City to Bring on Project Manager and Communications Consultant For POU

CCA-Community-ChoicePlans Go Forward Despite Clear and Sustained Community Opposition to Effort:

The Publicly Owned Utility has become a source of community scrutiny on the operations of city government ever since the public discovered earlier this year that the city had spent $400,000 on a feasibility study and that council earlier this year had approved an additional $600,000 loan provided by the Wastewater Enterprise Fund to continue to study and conduct outreach on the feasibility of the city moving to a publicly owned utility.  The $400,000 feasibility study estimates that the city and ratepayers could save as much as 20% on electrical bills.

For this coming Tuesday’s council meeting, staff recommends that the city council, “Approve a work program that specifically describes activities and tasks to be undertaken over the next six months that would enable staff to continue the due diligence process, educate the community about public owned utilities and develop partnerships with community groups that would collaborate with the City in its efforts to achieve its energy goals and objectives.”

The staff report specifically highlights hiring a consultant to manage the implementation of this work program at the cost of $30,000 plus a communications consultant to assist with public education, outreach to stakeholders and preparation/implementation of a communications plan at the cost of $25,000.

The city would also “prepare “studies of successfully implemented publicly-owned electrical utilities that were created within the service boundaries of an investor-owned utility.  Prepare a business plan for the operation of a public electrical utility, collaborating with local resources, and continue to work with PG&E regarding energy goals and objectives.”

All told moving forward with the staff recommendations would authorize $85,000 in expenditures, which would cover expenses for about six months. This money would come out of the $600,000 loaned and allocated from the Wastewater Enterprise Fund.

The city continues to stress that none of these past or current actions authorizes the actual implementation of the POU.

Back in December, the council approved a resolution that authorized then City Manager Steve Pinkerton and City Attorney Harriet Steiner, “to initiate actions necessary to provide municipal electrical utility service to Davis residents.”

In late January, the council established a four-part work plan and authorized the city to execute consultant agreements necessary to complete the work not to exceed $600,000. That money was to be a loaned from the Wastewater Enterprise Fund to be paid back at the rate of $66,000 a year over a ten year period.

By late March, City Council “directed staff to return with a revised resolution adding steps to the work plan calling for hiring of a Project Manager to oversee the effort, and adding review of the due diligence work by the Technical Advisory Group and the newly formed Utility Rate Advisory Committee. Also, staff was directed to conduct research into recent municipalization efforts in other communities, specifically looking at how long they took and how much they cost.”

However, once the public and PG&E caught onto the city’s plans this became controversial.

Back in January, Chamber Executive Director Kemble Pope reported on a poll conducted by the Chamber that found that most of the respondents were unsure whether the city should continue with these plans.  Their selection in the poll was  “that they did not have enough information.”  Mr. Pope told the Council, “The community is not educated, they may support this project, but we don’t know.”

Meanwhile Alicia Okelo-Odongo, PG&E’s government relations manager said a PG&E working group is prepared to work with the city’s leadership and sustainability experts “to explore innovative partnerships to help the city achieve its energy goals.”

“While this is our preferred path to the next steps, we are committed to continuing to engage with the city, as conversations around the city’s evaluation of creating a publicly owned electric utility continuum,” Ms. Okelo-Odongo continued; however, she warned, “Our facilities are not for sale.”

“If the city does decide to pursue this effort to acquire facilities we urge the council to take into serious consideration the cost and risk associated with such an effort,” she added.  She cited a 2006 study valuing PG&E facilities in all of Yolo County at $568 million.  “While a current detailed study has yet to be done, we anticipate that the value specific to Davis is higher than it was years ago.”

Sheila Allen, one of the candidates for council also summed up her opposition, noting at the Chamber debate, “This weekend people only wanted to talk about public utility.  I could not find anybody who was interested in us spending money right now to do this.  I absolutely agree that we need to move towards more renewables.  I really appreciated any time the city wants to do something that will save me 20 percent on my electrical bill or any other bill, but I think hiring a manager a moving forward with this right now is not the right time.”

John Munn, also a candidate for council, has stated, “I’m not going to sugar-coat this.  I don’t support pursuing a city-run utility at this time or spending money studying it.  We need to fix our problems first and then my requirements for seriously considering a publicly owned utility at any time are that it be clear from the outset that a city owned utility must be as reliable as what it replaces and must provide electricity at rates that are competitive with PG&E.”

Daniel Parrella has pushed an alternative model noted recently, “From my experience walking precincts, I would estimate at least 9 out of 10 people disapprove of the $600,000 loan to study DMUD.” He would state, “For someone who has a lot of faith in the Public Power movement it is, at times, difficult for me to admit that the current detractors have a point when it comes to council priorities. It is also very important to remember that the public does not care one bit about whether the money comes from the general fund, the enterprise fund, or the POU wish fund. The public views this loan as a clear disconnect on behalf of the council, and with two taxes coming up to vote this year the last thing we need is a public that thinks the council will spend their money frivolously.”

He argues, “My aim is to direct the discussion away from DMUD and focus on what I believe is a far more realistic option, that of a Community Choice Aggregation.”

“Community Choice Aggregation (CCA) is a state policy that enables local governments to aggregate electricity demand within their jurisdictions in order to procure alternative energy supplies while maintaining the existing electricity provider for transmission and distribution services,” he writes. “The key difference between a CCA and DMUD is a CCA only controls the generation of electricity; we would still pay PG&E for transmission fees. DMUD would allow us full control over every aspect of our utility grid, and theoretically greater cost savings. Below is a link to the staff report.”

Right now, the city is essentially spending money on making an informed choice. As staff notes, “A key recommendation of this report is staff’s request that the City Council authorize the City Manager and City Attorney initiate specific activities and tasks necessary to provide City Council sufficient information to, at an appropriate point, allow for a decision to be made regarding the formation and operation of a publicly-owned utility to serve the City of Davis.”

Many question the timing of this initiative. As Brett Lee noted a few weeks ago, when the council originally made the decision, they did not know that the city manager would be leaving and perhaps failed to recognize the degree of disruption that the campaign would take.

At the same time, the city recognizes a potential for saving 20% on power, which in the water and wastewater enterprise funds alone could come to between $600,000 to $1.2 million annually in a $6 million a year expenditure on electricity just in water.

Put into that context a one-time expenditure of $600,000 is a reasonable risk from the council’s perspective.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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14 Comments

  1. Don Shor

    Many question the timing of this initiative.

    Nearly everyone, apparently, questions the timing of this initiative. Staff must be completely oblivious to public opinion. This just increases the difficulty of getting the sales tax to pass.

  2. Tia Will

    I may be the lone voice, but I have a different point of view on this. I believe that now is the right time to be investigating the options and alternatives to the outmoded business model offered by PG&E. We heard many of the same kinds of arguments from those who opposed the water project. We heard many comments about wrong time, we can’t afford it, the council and staff have more important things to do. I would argue that preparing for a foreseeable future is the business of our city council. I don’t want to be 10 years down the road complaining about how short sighted this city council was and how they should have been proactive in securing us more affordable energy.

    1. Don Shor

      Staff doesn’t have time to do its current work load. Meetings are postponed, reports are delayed. The Innovation Task Force hasn’t met in two months. Setting priorities seems to be a serious problem for our local leaders.

    2. Mark West

      The issue is not whether it is a good idea, but rather if it should be our highest priority. Economic development continues to flounder while we spend our time and money chasing windmills. There are more productive ways for us to be spending our limited resources.

    3. DT Businessman

      Yep, Tia, you are a loan voice. Your comparison between the surface water project and the POU project is entirely off the mark. In the first instance, regulators are forcing us to take action. Were that not the case, I’m fairly confident we would not be moving forward with the surface water project. In the 2nd instance, there is no such outside entity forcing our hand.

      -Michael Bisch

  3. Tia Will

    Mark and Don

    “The issue is not whether it is a good idea,”
    ” Economic development continues to flounder while we spend our time and money chasing windmills. ”

    I disagree. I think the issue is very much about whether it is a good idea.

    We know that at best, the Innovation Park, which I support will be how long ? 5 years or so to fruition by someone’s estimate here on the Vanguard. I am wondering if either of you knows specifically why the Innovation Task Force hasn’t met in two months. This may or may not pertain to circumstances beyond the council’s control. The facts that we just lost our City Manger, that two on the City Council are running for election, and that a number of our leaders have been off on Cap to Cap should be seen as temporary delays, not reasons for not pursuing what may turn out to be a good, long term move. So we should shelve an idea that will be a multiyear project because of some short term delays ? I do not think this is a productive strategy in the long run.

    It would seem to me from our economic history that innovators have often been criticized for “chasing windmills”. I am sure that late adopters of the automobile felt that manufacturers would have been better off raising animals to pull their wagons. As I recall there was a great deal of criticism of the project to put a man on the moon and that endeavor drove science training and developments in this country for many years.

    While I am certainly not comparing the order of magnitude of a locally owned and or controlled utility with these endeavors which I am only using a examples, today’s windmill may very well turn out to be tomorrow’s economic benefit.

    1. Don Shor

      We should not be adding to the city’s payroll when we are having to cut the city’s payroll. This is not a reasonable use of funds when there are no funds.

    2. Mark West

      “We know that at best, the Innovation Park, which I support will be how long ? 5 years or so to fruition by someone’s estimate here on the Vanguard.”

      Tia, it will never happen if they don’t start working on it. We obviously don’t have the resources to do both projects. Economic development is the path to solving our economic problems, the POU is not. In the very long term (20-40 years, the POU might pencil out and end up as a very good idea, but in the short term, all it does is exacerbate our fiscal crisis and prevents us from accomplishing the far more important task of growing revenues and the local economy.

      If the Council and Staff (and you apparently) were really interested in addressing our fiscal crisis with a comprehensive solution, they would make economic development the top priority, and would table all work on the POU until some later date. As it is they are so busy tilting at the windmills that they have forgotten to put food on the table.

    3. DT Businessman

      Thank you, Tia, for illuminating the problem for us. There is no limit of good ideas. There are, however, limits to the resources to achieve them. So, given that we do not have sufficient resources to pursue all the priorities that the CC has instructed staff to pursue, which existing priorities do you think staff should stop pursuing to pursue the POU? For instance, 4 economic development priorities, the downtown parking management plan, the wayfinding program, downtown densification effort, and CalTrans community identification program are all currently stalled for lack of resources. These efforts have all effectively been stricken off the list of priorities by the CC decision to pursue the POU. Do you agree with this prioritization?

      -Michael Bisch

      1. Michelle Millet

        For instance, 4 economic development priorities, the downtown parking management plan, the wayfinding program, downtown densification effort, and CalTrans community identification program are all currently stalled for lack of resources.These efforts have all effectively been stricken off the list of priorities by the CC decision to pursue the POU.

        I don’t think the people working on economic development and parking management are the same ones working on the POU. Not sure how they are related as far as staff time and resources go, but I have no doubt you can explain it to me;-)

  4. D.D.

    Re: “chasing windmills”
    Wind energy has been around for a long time. Jerry Brown was promoting wind energy in the 70’s.
    This discussion is reminiscent of the people who (also in the 70’s) criticized solar.

  5. Tia Will

    DT, Mark and Don

    Robb Davis has made what I consider a very good point which speaks to my concern. He has stated that loss of city staff by attrition has not been an optimal means of downsizing. I am speaking only for myself here and only use Robbs comment for illustration.

    I feel that part of the issue with staff being overwhelmed is that perhaps we either do not have the optimal staffing or do not have them working as effectively as possible. Also, we are continuing to use a model within the city of underutilizing the talent that we have at the university and larger community. There are those in our community who are extremely knowledgeable in their area of expertise who would more than likely be willing to devote time to serve in advisory capacities thus relieving staff of some of their duties and freeing them from others but we remain tied to an outmoded “public vs private” mentality. We here this kind of thinking when we hear comments about “the City” as though we did not have any input uses “our money”. What I believe to be the truth is that we are “the City”. We elect and have the right to communicate freely with those we have chosen to be our representatives. Ultimately we choose the priorities by our vote, and by using our voices in comment to our city’s elected leaders. Of course, we always have another alternative which is to not use our voice until after the fact, and then decry what a bad job they are doing.

    An example from my work place. In Kaiser it is typical for doctors to take on roles such as administration or special committees in addition to their patient care. In the past, we were not very good about developing an adequate
    “exit strategy” for these individuals when they left. Usually a new doctor would be hired but only for the patient care role. The other duties might or might not be filled right away and often the new person did not have time for
    training for their new role. This lead to a lot of “catch up”. Sometimes the role was not found to be critical or could be subsumed within another doctors duties. Sometimes, they essentially had to “learn on the job” or “reinvent the wheel”. A much more effective strategy has been in place more recently. It has several component pieces.
    1. Priorities for committee work and other ancillary roles are re evaluated on a regular basis.
    2. Physicians with a perceived talent for and interest in these ancillary roles and leadership positions are identified early in their career and given special training in their areas of interest.
    3. Senior and mid level administrators and other team members such as nursing supervisors and managers look ahead to anticipate where their may be deficits and who may be the best fit as a candidate for a position that
    will be opening.
    This more proactive approach has led to a much smoother functioning in a number of areas of our organization.
    I anticipate that I will be retiring within the next 2 or so years and have begun to develop my “exit strategy” in terms of who will be getting up to speed on each of my roles, and identifying those areas in which it may be more appropriate to let lapse before I actually leave.

    I think that this kind of proactive approach might be more constructive for the city to the degree that it is not already in place.

  6. Tia Will

    Michael

    I am not deliberately ducking your very appropriate question about whether or not I agree with the current priorities. I do not know the answer.
    This would necessitate some knowledge that I do not have. I would have to know for each of the projects that you mentioned:
    1) How much staff time is involved in each? How much does their time cost for this specific project ?
    2) What economic impact is this particular project anticipated to have on the city ?
    3) If the benefits are not primarily economic, how does this project fit into the bigger picture of the triad that
    describes the well being of the community, the health and safety aspect, the environmental aspect and the
    financial aspect ?
    4) How much of the work involved could be passed down to lower level staff, interns or other volunteers ?

    Armed with this kind of information, I might be able to achieve the kind of prioritization that you are asking for.
    Speculation without data is just that, speculation.

    What I do know, is that given this kind of information, I do have experience in making program changes.
    I recently made cuts to a program that was near and dear to my heart having been started by a friend and myself 16 years ago. At the time it was cutting edge and made a huge difference for our patients in terms of improving the speed in which their care was provided and the quality of that care. Over the years, our model had undergone some tweaking and some major improvements, but we had never done a complete review of whether there were aspects that could be changed while still maintaining our level of service. We did this review and concluded that we could indeed do at least as much with less. I made the necessary cuts in staff and hours and lo and behold, the sky has not fallen in. My point is that these kinds of changes can be made, but should be made comprehensively, thoughtfully, with the core values held firmly in mind.

    This is the kind of information and approach that I would like to see applied to the prioritization of programs within the city.

  7. Jim Frame

    I don’t have a strong opinion one way or another on the POU plan at this point, but I will note that if the city were to pursue a publicly-operated high-speed fiber-to-the-home network, the administrative infrastructure could serve both functions.

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