A consulting firm that warned Los Angeles officials last fall that a solar energy measure on the March 3 ballot was "extremely risky" sent an apology to the city's Department of Water and Power weeks later, voicing alarm that its comments may cause it to lose out on a city contract.
P.A. Consulting Group privately warned the City Council's top policy advisor that the DWP might have to impose major rate hikes to implement the solar proposal, which later became Measure B.
But a week after The Times reported on those warnings, P.A. Consulting analyst Andrew Rea told DWP officials in an e-mail that his firm gave the advice based on "limited information" -- and with a guarantee that it would never be publicized.
"I'm also sorry that (this) incident has caused the DWP to re-evaluate having P.A. assist in the upcoming Strategic Planning off site [meeting] and helping with the process generally. I think we were making excellent progress and that we would have added significant value in assisting you," Rea wrote to DWP General Manager H. David Nahai.
Rea did not return calls seeking comment.
The Times obtained the apology e-mail the same day the DWP produced its own long-awaited analysis of Measure B, which concluded that the plan -- which would add solar panels to rooftops and parking lots across the city -- would be considerably less expensive than previously estimated. The plan calls for the nation's largest municipal utility to produce 400 megawatts of solar energy by 2014.
Huron Consulting, the DWP-hired firm, said the solar plan would probably cost as much as $1.6 billion without federal tax credits, not the $3 billion previously estimated by the DWP. The plan will probably lead to a maximum increase of $1.05 to the average monthly DWP electricity bill, which is $69.50 -- not the $2.78 estimated by the DWP in November, Huron officials said.
Those rate estimates were based on computer modeling that analyzed 10,000 scenarios for the solar plan, said Arun Mani, Huron's managing director. Mani said he also expected that solar technology costs would drop by up to 35% by 2012. On Monday, DWP officials disclosed that up to one-third of the panels proposed in Measure B could be installed on 4,000 acres of airport property in Palmdale.
The findings were a major departure from the warnings issued by P.A. Consulting, which had questioned whether the DWP had the ability to install so many solar panels in such a short time. The firm also warned that the cost of the program could reach $3.6 billion if it failed to secure federal tax credits.
Nahai said P.A. Consulting was a candidate for strategic planning work at his agency but did not get the job, in part because the firm never contacted the DWP while it was analyzing the solar measure for the council's advisor, Chief Legislative Analyst Gerry Miller.
City Controller Laura Chick said she had not seen the new analysis of Measure B. But she called Nahai's decision not to select P.A. Consulting "disturbing." "Is it that the DWP hires consultants who tell them what they want to hear and everybody else gets shut out? Because that makes me very, very nervous," she said.
Despite its apology to Nahai, the firm repeated its warnings in a draft report on the DWP prepared by the company for Chick only two weeks ago. Nahai said he was disappointed to see the solar measure discussed in Chick's draft report, which warned that its findings were preliminary.
"They put out a report that was rushed, superficial and based on outdated information, and I think they want to distance themselves from it," he said.