Vote on POU Delayed: Lee Pushes for More Information

public-powerBy Michelle Millet

After over an hour long discussion, at the request of Council Member Brett Lee, city council decided to delay voting on a resolution that would authorize the City Manager and City Attorney to initiate actions necessary to provide City Council sufficient information to allow for a decision to be made regarding the possible formation of a municipally owned utility within the City of Davis.

Before the staff report, Valerie Fong, the utilities director for the city of Palo Alto, presented an overview of the City of Palo Alto’s Electric Utility operations.  Palo Alto owns all its own utilities, including the electric utility which was founded back in 1900. In March of 2013 Palo Alto City Council voted to implement a Carbon Neutral Plan, which committed the city to pursuing only carbon neutral electric resources. Palo Alto’s current supply of energy comes from hydroelectric, wind, biogas, natural gas, and local solar.

Herb Niederberger, General Manager Utilities, Development & Operations began the staff report by clarifying that approval of Resolution No. 13-169 did not in and of itself, authorize municipalization of electrical assets within the City limits.

As stated in the report, “There is a process prior to taking the necessary steps towards acquisition of the PG&E assets. To further clarify the process necessary, staff provides further clarification of the workplan and authorizations granted.” The staff report requested the council authorize the City Manager and the City Attorney a set of actions that would allow for a decision to be made regarding the possible formation of a municipally owned utility.

During public comment Mark Braly referenced a recent piece he co-authored entitled, Rethinking our Town’s Energy Future where the authors sketched out an energy future for Davis where all of the community’s electrical power was provided by local sources. The article claims that PG&E and other investor owned utilities are unable to come up with a business model that works with the new world of climate change and emerging clean, low-cost clean energy technology.

Braly’s piece states, “The city of Davis has revived its interest in a municipal electric utility and has authorized a thorough study by local and outside experts to determine whether 1) rates can be reduced, 2) energy can be cleaner, 3) power can be more reliable and 4) whether the city can realize significant economic benefits.”

Braly concluded his public comment by suggesting an additional amendment to the resolution being considered that included the hiring of a project manager to oversee the actions laid out in the resolution.

After public comment the item was quickly moved by Mayor Pro-Tem Wolk and seconded by Frerichs, who also approved an addition to the motion that included hiring a project specific manager to guide the city’s efforts.

It was at this point that Council Member Brett Lee expressed concerns over the adoption of the resolution. Lee clarified that he was not opposed to pursuing a POU, but that he felt that some key questions regarding the process of moving from a investor owned utility (IOU)  to a private owned utility (POU) had yet to be addressed.

He stated, “I think before we agree to spend, or authorize to spend this fairly large amount of money we should at least be able to talk confidently about some actual real numbers. I’d like to talk to somebody about when they made the effort to go to a POU. We will likely end up in court and there will be legal cost involved.  I don’t know wether this will be millions of dollars in legal fees or wether it will be 10 of millions in legal fees. I don’t know wether the journey is a 1 year journey or a 10 year journey.”

Niederberger responded that he thought staff had addressed most of council member Lee’s concerns with Work Task Number 3 which includes case study analysis of Hayfork Utilities, Trinity Utility, and the current effort with South San Joaquin Irrigation District.

Lee countered with concerns that the work plan items would go concurrently not sequentially. He stated, “What I’m asking for is that upfront, we have a little more education. Then I would feel more comfortable authorizing this expenditure, and authorizing the hiring of a project manager. As it is now I can’t support something like this, there is too much of a gap of knowledge.”

He goes on to say,  ”I urge my colleges for basic due diligence.  Fiduciary responsibility requires us to have at least half a sense of what we are trying to do in terms of the cost involved and the time involved.”

Mayor Korvoza responded by saying, “I am completely sympathetic to the theme the Brett is introducing which is ‘what does that pathway look like’. I am very supportive of this motion on the floor because it’s exactly what we are trying to get at. What is the pathway like? What are the cost going to be? What is the business plan? What is the rate structure going to look like?  What would it mean for community renewables? Part of the question is going to answered by looking at other communities, but part is going to be looking at our mix, our community values, our cost structure. Our cost to acquire PG&E assets are not going to be known by talking to any other utility.  That is going to be completely unique to us”

He continues, “I view all of this as putting together the pieces of puzzle so that we can get answers for the community, so I think we have to go forward with this. We have always understood that we would hire a project manager to quarterback hearing from other communities and figuring out what the cost could be for us. This staff report to me lays it all out.”

Lee reiterated his concerns about the lack of information available regarding the specific challenges other communities faced when they transitioned from an IOU to a POU. He requested that staff attempt to contact communities that have recently made this transition and ask them questions like, “When did you start, when did you finish, how long did the legal issue drag on, how much did it cost.”  He continued, “The goal is not to derail the process, but this seems like its a basic first step.”

Ultimately council decided to delay a vote on the resolution. Staff was directed to attempt to acquire the information requested by Council Member Lee and include it in a report that would be placed the consent calendar in the next 2-4 weeks.

About The Author

Michelle Millet is a 25-year resident of Davis. She currently serves as the Chair of the Natural Resource Commission.

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