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Push on for public power agency in Sonoma County

By BRETT WILKISON

THE PRESS DEMOCRAT

Starting Tuesday, Sonoma County officials pushing creation of a public power agency face what could be the biggest hurdle yet as they appeal to cities to join the program.

In a series of public meetings that begin Tuesday night in Sebastopol and take place in seven other council chambers this powerplantmonth and next, city officials are set to pepper county representatives with questions about the power program.

It is touted by supporters including environmental and business interests as a greener alternative to Pacific Gas and Electric Co. — the region’s dominant utility — that promises an immediately higher share of electricity from renewable sources.

Customer rates are the biggest focus for decision makers, and county officials have sought to allay concerns, saying initial bids show electricity could be competitive if not cheaper than PG&E rates.

But many city representatives say that they are unlikely to give any go-ahead that would effectively enroll customers, who would have the option to opt out, without seeing final rates and having a clearer idea of where the program will get its electricity and how green it will be.

Those answers are not expected before a county-imposed decision deadline of June 30, meaning the county’s request amounts to a leap of faith, city officials say.

“They want us to sign up for something. We want to know the specifics,” said Sebastopol Mayor Michael Kyes, a former energy consultant.

Benefits, including local energy projects that could create jobs, are “intriguing,” Kyes said. “But there really isn’t any information yet that shows that’s more than talk.”

The concerns were echoed in interviews with more than a dozen elected city leaders and administrators, including representatives of the largest cities, which also are the county’s biggest electricity markets.

“I want to make sure that what we’re doing doesn’t turn out to be just a feel-good measure,” said Petaluma Mayor David Glass. “How does this stack up against the record of the current provider? I don’t know the answer to that question. PG&E may be far greener.”

Santa Rosa officials want the so-called Sonoma Clean Power program to succeed, said Councilman Jake Ours, but they don’t have enough information — particularly rate details — to support it at this point.

“Without that cost factor, I don’t think there’s anybody on the council that’s going to go along with it,” said Ours, who has served on a public-private steering committee giving input on the power plan.

Santa Rosa’s participation in the program is seen as key since the city consumes 34 percent of all electricity sold by PG&E in Sonoma County. City officials need to weigh not only whether to give customers the chance to participate, but whether doing so make sense for City Hall, which pays millions of dollars to PG&E annually from more than 700 separate accounts.

The pushback comes at a time when cities are struggling to examine their stake in a complex business deal that would permanently privatize operations at the county’s central landfill. They’re also preparing budgets for the next fiscal year.

The concerns raise the possibility — or likelihood, some sources say — that the county could be jumping alone, or with few cities, into one of the biggest initiatives it has ever taken on.

It would diverge from the model used by Marin County, where a public power agency was launched in 2010 with eight of 12 municipalities. The agency had all municipalities on-board by late 2011.

But Sonoma County officials have rejected assertions they are pushing cities into rushed decisions.

“I don’t think we’d classify this is a leap,” said Cordel Stillman, deputy chief engineer for the county Water Agency and the lead staff member on the proposal. “We’ve spent more than two years studying this. We have a good idea of what the rates will be. It’s time to go.”

On its face, the public power immediately would be 65 percent greener than PG&E’s. It would be drawn from a portfolio with a third of its sources in renewable power — wind, solar, geothermal, biomass and small hydroelectric projects — versus the roughly 20 percent renewable share that would come next year from PG&E.

Critics have questioned that comparison because about half the county’s renewable supply would come from energy credits that allow purchase of standard-sourced power from the grid.

Monthly bills in the first year could range from $1.73 less to $1.02 more — or 1.8 percent less to 1.1 percent more — than a PG&E bill for a 2,000-square foot single-family home. For a mid-sized commercial customer such as a restaurant, large convenience or retail store, the monthly bill could be $80 less to $13 more — 3.1 percent less to 0.5 percent more.

County officials say the program still would be viable and have similar rates if it was just serving the unincorporated area, with over 91,000 metered customers, including homes and businesses. The Board of Supervisors last month tentatively approved that implementation plan.

PG&E would continue to handle transmission, billing, metering, customer service and grid repair. Healdsburg is not part of the mix because it has its own municipal utility.

The initial rollout in 2013 is only set to reach about 10,000 meters. But within three years, the plan envisions serving up to 80 percent of PG&E’s customers in the county, about 220,000 meters. Cities have to sign up before that can happen, and the county wants as many participating as possible before going into final contract negotiations in July.

“It’s going to be easier for us to negotiate an initial power contract if we know everyone is going to be a part of it,” Stillman said.

The latest approach to cities follows previous updates to council members in public sessions over the past two years and in private meetings with advocates pushing the power plan. They have convinced nearly all local elected officials to back the plan in concept.

But with a decision now on the line, the lobbying efforts have been stepped up, employing a campaign that asks city representatives to give their residents and businesses a choice they currently don’t have over their power provider.

The message resonates with some city officials.

“It creates a competitive marketplace for power,” said Cotati Mayor Mark Landman.

Supporters also tout benefits that include an ability to control net revenues, which otherwise go to shareholder dividends. The money can be used to keep customer bills down or can be plowed into local power projects and energy efficiency programs. Financial risk for cities also would be minimized through a separate governing authority that insulates general funds.

“It takes a lot of time to get that message out,” said Landman.

But others have bristled at the looming county deadline and the campaign that accompanies it.

“The flip side of it is that we’re jumping the gun and signing up for something that we don’t know what it supposed to look like,” said Windsor Mayor Robin Goble.

Apart from the attention paid by activists, city officials said they were seeing little groundswell for the program. That might keep them on the sidelines for a while, they suggested.

“There’s a number of pressing issues out there that I think surpass this one at the present time,” said Carol Giovanatto, city manager of Sonoma. “This just hasn’t risen to that level.”

Even supportive city officials say the plan faces obstacles.

“I think it will be difficult to get the votes without some fairly concrete data,” said Rohnert Park Councilman Jake Mackenzie, who is active in transportation and environmental issues. “As an individual council member, I might not be as reluctant, but my suspicion is that other council members and city managers may be more suspicious.

“We’ve all done the easy stuff,” he added. “This is the hard stuff.”

Staff Writer Kevin McCallum contributed to this report.

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





9 Responses to “Push on for public power agency in Sonoma County”

  1. Snarky says:

    What Grapevines stated is absolutely true.

    If you actually think that local bureaucrats are skilled enough to handle local power without screwing it up,,,,,

    Just look at your local roads.

    The local government claims it has not choice…. the roads are under-funded.

    The local and state government claims they have no choice but to steal more money from you… as the public pensions are under-funded.

    And,,,, yes…. you let those idiots get hold of your local power… and you will not only be paying higher monthly costs…. but you will be hearing their usual incompetent excuses…. they “have no choice” but to charge you higher and higher costs….

    While your roads decay to gravel.

  2. MOCKINGBIRD says:

    GAJ- I read the letter too. I guess not everyone is science oriented. The PD should not have printed that letter. Poor sod-exposed and embarrassed by the PD.

  3. Well Informed says:

    This Power grab will cost the Sup’s sans Rabbit who voted no their careers here in Sonoma County.

    It is a complicated scheme to offset unfunded pension costs with revenues from your power bills. Be afraid.

  4. Steveguy says:

    @GAJ , My comment is there on that ludicrous ” Letter of the Day ” that the PD printed. I have actually studied geophysics and am puzzled why the Press Democrat would stoop so low as to expose some person’s addled mind. I dunno.

    I have made Letter of the Day in a very cogent manner ( last time was on beach perking fees).

    That letter was a head scratcher.

    Steve Mosher

  5. Emerson Burkett says:

    “Follow the Money”. So, who is behind this scheme? The “carrot” is “Green Power”, and the scammers know we are suckers for anything “Green”. Ever notice the Oil Company Ads touting their supposed greenness? George Orwell is laughing in his grave at this blatant “doublespeak”. The way I see it is our rates will go up substantially (hey, I can pull stuff out of my a__ too; just like the folks claiming “1.8% less to 1.1% more). Personally, I will be sticking with PG&E. Also, PG&E helps out seniors and folks with low incomes with lower rates; will the “Revenue Gathering” Board of Supervisors be so inclined? I seriously doubt it. Note to Efren; I voted for you twice, stick up for this and good luck getting my vote when you want to pursue “higher office”.

  6. Grapevines says:

    This ponzi scheme by the water board is smelling more and more like old bait. We first get this authoritative statement that they have intensively studied this for the past X years and know what they are doing in presenting it. OK lets see how this intensive study holds up, lets ask questions!

    Q) What are the rates going to be?
    A) ” Monthly bills in the first year could range from $1.73 less to $1.02 more — or 1.8 percent less to 1.1 percent more ” I love the unstated obvious add on here (OR MORE)

    In other words, they don’t know, don’t have a clue. Well put to us by the BOS and backed up with the power grabbing (pun not intended) water agency, I’m not surprised.

    Anyone dumb enough to not opt out of this deserves what they will be getting. Just look at how the roads are being managed to see what’s going to happen to the power. PG&E will keep things going, but the rates will skyrocket to satisfy the insatiable demand of the BOS to spend, spend, spend.

    As far as the cities joining in, that’s already happened. They will join in lockstep to received the kickbacks they have been promised. Right now they are just putting up the pretense of appearing to be studying the issue.

    Opt out now or prepare to be fleeced.

  7. andrew simpson says:

    RE: REFERENCE CHECKING OUR CONTRACTOR ON SONOMA CLEAN POWER

    Would you re-wire your house without reference checking your contractor?

    Would you re-wire your County without reference checking your contractor?

    Sonoma Clean Power’s contractor’s the Water Agency.

    There are three questions:

    • have they done this kind of project before?
    • how did they perform?
    • would you hire them again?

    SHORT ANSWER

    The Water Agency sponsored a $60 million precursor–a miniature– of Sonoma Clean Power called Sonoma County Energy Independence (“SCEIP”). SCEIP was designed just to prove the Water Agency knew how to run a clean energy program.

    It turns out that SCEIP was an operational disaster which the Water Agency concealed with fraud.

    So:

    • has the Water Agency done this kind of project before? YES.

    • how did the Water Agency perform? INCOMPETENTLY AND FRAUDULENTLY

    • would you hire them again? NO

    SOME FACTS

    The Water Agency presented Sonoma County Energy Independence (“SCEIP”) to the public in 2010 as a mechanism to fund solar and energy retrofits for local homeowners and businesses, by offering them long term loans.

    The Water Agency promoted SCEIP as a boon to CO2 emissions reduction, even though they good reason at the outset to suspect that SCEIP would have almost no measureable impact on the County’s CO2 levels. Here’s what happened next.

    • The Water Agency borrowed $45 million of County retiree pension fund money to start SCEIP

    • This was a long term illiquid loan by the retirees to the Water Agency in support of SCEIP’s long term mortgages on energy equipment

    • The retirees pension fund forbade such loans, preferring short term liquid investments

    However, the Board of Supervisors overrode retiree pension fund policy on the strength of this Water Agency promise: even though the loan is structured as long term, we’ll be able to get bank money to replace the retirees’ loan, so this is just a bridge loan by the retirees to the Water Agency and SCEIP.

    SCEIP, housed in Water Agency offices and under Water Agency supervision, quickly spent the $45 million it borrowed from the County retirees. So then:

    • SCEIP spent this money by lending it out to finance local energy retrofits

    • Meanwhile, the Federal Housing Authority looked at these SCEIP loans for energy retrofits and declared them ineligible for federal guarantees,

    That means that the SCEIP loans could not be packaged up for resale in the secondary mortgage markets. That meant that the banks would no longer assist in refinancing SCEIP. And that in turn meant that the Water Agency was unable to get outside money to pay off the retirees’ pension fund that financed the Water Agency and SCEIP in the first place, with this result: the County retirees thus became “stuckholders” in a toxic, illiquid loan portfolio which their investment policy said they should have never held. Further,

    • To make matters worse, the commercial solar finance market began offering no money down leases and other terms more favorable than SCEIP’s
    • So even if SCEIP hadn’t been declared out of bounds by the federal government, SCEIP was a commercial failure and would have gone nowhere

    This string of bad judgment and bad luck posed a problem for the Water Agency.

    SCEIP was to have been the goose that laid the golden egg. The golden egg was the billion dollar bonanza in son-of-SCEIP. Sonoma Clean Power. Sonoma Clean Power is designed to lift revenues under Water Agency Control by fivefold; and its capital budget by ten to twentyfold.
    So the Water Agency decided that SCEIP was “too big to fail”.

    The Water Agency saved SCEIP by siphoning off $15 million of water rate payer funds to prop up the moribund SCEIP program; and then by doing something illegal on top of the unethical misuse of ratepayer funds. Enter fraud:

    • The Auditor Controller, at the Water Agency’s prompting, began publicly extolling the virtues of SCEIP and its loans, proclaiming their environmental and jobs creation benefits in Congressional testimony even while making earnest assurances that these loans were of good credit quality

    • With the complicity of the Board of Supervisors, the Water Agency and County Counsel, the Auditor Controller–in his dual hat as fiduciary for the pensioners’ retirement funds–studiously omitted to report the following to the pensioners.

    • The tens of millions of County retirees’ money that was supposed to invest in short term liquid investments were now stuck in long term illiquid investments.

    • A long term loan portfolio loses its trading appeal when its assets are declared toxic by the federal government.

    • This portfolio cannot be sold at face value. It can only be sold at a discount. It is worth less than face value.

    In the case of this County retirees’ tens of millions loan portfolio, the loss runs in the millions. To fail to report this loss of value to the pensioners is a breach of fiduciary duty.

    It is fraud.

    Adding insult to injury, SCEIP reduced County C02 emissions by 6,000 tons against an annual County wide goal of CO2 emissions reduction of 1.5 million tons

    That means SCEIP spent $60 million to achieve a CO2 reduction of .004 (4/10th of one percent), at a cost of $10,000 per ton reduced.

    Given the County wide goal of 1.5 million tons annual CO2 reduction, the Water Agency’s recent performance translates to a cost of $15 billion to achieve the County goal.

    Finally, the County spent $60 million over two years to create 70 full time jobs. That’s about $400,000 per job.

    If $15 billion in CO2 emissions reduction cost sounds hefty, or $400,000 per job sounds odd, here’s an interesting question: did you ever, in your wildest dreams, imagine we would fall behind a billion dollars on road repair; and another billion on pensions?

    CONCLUSION
    Are you willing to look at the Water Agency the way you would any contractor who might put your family at risk?

  8. Steveguy says:

    I love the line ” Monthly bills in the first year could range from $1.73 less to $1.02 more — or 1.8 percent less to 1.1 percent more ”

    Does everybody here know that there are no rate arbiters for this money and literal power grab ? For PG&E to get a rate hike, they have to go through the CPUC (California Public Utilities Commission).
    We will lose that firewall, and the Board of Stups can raise rates at will.

    What happened to the original $4-10 a month more ? They are fudging numbers, don’t believe a word they say.

    OPT OUT

  9. GAJ says:

    Dear lord; the kooks are out in force.

    Now Geothermal energy is not “green” to some.

    In fact it’s “worse” than oil evidently!

    Letter to the editor from yesterday:

    EDITOR: Many articles in The Press Democrat and elsewhere (e.g., concerning Sonoma County’s proposed power plan) refer to geothermal power as “renewable.” Geothermal power is generated by withdrawing the stored thermal energy of our planet’s hot and gradually cooling interior. This is one of our least renewable options — far less renewable than oil, which at least is regenerated over millions of years. Geothermal energy will never regenerate, ever, ever. Tapping into it will only speed the cooling of the Earth’s core and hasten the resulting shrinkage and cracking of the Earth’s crust (e.g., earthquakes and other unpredictable consequences).

    This and many other common misconceptions about energy production reflect poorly on our education system, which produces environmental “experts” without a basic knowledge of physics and thermodynamics.

    JOHN BRABYN

    Bodega