global warming." In fact, Geere said, it was DWP that coaxed Edison into announcing a CO2 program.

Nichols, however, pointed out that the cuts are only half as ambitious as mandated by Big Green. But Nichols still praised the utilities. "I think that the companies have been very straightforward about making prudent investments and being ahead of the curve."

AQMD's Kelly agreed. "They're coming out ahead of the pack on this and they should be credited strongly on that."

Hertel said Edison didn't go as far as Big Green, partly because "there's enough (scientific) uncertainty that it does not warrant major expenditures at this time."