At the last council meeting, the Davis City Council approved a consent item that would finance an additional $600,000 to study the feasibility of the city moving away from PG&E and towards a Publicly Owned Utility (POU) that the city believes would both save the city and community 20% of its electricity bills, as well allow the city enhanced flexibility in the $4.3 million in funding generated by the community for the Public Purpose program that PG&E currently uses elsewhere.
However, there has been a major pushback against that movement by the Chamber, PG&E itself, members of the public and now the Davis Enterprise, which on Sunday argued, “Public power would be good for Davis, but we have too much on our plate.”
The editorial writes, “Revisiting a long-held community goal, the Davis City Council is looking at the feasibility of a public utility to provide electricity to residents. Last attempted with 2006′s Measures H and I, which would have allowed Yolo County to join Sacramento’s publicly owned SMUD, backers see opportunities for long-term savings, local accountability and greener production methods in public power.”
However, they write that PG&E is the main obstacle to such a vision. Our current provider, they write, “is in no mood to give up customers, and not inclined to sell the infrastructure a public provider would have to buy. In 2006, the utility spent heavily to prevent an exodus and, while the measures passed in Davis, it was able to convince Sacramento voters to reject the union. Davis was back at Square One.”
“At this point, the council has spent $400,000 analyzing the possibilities, with $600,000 more earmarked from a wastewater fund,” the paper notes.
They add, “A report by economist Charles Cicchetti unsurprisingly found that a public utility could save $5 million to $9 million a year after paying $20 million for the physical infrastructure. Just as unsurprising, PG&E disputes the first figure and promises the second will be higher. Ultimately, state regulators or the courts would have to decide what all those power lines and transformers are worth.”
The paper notes that city leaders are reluctant “to discuss details” while they are in early stages of analysis.
”All we’re doing now is methodically exploring the issue,” Mayor Joe Krovoza said.
“But if the past is anything to go by, a bruising fight lies ahead,” the paper correctly observes. They noted that they, along with all other public officials, backed the 2006 measures and the paper argues, “The reasoning behind them is still sound. The investment is well worth it if it results in greater local control, lower prices and a reinvestment of the fees Davis ratepayers pay back into Davis.”
At the same time, the paper argues that “conditions have changed in seven years.” They reason, “Retiree pension and medical benefits costs are out of control. A recession has forced cuts to services and a drastically reduced city workforce. We have a massively expensive water project coming up, one whose rates are sure to be challenged at the ballot box, but will be hefty no matter what final form they take.”
They add, “Voters also will be asked to approve a sales tax in June to help close the budget deficit, as well as a parcel tax to fund roads and parks. If we ask taxpayers for too much, we may end up with nothing.”
But the paper, like many others, fail to see this as a way to control costs and save money down the line. Much has been made of a $1 million investment, but at this point, that investment comes to $66,000 a year in payments. If the further analysis seems unwieldy, the city has the ability to cut their losses.
But, like others, the Enterprise takes a different approach, arguing, “Now is not the time to take on another huge project. We have too much on our plate as it is.”
They write, “Perhaps if the long-hoped ‘innovation park’ ever gets going and we start attracting high-tech businesses to town, the tax base will improve to the point where this is feasible. Or perhaps our economy will rebound enough to allow us the fiscal luxury of moving forward.”
There will always be reasons not to take chances and to play it safe. As people in Davis found out yesterday, PG&E has poor system reliability compared to other utility operators, PG&E has a worse outage duration and more sustained outages per customer than comparable groups.
The study found that their per KWH price was high but Davis pays more per KWH than the average PG&E customer. Each 1 cent per KWH costs Davis about $2.64 million per year.
Given community pushback and council concerns about getting the revenue measure passed, the Enterprise might ultimately be right, that “for now, public power seems like a step too far.”
But the numbers are mindboggling in terms of the potential here and $1 million, $660,000 spread out over a decade, seems like a small amount to risk on something that could produce $5 million in savings community-wide per year.
—David M. Greenwald reporting