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The power keeps going out at the Port of Los Angeles, raising worries about its green future

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The power keeps going out at the Port of Los Angeles, raising worries about its green future

The morning along the San Pedro docks began typically enough, summery but cool, as the first shift powered up the Port of Los Angeles. The giant cranes that fill the sky like skeletal bridges hummed to life. Semis already were lined up at the front gates, ready to take on loads of shipping containers as big as mobile homes.

But at a little past 7, an all-too-familiar trouble flared. A blip in the electric power lines so short it barely registered on the monitors of the L.A. Department of Water and Power brought major operations at the busiest seaport in the Western Hemisphere to an abrupt stop.

If the public face of the port is the forest of cranes and mountain range of cargo containers, its invisible heart is a network of computers that controls almost the entire operation. That system, along with a growing multitude of electric-powered equipment and vehicles, depends on an uninterrupted supply of electricity. Rebooting all those smart devices, sometimes requiring workers to climb to the tops of 200-foot cranes, can take several hours, no matter how brief the outage.

By the time everything was back up and running on that August morning, unloading schedules were scrambled, frustrated terminal operators struggled in vain to make up lost time and the freeway was backed up by dozens of semis.

“It’s a significant direct financial impact,” said Jeff Vogel, general counsel to the National Assn. of Waterfront Employers, whose members include container-handling companies. “We operate in a just-in-time economic model where getting that vessel in and out of the port as quickly as possible is critical.”

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And the impact of power interruptions goes beyond the immediate costs and frustration. It threatens a commitment to meet major, long-term climate change goals by further electrifying port operations and the huge distribution system it supplies.

The brief surge was one of three already this month and the 12th power-related outage of the year so far. And the recent disruptions hit particularly hard as summer is a busy season for the ports, with back-to-school and Halloween deliveries as well as retailers getting a jump on Christmas shipments. The Port of L.A. had a record July, handling more than 939,000 containers.

“It’s a pretty big deal with the amount of cargo they have to move,” said Thomas Jelenić, a vice president at the Pacific Merchant Shipping Assn., which represents the terminal operators.

It will be an even bigger deal down the road. The port, with the DWP, is aiming to phase out greenhouse gas emissions by the end of the decade.

To meet this goal, the port will need almost twice as much power as it currently uses by the end of the decade, DWP estimates. But the surges and dips have raised serious concerns about whether the port and its tenants will have reliable energy to meet their needs.

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The private companies that operate container-handling terminals long ago electrified the massive ship-to-shore cranes and are now investing millions to transition forklifts, gantry cranes and yard tractors that move and stack containers, as well as other vehicles and equipment that run mostly on diesel.

Container ships docked at the Port of Los Angeles.

(Luis Sinco/Los Angeles Times)

“We’re up against the zero-emission mandate by 2030, and I don’t know how that happens right now,” said one terminal executive who asked not to be identified. None of the seven container terminals at the Port of L.A. would talk publicly about their grievances, saying they were concerned how municipal authorities who are their landlord and power supplier might react.

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Though the Port of L.A. and its Long Beach sister facility are on the leading edge, other seaports around the country also have been moving to electrify their operations. That’s placed more demand on the grid, with occasional brownouts having been reported at some ports in the East and Gulf coasts, said the Waterfront Employers’ Vogel.

But the problem appears to be particularly acute at the Port of Los Angeles, he said.

At the Port of Long Beach, where electricity is supplied by investor-owned Southern California Edison, terminal operators say power interruptions haven’t been an issue. In fact, Sean Gamette, the port’s managing director of engineering, couldn’t recall a single outage this year.

It’s helped that Southern California Edison’s lines are mostly underground and that the port, deemed a vital infrastructure, is exempt from brownouts, an outage resulting from a temporary drop in voltage. In the mid-2000s some $180 million was invested to upgrade the electric infrastructure at the port, said Gamette.

Gene Seroka, executive director of the Port of Los Angeles, was careful not to overstate, or minimize, the disruptions and the threat to the operations. Power surges tend to affect only some of the terminals, he said, and typically everything is rebooted in a couple of hours. If you have on average one brief outage a month, that might add up to one lost shift out of 36, Seroka said.

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“I don’t think it’s shutting down this port. It is not terribly impacting competitiveness.” But he added: “If I’m a terminal operator and I’ve got to pay workers for a shift that they’re not working, that’s very painful. And so we’ve got to fix it.”

The issue isn’t just financial. Outages pose safety risks, too. At one terminal yard, a power surge in mid-July caused a driverless cargo-moving truck to crash into a container. “You can have a crane operator get violently stopped and jostled,” said another terminal manager.

Terminal operators say they think the source of the outages is at the utility, and have wondered whether the DWP has even recorded the momentary outages that cause costly delays on the docks.

DWP officials say it’s not a one-sided issue and, at the request of The Times, furnished a synopsis of the dozen outages this year. The utility said two were due to birds hitting power lines, one was caused by a truck explosion and another because a power transformer went bad.

But according to the account provided to The Times, in five outages, each lasting 10 seconds, no cause was found. Simon Zewdu, a senior manager of the DWP’s power system, said such momentary outages are usually due to an issue on the user’s side.

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“Increasingly we’re seeing equipment installed by our customers that are very sensitive to minor voltage fluctuations,” he said.

Zewdu said the DWP is working to expand substations at the Port of L.A. and construct new underground lines as part of a $500-million project to be completed by 2029. These efforts should help both add power and improve reliability.

In addition, Zewdu and the Pacific Merchant Shipping Assn. began a fresh round of meetings this week to discuss strategies to mitigate outages and with an eye to their zero-emission goal. Among other things, Zewdu said he wants to install monitoring equipment on circuits on both the utility and terminal sides to discern the source of the power surges — something he said hadn’t been done yet because the terminal operators had not made a request or given permission to DWP’s power quality-monitoring team.

Jelenić, of the Pacific shipping group, said that until Monday he wasn’t even aware such a monitoring program at the DWP existed.

“Right now we’re deficient in both our near-term and long-term needs,” he said, but added that his group had a very encouraging meeting with DWP officials this week. “They were concerned about issues we’re having, they proposed solutions, and made clear, open lines of communication.”

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Startup Varda Space Industries snags former Mattel plant in El Segundo

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Startup Varda Space Industries snags former Mattel plant in El Segundo

In an expansion of its business of processing pharmaceuticals in Earth’s orbit, Varda Space Industries is renting a large El Segundo plant where toy manufacturer Mattel used to design Hot Wheels and Barbie dolls.

The plant in El Segundo’s aerospace corridor will be an extension of Varda Space Industries’ headquarters in a much smaller building on nearby Aviation Boulevard.

Varda will occupy a 205,443-square-foot industrial and office campus at 2031 E. Mariposa Ave., which will give it additional capacity to manufacture spacecraft at scale, the company said.

Originally built in the 1940s as an aircraft facility, the complex has a history as part of aerospace and defense industries that have long shaped the South Bay and is near a host of major defense and space contractors. It is also close to Los Angeles Air Force Base, headquarters to the Space Systems Command.

Workers test AstroForge’s Odin asteroid probe, which was lost in space after launch this year.

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(Varda Space Industries)

Varda is one of a new generation of aerospace startups that have flourished in Southern California and the South Bay over the last several years, particularly in El Segundo, often with ties to SpaceX.

Elon Musk’s company, founded in 2002 in El Segundo, has revolutionized the industry with reusable rockets that have radically lowered the cost of lifting payloads into space. Though it has moved its headquarters to Texas, SpaceX retains large-scale operations in Hawthorne.

Varda co-founder and Chief Executive Will Bruey is a former SpaceX avionics engineer, and the company’s spacecraft are launched on SpaceX’s workhorse Falcon 9 rockets from Vandenberg Space Force Base in Santa Barbara County.

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Varda makes automated labs that look like cylindrical desktop speakers, which it sends into orbit in capsules and satellite platforms it also builds. There, in microgravity, the miniature labs grow molecular crystals that are purer than those produced in Earth’s gravity for use in pharmaceuticals.

It has contracts with drug companies and also the military, which tests technology at hypersonic speeds as the capsules return to Earth.

Its fifth capsule was launched in November and returned to Earth in late January; its next mission is set in the coming weeks. Varda has more than 10 missions scheduled on Falcon 9s through 2028.

For the last several decades, the Mariposa Avenue property served as the research and development center for Mattel Toys. El Segundo has also long been a center for the toy industry as companies like to set up shop in the shadow of Mattel.

The Mattel facility “has always been an exceptional property with a legacy tied to aerospace innovation, and leasing to Varda Space Industries feels like a natural continuation of that story,” said Michael Woods, a partner at GPI Cos., which owns the property.

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“We are proud to support a company that is genuinely pushing the boundaries of what’s possible, and are excited to watch Varda grow and thrive here in El Segundo,” Woods said.

As one of the country’s most active hubs of aerospace and defense innovation, El Segundo has seen its industrial property vacancy fall to 3.4% on demand from space companies, government contractors and technology startups, real estate brokerage CBRE said.

Successful startups often have to leave the neighborhood when they want to expand, real estate broker Bob Haley of CBRE said. The 9-acre Mattel facility was big enough to keep Varda in the city.

Last year, Varda subleased about 55,000 square feet of lab space from alternative protein company Beyond Meat at 888 Douglas St. in El Segundo, which it started moving into in June.

Varda will get the keys to its new building in December and spend four to eight months building production and assembly facilities as it ramps up operations. By the end of next year, it expects to have constructed 10 more spacecraft.

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In the future, Varda could consolidate offices there, given its size. Currently, though, the plan is to retain all properties, creating a campus of three buildings within a mile of one another that are served by the company’s transportation services, Chief Operating Officer Jonathan Barr said.

“We already have Varda-branded shuttles running up and down Aviation Boulevard,” he said.

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How Iran War Is Threatening Global Oil and Gas Supplies

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How Iran War Is Threatening Global Oil and Gas Supplies

Ships near the Strait of Hormuz before and after attacks began

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Note: Times shown are in Iran Standard Time. Some ships in the region transmit false positions and others sometimes stop broadcasting their locations, and may not be reflected in the animation. Ships with sparse location data are shown in a lighter shade. Source: Kpler and Spire.

Every day, around 80 oil and gas tankers typically pass through the Strait of Hormuz, the narrow waterway off Iran’s southern coast that carries a fifth of the world’s oil and a significant amount of natural gas.

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On Monday, just two oil and gas tankers appear to have crossed the strait, according to a New York Times analysis of shipping activity from Kpler, an industry data firm. Since then, one tanker passed through.

“It’s a de facto closure,” said Dan Pickering, chief investment officer of Pickering Energy Partners, a Houston financial services firm. “You’ve got a significant number of vessels on either side of the strait but no one is willing to go through.”

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Tankers have been staying away from Hormuz since the U.S.-Israeli attacks on Iran that began on Saturday. A prolonged conflict could ripple broadly across the global economy, threatening the energy supplies of countries halfway around the world and stoking inflation.

International oil prices have climbed 12 percent since the fighting began, trading Tuesday around $81 a barrel, and natural gas prices have surged in Europe and in Asia.

A senior Iranian military official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz. Vessels in the region have already come under attack. Several oil and gas facilities have also been struck or affected by nearby shelling, though the damage did not initially appear to be catastrophic.

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Where ships and energy facilities have been damaged

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Note: Damage as of 2 p.m. Eastern time Tuesday. Source: Kpler, Kuwait National Petroleum Company, Saudi Arabian Ministry of Energy, Planet Labs, QatarEnergy, United Kingdom Maritime Trade Operations and Vanguard Tech.

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A fire broke out Tuesday at a major energy hub in Fujairah, United Arab Emirates, from the falling debris of a downed drone, the authorities said. On Monday, Qatar halted production of liquefied natural gas, or fuel that has been cooled so that it can be transported on ships, after attacks on its facilities.

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Facilities at Ras Tanura oil refinery in Saudi Arabia were on fire on Monday after two Iranian drones were intercepted, according to Saudi Arabia’s Ministry of Energy, causing fragments to fall. Vantor

The sharp reduction in tanker traffic is reducing the supply of oil and gas to world markets, pushing up prices for both commodities. And the longer that ships stay away from the Strait of Hormuz, the less oil and gas get out to the world, which could raise prices even more.

Shipping companies have paused their tankers to protect their crew and cargo, and because insurance companies are charging significantly more to cover vessels in the conflict area.

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On Tuesday, President Trump said that “if necessary,” the U.S. Navy would begin escorting tankers through the strait. He also said a U.S. government agency would begin offering “political risk insurance” to shipping lines in the area.

In addition to tankers, other large vessels regularly go through the strait, including car carriers and container ships. In normal conditions, nearly 160 make the trip each day.

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Some ships in the region turn off the devices that broadcast their positions, while others transmit false locations — making it hard to give a full picture of the traffic in the strait.

The Shiva is a small oil tanker that has repeatedly faked its location, according to TankerTrackers.com, which tracks global oil shipments. It is suspected of carrying sanctioned Iranian oil, according to Kpler. The Shiva was one of the two tankers that crossed the strait on Monday.

The oil and gas that typically move through the strait come from big producing countries like Saudi Arabia, Iraq, Iran and United Arab Emirates, and are exported around the world.

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Where tankers moving through the Strait have traveled

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Note: Tanker paths are since Jan. 1 and include all tankers and gas carriers. Source: Kpler and Spire.

In 2024, more than 80 percent of the oil and gas transported through the Strait of Hormuz went to Asia. China, India, Japan and South Korea were the top importers, according to the U.S. Energy Information Administration.

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Countries have energy stockpiles that could last them into the coming months, but a continued shutdown of the strait could damage their economies.

Several big disruptions have roiled supply chains in recent years, but the tanker standstill in the Strait of Hormuz could have an outsize impact.

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Paramount credit downgraded to ‘junk’ status over debt worries

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Paramount credit downgraded to ‘junk’ status over debt worries

Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:

Call it the deal-debt hangover.

Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.

Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.

S&P Global Ratings took similar action.

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To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.

“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.

Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.

Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.

Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.

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Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.

Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.

Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.

(Evan Agostini / Invision / AP)

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Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.

Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.

Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.

Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.

Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.

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During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.

Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”

It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.

Workers are scattered throughout the region.

HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.

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“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”

David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.

Ellison has not announced what the combined company will be called.

Paramount shares closed down more than 6% Tuesday to $12.45.

Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.

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