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Sonoma County considers key step toward becoming power provider

By BRETT WILKISON
THE PRESS DEMOCRAT

Sonoma County government this week could take its most significant step yet toward becoming a power provider for homes and businesses.

The Board of Supervisors on Tuesday is set to consider creation of a separate agency, known as a joint-powers authority, to administer the power program.

That step is needed, officials say, to get estimates from power companies on the rates they might provide to the county for the program. Those rates, which the county expects to be initially higher than those offered by PG&E, will ultimately factor into the most pivotal future decision on whether the program goes forward.

That decision, which faces scrutiny especially from the business community, could be months away, after the county and cities have evaluated the potential energy rates they would charge customers.

Still, county officials acknowledged that after several years of study and intermediate decisions to advance the power proposal, Tuesday’s decision represents a watershed.

“It’s the most significant step so far,” said Cordel Stillman, deputy chief engineer for the Sonoma County Water Agency, which has overseen the proposal.

Supporters see it as a key way to boost investment in clean, renewable energy sources, create jobs and cut greenhouse gas emissions.

Critics are worried about the rates it might offer customers — they would nevertheless retain the right to opt out — as well as the costs and liabilities it could pass on to taxpayers.

To date, the cost of studies, staff time and consulting contracts totals $520,000. A new pair of consulting contracts valued at $150,000 are also up for a board decision Tuesday.

The county has acknowledged that its approach to the next step might seem backward to some, or arouse critics’ suspicions that the proposal was being advanced beyond the point of no return.

Stillman, however, said there were good reasons to establish an administrative home for the program before any decision to launch it.

The main reason is power suppliers want some evidence the county is serious before they respond to competitive bids on the rates they might offer.

“We feel this step sends that message,” Stillman said.

Another reason is that energy prices are at historic lows because of cheap natural gas. Many suppliers urged swift action to take advantage of those prices, Stillman said.

The county also needs to show some progress on the proposal in order to compete for startup funding from the state. The program’s estimated startup costs are $2 million to $6 million — money that is likely to come from bond financing.

As it stands, however, the county would be the only local government immediately involved in the joint-powers agency. That’s because the eight local cities being recruited for the program have been unwilling to sign up without knowing what the eventual power rates might be.

That question might be answered with the return of prospective rates from would-be suppliers, Stillman said. The county has identified at least five, including Consolidated Edison, Constellation Energy, Shell North America, Direct Energy and NRG Energy.

The county has not changed its rate estimates from a 2011 study, which found the typical customer could pay $4 to $10 more a month over a 20-year period for county-supplied power. After 20 years, the rates are projected to be nearly equal, with PG&E rates exceeding those for public power thereafter.

The additional costs could be a problem in any final sales pitch to customers. A county-paid survey this year found a solid majority of residential and commercial customers were either unwilling to pay much more, or any more, for renewable power from a local provider.

Supporters, including trade unions and environmental groups, have touted other results from the survey, showing 79 percent of those polled supported a locally controlled electricity portfolio, with more than 80 percent supporting greenhouse gas cuts and having a choice in how their electricity is generated.

“Competition is good,” Stillman said, echoing those points. “We hope to give customers a chance to shop their power needs.”

But the county must also convince cities that they will not incur any liabilities by attaching themselves to the program.

Water Agency officials have insisted the joint-powers authority provides that assurance, in the form of a financial firewall that shields county and city general funds from any debt obligations should the program shut down. That liability would fall to power suppliers under contract, Stillman said

Financial watchdogs are not so convinced.

“The marketplace is beating the drum to have some sort of guarantee from the county. That’s what I’ve heard,” said Bob Williamson, a retired Santa Rosa finance executive who has followed the proposal closely.

“I would want to make sure that the joint powers authority is very clear that ultimately the county would not be on the hook,” he said.

The supervisors’ hearing on the proposal is set for 10:30 a.m. Tuesday.

You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.





14 Responses to “Sonoma County considers key step toward becoming power provider”

  1. The 1% says:

    SCEIP provided government subsidized funding for the 1% that could qualify. Now Sonoma Clean Power will again provide “clean green” power for those able to pay a premium. Why is the County providing taxpayer subsidized programs for the wealthy?

    Thumb up 1 Thumb down 0

  2. andrew simpson says:

    Dear Snarky

    In the prior commentary on the Water Agency’s mendacity, payoffs, and incompetence, there were a number of things–in the interests of brevity–that were left out.

    But since you were kind enough to ask for more detail: other artifacts seem to come trundling out, almost unbidden, from the Water Agency’s cornucopia of whoppers and malfeasance.

    With this quick preface. The folks who run the Water Agency aren’t “bad guys”.

    They’re aligned.

    Aligned to what?

    To the governance culture by which the County of Sonoma is run. Which is: “if nobody’s looking, what we do doesn’t matter.” For example: the Water Agency’s 2010 $95,000 payoff to our erstwhile State Assemblyman. Or the Water Agency’s 2011-2012 $115,000 payoff to an associate of that Assemblyman.

    Here’s another canary-in-the-coal mine episode of Water Agency conduct that will make citizens think twice about enabling a billion dollar ATM card for the Water Agency on Sonoma Clean Power.

    This is what happened.

    There’s some financial stuff, called a spreadsheet, that fully explains, in every nit, how the Water Agency decided Sonoma Clean Power is a good idea.

    A member of the public asked for that financial stuff. It was done by a consultant. That consultant’s contract with the Water Agency says in effect “all my financial stuff, without any exception, is in the public domain”. Since the Water Agency doesn’t know how to analyze Sonoma Clean Power using a spread sheet, they were concerned some public member would get the spread sheet–and then start asking questions the Water Agency management couldn’t answer.

    So, in a farce of prevarication so naive it invites empathy, the Water Agency declared “we can’t show you that financial information: our contract with the consultant prohibits it.”

    It apparently never occured to the Water Agency that the next question was, “OK, can we see the contract?” The contract of course was written as such contracts should be written: all consultant work product is in the public domain.

    When confronted with this, um, contradiction, the Water Agency responded to this effect: “County Counsel informs us that there are special overriding rights not written in the contract that mean you can’t see this finanical material.”

    Is this is beginning to sound like Dean Wormer’s invoking “double secret probation” to John Belushi in “Animal House”?

    The story continues, gets worse; I’ll skip the details in favor of this concluding point.

    It’s hard to mismanage a small water agency when all you have to do is raise rates to bury your mistakes. For example, the Water Agency just threw another $15 million of rate payer money at Sonoma County Energy Independence (“SCEIP”), a heart breakkng waste of public funds on an already-dead project: the Supervisor just looked the other way.

    The folks running our Water Agency are just doing what they’re told by the insiders who run the County. But they’re in over their heads with Sonoma Clean Power; making a mess; and covering things up, maladroitly, with deception and massive misuse of public funds. This isn’t incompetence-in-isolation: it’s a drain on County resources better used to address roads and pensions; and a potential back-breaker–an insolvency maker–for the County of Sonoma.

    Thumb up 7 Thumb down 1

  3. Power Grab says:

    How is that wave energy project the water agency spent hundreds of hours and thousands of dollars on just two years ago. Like SCEIP DOA. The water agency is filled with high paid dreamers and sceamers – always looking for the next way to pursue some outlandish idea. The Grand Jury needs to conduct a detailed review of the water agency contracting. The Michael Allen payoff is not an isolated incident.

    Thumb up 15 Thumb down 1

  4. Snarky says:

    Andrew Simpson:

    Could you help me better understand your position by repeating what you stated with a little more detail ?

    You lost me after “Sonoma Clean Power, if devised…”

    Thank you.

    Thumb up 5 Thumb down 1

  5. Louis Irwin says:

    Like Clinton famously said, “It depends on what “is” is.”

    Here I refer to the article headline which uses the word “provider.” It may be an accepted term for procurement and distribution (without owning the distribution system). But as far as I can see Sonoma is not proposing to “provide” electricity in the sense of going into the generation business. As an alternate procurer, not really a true provider, how much advantage can be gained? You already know the answer.

    Thumb up 13 Thumb down 0

  6. Over Easy says:

    The County Supervisors are to blame here and should be made to stand down.

    They have spent 1/2 million dollars studying whether they should create a new monopolistic bureaucracy with your tax dollars!

    Why have they spent the money? To please the Water Agency who is pushing them to do this! Why are they pushing the county? because they want another complete monopoly such as their current monopoly on water, which BTW they set the rates WITHOUT any other governing body approving the increases. Lets see you control the price and are not accountable to anyone, Pretty sweet deal if you ask me.

    So where is the tie in back to the Board of Supervisors? They get funds from the water agency which they depend on. So what you have here is legal graft and extortion.

    In the end the county will not produce a single KW of power nor will it encourage the vendors they will have to buy the power from to do so either. This is a farce and offensive.

    Thumb up 28 Thumb down 2

  7. R. B. Fish says:

    Just another scam. Windmills/waterwinds/horsemills and solar device have here in the US for hundreds of years. They were effective technologies and todays for their day. You could build and operate them yourself. The technology is not quite here to make if very effeiceient for large commercial use. The labor and product costs are far too high even with tax incentives. NOt to mention envinonmental rules. By the way it’s OK for enviro nazis to ruin the public landscape so long as they keep believing it’s free from the sun and wind.

    Thumb up 25 Thumb down 3

  8. Grapevines says:

    Just another greedy revenue grab by the BOS. They havn’t got a clue on providing power to the county, let alone maintain the infrastructure, but the thought of another way to fleece the public of funds is too overwhelming for them to pass up.

    Just look at their track record. Are the roads maintained? Is the pension requirements safely funded? Are even the street lights being lit? About the only thing you see being accomplished is they keep voting in pay raises for themselves, benefits for themselves, and slighting the taxpaying public.

    Allow them to start being the power brokers to the county, and your just looking at another disaster in the making.

    Thumb up 29 Thumb down 2

  9. andrew simpson says:

    Sonoma Clean Power, if devised in the public interest, holds the potential for wide public benefit including reduction in electricity rates relative to PG&E, jobs growth, CO2 emissions reduction, and a shared community enterprise in clean energy innovation.

    But Clean Power and its companion initiative, a Joint Powers Agreement, suffer a material liability from inception. They’re sponsored by the Sonoma County Water Agency (“SCWA”) whose signature behavior includes:

    • Mendacity
    • Payoffs
    • Incompetence

    THE WATER AGENCY’S MENDACITY

    The Water Agency performed a feasibility on Sonoma Clean Power. Given the economic duress many County residents are now experiencing, one would have reasonably expected this feasibility study to pose and answer this question: what’s the cheapest way to get electric power delivered in Sonoma County?

    This question was not even asked.

    Would you like to know the answer?

    While Sonoma Clean Power will be a little more expensive than PG&E, Healdsburg/Northern California Power Agency would be 10% cheaper to retail consumers than PG&E; commercial rates would be even more advantageous.

    Just as importantly, allying Sonoma County’s rate payers with Healdsburg/NCPA would enhance the combined effort’s ability to buy power cheaply, potentially creating even greater benefit than a 10% end user cost reduction. And this: Healdsburg/NCPA would like to be asked to merge their end user base with Sonoma County’s.

    The Water Agency hasn’t made that request to Healdsburg/NCPA.

    The Water Agency hasn’t even asked Healdsburg/NCPA for a proposal asking the questiom: working together, just how low can we drive electricity rates?

    Why not?

    Please keep reading.

    THE WATER AGENCY’S PAYOFFS

    Outspent five to one, Marc Levine won the November 2012 election for State Assembly not just in his native Marin County. But in Sonoma County as well.

    What happened? Mr. Levine’s opponent, the incumbent, took a $95,000 payoff from the Water Agency. And got caught. The voters rebelled and elected Mr. Levine.

    One might reasonably expect the Water Agency to have been chastened by the reporting of these events, even prior to the November election.

    But the Water Agency, unchastened, has undertaken a new payoff effort in favor of an associate of Mr. Allen’s. This is a $115,000 payoff.

    This payoff is disguised—small world—as an advisory contract in support of the Water Agency’s efforts on Sonoma Clean Power.

    When queried by a member of the public about the notable absence of professional substance in the Sonoma CLean Power consultant’s work product, here’s how the Water Agency responded. They made stuff up: the Sonoma County Water Agency’s response to an embarrassing question–one they would have preferred not to have answered–was to fabricate. They invented work product purporting to represent its consultant’s attainment of professional standards. These invented documents make interesting reading; and will come to light shortly.

    While the dollar amounts of payofffs cited above are trivial in the grand scheme of things, the implications aren’t.

    Sonoma Clean Power will increase the Water Agency’s revenues from $50 million to $250 million; and will increase the capital budget under its control from $10 million a year to upwards of $200 million a year.

    The Water Agency, historically, has had limited scope for its habitual hand-in-the-cookie-jar behavior.

    But now Sonoma Clean Power is the Water Agency’s Field of Dreams: a kind of billion dollar ATM card.

    Sonoma Clean Power gives the Water Agency virtually unlimited scope for acts in service of County insiders but to the detriment of the public interest.

    So, the reason the Water Agency attempted to dupe the public with its fake “feasibility study” on Sonoma Clean Power—and the reason the Healdsburg/NCPA rate advantage was never mentioned by the Water Agency is this: Sonoma Clean Power isn’t about rate payer service; nor the public interest; it serves one purpose only: to enable illegal payoffs, patronage and spoils authored by County insiders for their own benefit.

    This dimension of Sonoma Clean Power warrants attention: it’s not just the $50 million or so—about 5% of a billion dollars now ceded to Water Agency control– that stands to be diverted, unjustly, to private interests from Sonoma Clean Power’s revenues and capital budget.

    It’s what happens if the Water Agency creates a billion dollars in contracts—for example, they’ve just initiated a $100 million negotiation for solar power at the airport—then defaults.

    What happens if a County sponsored agency defaults on a billion in contracts or bond debt at a time when the County faces a potential doubling of pension obligations—to over $2 billion; and faces an unfunded road investment requirement of $500 million?

    What happens may be this: the rating agencies would start paying closer attention to Sonoma County. Having been burned by Vallejo, Stockton and San Bernandino, the rating agencies might now worry that where there’s smoke there’s fire. Every issuer of public debt in Sonoma County—the County itself, its agencies, and municipal issuers—may come under the microscope.

    In the case of the Sonoma County Board of Supervisors and the pensions, roads and public power challenges they address, that microscopic view might be troubling. That view might include cognizance of the deep- dyed culture of mendacity, payoffs and professional incompetence that defines Board of Supervisors, Water Agency and certain other County units.

    Such unveiling of County governance track record and culture could result in a constriction of credit to County issuers across the board; resulting in further cutbacks in services including road investments by the County and obligatory pension fund payments by the County.

    But wait a minute: aren’t public utilities supposed to be pretty low risk?

    Actually, no: PG&E went bankrupt in 2001.

    And the Water Agency just squandered—and is now concealing—its role in Sonoma County Energy Independence (“SCEIP”).

    SCEIP is a $60 million clean energy—mainly solar– lending program sponsored and overseen by the Water Agency. The Water Agency, which recently invested $15 million of rate payer funds in this breathtaking fiasco, now publicly denies its sponsorship of SCEIP.

    The Water Agency’s professional incompetence in a failed $60 million clean energy investment program is a sticks-out-like-a-sore-thumb kind of fact. It should give anyone pause about putting a billion or more in contract or debt risk in the hands of this bumbling management team. Kindly read on.

    THE WATER AGENCY’S PROFESSIONAL INCOMPETENCE

    SCEIP–again–is the Water Agency’s effort to loan $60 million to homeowners and businesses for energy saving equipment, mainly solar.

    SCEIP was designed to boost jobs, lower CO2 emissions, and give a preview of the Water Agency’s visionary leadership in clean energy.

    That’s not the way it worked out.

    To get SCEIP funded, the Water Agency convinced the County Pension Fund to put up $45 million in a long term loan to SCEIP, in order for SCEIP to fund solar retrofit loans for houses and businesses.

    The Water Agency’s loan request was against Pension Fund policy. That policy says: we invest in short term money market instruments, not long term illiquid investments (like the Water Agency’s taking $45 million from the Pension Fund to capitalize SCEIP). The Pension Fund’s conservative policy, at Water Agency urging, was overridden, on this promise: we (the Water Agency) will use this money only as bridge loans, until we can refinance with the banks or in the bond market to pay back the Pension Fund.

    That refinancing never happened. Nobody wanted to bail the Water Agency out. Nobody would provide loans enabling the Water Agency to pay back the County Pension Fund.

    The County Pension Fund is stuck with a low yielding (3%) loan to a failed energy finance venture, the Water Agency’s SCEIP program; even while the Pension Fund is supposed to be earning a 7.75% target rate of return.

    Why did SCEIP fail? Three reasons:

    1. The Water Agency is used to running a monopoly business– a small county local water supply operation run in secrecy, out of the public eye, and with a blank check from the Supervisors for raising rates. Given its terrarium-like insularity, the Water Agency has no commercial training nor experience–nor the temperament–for running a market-driven energy venture.

    2. It turns out that a year after SCEIP’s 2010 inception, the Federal Government blacklisted SCEIP loans for secondary market trading. This blacklisting occured because SCEIP loans have a County tax lien that supersedes mortgage claims, gutting these loans’ attractiveness to mortgage investors.

    The Water Agency simply didn’t think to ask the Federal housing authorities—who effectively set the rules for mortgages—whether the existence of a prior lien on these loans might disaffect potential investors. This was a huge breach of professional diligence by a Water Agency accustomed to setting its own rules and buying support with payoffs, where needed.

    3. This story gets weirder: the way only truth can be stranger than fiction. The market for SCEIP loans, irrespective federal blacklisting, has dried up because of competitive factors: private capital sources now offer no money down deals on solar installations that are cheaper than SCEIP’s 7% loan rates.

    Here’s the crowning touch: with SCEIP now virtually shut down by market forces, the Water Agency not only recently invested $15 million in new rate payer funds in SCEIP; the Water Agency increased actually hiring and administrative overhead in an operation that’s DOA. And still losing money.

    Why would the Water Agency invest millions of public money to prop up a commercial corpse? Why would the Water Agency spend such money when our roads are crumbling; and then, a few months later, deny any involvement in the waste of $60 million?

    The Water Agency created SCEIP, butchered its commercial execution, threw good money after bad to cover up its failure—a failure more telling in light of SCEIP’s precedent as a pilot for Sonoma Clean Power—and now looks the public in the eye with a straight face and denies its role and accountability in SCEIP.

    CONCLUSION

    The reason the Water Agency has– in concerted, copious detail— misrepresented Sonoma Clean Power to the citizens and rate payers of Sonoma County is:

    • Sonoma Clean Power’s true purpose is to expand—in the hundreds of millions, annually—the Water Agency’s scope for payoffs and patronage to County insiders

    • Sonoma Clean Power is the most costly option compared to the status quo with PG&E or a cost-saving alliance with Healdsburg/NCPA

    • Owing to the demonstrable incompetence of Water Agency senior management, Sonoma Clean Power poses very serious risks to the long term fiscal viability of Sonoma County. Sonoma Clean Power threatens to become the straw that breaks the camel’s back by compounding our existing burdens in pensions and roads, with mismanaged and defaulted contracts in billion dollar scale.

    Thumb up 26 Thumb down 2

  10. andrew simpson says:

    Sonoma Clean Power, if devised in the public interest, holds the potential for wide public benefit including reduction in electricity rates relative to PG&E, jobs growth, CO2 emissions reduction, and a shared community enterprise in clean energy innovation.

    But Clean Power and its companion initiative, a Joint Powers Agreement, suffer a material liability from inception. They’re sponsored by the Sonoma County Water Agency (“SCWA”) whose signature behavior includes:
    • Mendacity
    • Payoffs
    • Professional incompetence

    THE WATER AGENCY’S MENDACITY
    The Water Agency performed a feasibility on Sonoma Clean Power. Given the economic duress many County residents are now experiencing, one would have reasonably expected this feasibility study to pose and answer this question: what’s the cheapest way to get electric power delivered in Sonoma County?

    Did you know this question was not even asked?

    Would you like to know the answer?

    While Sonoma Clean Power will be a little more expensive than PG&E, Healdsburg/Northern California Power Agency would be 10% cheaper to retail consumers than PG&E; commercial rates would be even more advantageous.

    Just as importantly, allying Sonoma County’s rate payers with Healdsburg/NCPA would enhance their ability to buy power cheaply, potentially creating even greater benefit. Just as importantly, Healdsburg/NCPA would like to be asked to merge their end user base with Sonoma County’s.

    The Water Agency hasn’t made that request.

    Why not?

    Please keep reading.

    THE WATER AGENCY’S PAYOFFS

    Outspent five to one, Marc Levine won the election for State Assembly not just in his native Marin County. But in Sonoma County as well.

    What happened? The incumbent took a $95,000 payoff from the Water Agency. And got caught. The voters rebelled and elected Mr. Levine.

    One might reasonably expect the Water Agency to have been chastened by the reporting of these events, even prior to the November 2012 election.

    But the Water Agency, unchastened, has undertaken a new payoff effort in favor of an associate of Mr. Allen’s. This $115,000 payoff is disguised—small world—as an advisory contract in support of the Water Agency’s efforts on Sonoma Clean Power.

    The Water Agency, when queried about the notable absence of professional substance in the consultant’s work product, responded by fabricating work product purporting to represent consultant’s attainment of professional standards. These documents make interesting reading; and will come to light shortly.

    While the dollar amounts of payofffs cited above are trivial in the grand scheme of things, the implications aren’t.

    Sonoma Clean Power will increase the Water Agency’s revenues from $50 million to $250 million; and will increase the capital budget under its control from $10 million a year to upwards of $200 million a year.

    The Water Agency, historically, has had limited scope for its mendacity and payoffs.

    Sonoma Clean Power is its Field of Dreams: virtually unlimited scope for acts in service of County insiders but to the detriment of the public interest.

    So, the reason the Water Agency attempted to dupe the public with its fake “feasibility study” on Sonoma Clean Power—and the reason the Healdsburg/NCPA rate advantage was never mentioned by the Water Agency is this: Sonoma Clean Power isn’t about rate payer service; nor the public interest; it serves one purpose only: to enable illegal payoffs, patronage and spoils authored by County insiders for their own benefit.

    This dimension of Sonoma Clean Power warrants attention: it’s not just the $50 million or so—about 5% of a billion dollars– that stands to be diverted, unjustly, to private interests from Sonoma Clean Power’s revenues and capital budget.

    It’s what happens if the Water Agency creates a billion dollars in contracts—for example, they’ve just initiated a $100 million negotiation for solar power at the airport—then defaults.

    What happens if a County sponsored agency defaults on a billion in contracts or bond debt at a time when the County faces a potential doubling of pension obligations—to over $2 billion; and faces an unfunded road investment requirement of $500 million?

    What happens may be this: the rating agencies could get cold feet about Sonoma County: having been burned by Vallejo, Stockton and San Bernandino, they now worry that where there’s smoke there’s fire. Every issuer in the County—the County itself, its agencies, and municipal issuers—will come under the microscope. And in the case of the Sonoma County Board of Supervisors and the pensions, roads and public power challenges they address, the findings might be troubling. The findings might include cognizance of mendacity, payoffs and professional incompetence—resulting in a constriction of credit to County issuers across the board; resulting in further cutbacks in services including road investments by the County and obligatory pension fund payments by the County.

    But wait a minute: aren’t public utilities supposed to be pretty low risk? Actually, no: PG&E went bankrupt in 2001. And the Water Agency just squandered—and is now concealing—its role in Sonoma County Energy Independence (“SCEIP”). SCEIP is a $60 million clean energy—mainly solar– lending program sponsored and overseen by the Water Agency. The Water Agency, which just invested $15 million of rate payer funds in this breathtaking fiasco, now publicly denies its sponsorship of SCEIP.

    The Water Agency’s professional incompetence in a failed $60 million clean energy investment program is noteworthy. It should give anyone pause about putting a billion or more in contract or debt risk in the hands of this feckless management team. Kindly read on.

    THE WATER AGENCY’S PROFESSIONAL INCOMPETENCE

    The Water Agency convinced the County Pension Fund to put up $45 million in a long term loan to SCEIP, in order for SCEIP to fund solar retrofit loans for houses and businesses. This loan was against Pension Fund policy. That policy says: we invest in short term money market instruments, not long term illiquid investments (like the Pension Fund’s $45 million loan to SCEIP). That conservative policy, at Water Agency urging, was overrode; on this promise: we (the Water Agency) will use this money only as bridge loans, until we can refinance with the banks or in the bond market.

    That refinancing never happened. The County Pension Fund is stuck with a low yielding (3%) loan to a failed energy finance venture, the Water Agency’s SCEIP program; even while the Pension Fund is supposed to be earning a 7.75% target rate of return.

    Why did SCEIP fail? Three reasons:

    1. Because the Water Agency is used to running a monopoly business: small county local water supply; but the Water Agency has no commercial training nor experience–nor the temperament–for running a market-driven energy venture.

    2. It turns out that a year after SCEIP’s 2010 inception, the Federal Government blacklisted SCEIP loans for secondary market trading. This blacklisting occured because SCEIP loans have a County tax first lien that supersedes mortgage claims, gutting these loans’ attractiveness to mortgage investors.

    The Water Agency simply didn’t think to ask the Federal housing authorities—who effectively set the rules for mortgages—whether the existence of a prior lien on these loans might disaffect potential investors. This was a huge breach of professional diligence by a Water Agency accustomed to setting its own rules and buying support with payoffs, where needed.

    3. The story gets weirder, the way only truth can be stranger than fiction. The market for SCEIP loans, irrespective federal blacklisting, has dried up because of competitive factors: private capital sources now offer no money down deals on solar installations that are cheaper than SCEIP’s 7% loan rates. Here’s the crowning touch: with SCEIP now virtually shut down by market forces, the Water Agency not only invested $15 million in new rate payer funds in SCEIP—they increased headcount and hiring in an operation that’s DOA.

    Why would the Water Agency prop up a commercial corpse? And then, a few months later, deny any involvement in the waste of $60 million that could have gone for higher priority investments ?

    The Water Agency created SCEIP, butchered its commercial execution, threw good money after bad to cover up its failure—a failure more telling in light of SCEIP’s precedent as a pilot for Sonoma Clean Power—and now has the mendacity to deny its role in SCEIP.

    CONCLUSION

    The reason the Water Agency has– in concerted, copious detail—misrepresented Sonoma Clean Power to the citizens and rate payers of Sonoma County is:
    • It’s a higher cost option compared to Healdsburg/NCPA
    • It’s true purpose is to expand—in the hundreds of millions, annually—the Water Agency’s scope for payoffs and patronage to County insiders
    • It poses very serious risks to the long term fiscal viability of Sonoma County; owing to the demonstrable incompetence of Water Agency senior management, Sonoma Clean Power threatens to become the straw that breaks the camel’s back by compounding our existing burdens in pensions and roads, to the breaking point.

    Thumb up 2 Thumb down 1

  11. Dan J Drummond says:

    You never know what new technologies will evolve to lower the cost of electricity. Bloom Energy may be what we’ve been waiting for.

    Bloom Energy enables you to save money by reducing your electricity costs. Our customers today generate their own electricity for less than they pay their power company. The savings typically provide a 3-5 year payback on their initial capital investment.
    Our systems can generate electricity cheaper than the power company for two main reasons. First, Bloom’s unmatched efficiency in converting fuel to electricity means that our systems produce significantly more electricity for the same fuel costs. Second, our ability to generate the electricity on-site eliminates the need for costly transmission and distribution infrastructure. (from http://www.bloomenergy.com/)

    Additionally, awareness of how much electricity you use and how much you pay per kilowatt will also help in conserving this resource. I’ve saved $50-$60 a year the last two years by participating in PG&E’s SmartRate program. I love being able to monitor my detailed usage on line via my SmartMeter.
    http://www.pge.com/myhome/saveenergymoney/energysavingprograms/smartrate/

    Thumb up 2 Thumb down 22

  12. Snarky says:

    Just an FYI:

    Someone inside local government is pushing this and stands to profit.

    Just like when the expensive homes were built on top of Fountaingrove in violation of the existing laws. Someone profited within the local government.

    Thumb up 30 Thumb down 6

  13. MendoTech says:

    The county can’t keep the roads in passible condition, but can spend money (over $500,000 so far, plus another $300,000 in ‘new’ contracts) to “study” whether they should go into a business they have absolutely no experience running, and nothing to offer in the way of lower costs nor improved service.

    Of course the unions, the Sonoma County Water Agency, and other libs will push this. They see lots more $150,000 / year jobs, with $200,000 / year pensions in the near future. That, along with the ability to control people’s lives through the power we are allowed to use. What’s not to like about that?

    And, it will all be done with bond money! We all know that is free money! Just ignore the high costs to future generations. I especially love the “financial firewall.” No one will have to pay anything for the failures and cost over runs of this boondoggle. That will fall to the power producers. And they will no doubt guaranty this out of the generosity of their hearts!

    Stand by for higher electric rates, outages and cost increases. I guess it will just take some getting use to, kinda like the potholes.

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  14. GAJ says:

    What the County does not need, especially in these fiscally dubious times, is yet another gold plated bureaucracy.

    The County gets all its power from the largest “green” geothermal power system on the planet; it’s called The Geysers.

    Stop chasing freaking rainbows and figure out how to fix the roads. That is the most basic and fundamental responsibility of the County and one which they have failed at miserably.

    If the County can’t do it’s most fundamental duties they certainly shouldn’t be allowed to take on new ones.

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