Councilmember Brett Lee made a motion to rescind the previous authorization to spend up to $600,000 on the study of a POU. Councilmember Lucas Frerichs seconded the motion. It passed 4-1 with Councilmember Rochelle Swanson and Mayor Pro Tem Dan Wolk supporting the motion and Mayor Joe Krovoza opposing it.
The Vanguard will update this story.
Tonight council is scheduled to vote on resolution that authorizes staff to continue taking the necessary actions needed to form a publicly owned electric utility.
Specifically, the resolution identifies the steps and activities that need be taken to determine whether to move forward with actions necessary to create a publicly-owned electrical utility, as well as the tasks necessary to make the utility operational.
The resolution states the staff will provide sufficient information to allow council to make this determination within the next 12 months.
These steps include utilizing community resources such as the Valley Climate Action Center, Davis Coalition for Local Power, UC Davis Energy Institute, and the City of Davis Energy Services Options Technical Advisory Group, completing various due diligence tasks, initiating an environmental review pursuant to CEQA, investigating and reporting the steps necessary for acquisition of electrical infrastructure, and continuing discussions with PG&E regarding the implementation of this resolution and any alternative proposals that PG&E might propose.
A vote to move forward with this plan was set to take place on March 25, but was delayed at the request of Councilmember Brett Lee.
Lee stated concerns over adopting the resolution before some key question regarding the process of moving from an investor owned utility (IOU) to a private owned utility (POU) had been addressed.
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, and how much did it cost?
Lee stated, “We will likely end up in court and there will be legal costs involved. I don’t know whether this will be millions of dollars in legal fees or whether it will be tens of millions in legal fees. I don’t know whether the journey is a 1 year journey or a 10 year journey. 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.” He clarified that his goal was not to derail the process, but he felt this was a necessary first step to take.
The May 13 staff report, though, does not specially address the questions raised by Councilmember Lee.
In response to the question of how long the process would take, staff directed council to an excerpt from a PowerPoint presentation given in December, during which a consultant estimated the acquisition could be achieved in 18-36 months. Staff estimates that a condemnation proceeding could add another 2 years to the timeline.
The report does not include any specific information regarding other municipalities’ efforts to move from an IOU to POU.
According to the Enterprise article, “Davis’ Path to Public Power is not like others,” published on April 1, there is no city in California that has made the transition from a IOU to a POU.
The article states, “The municipal utilities in California are usually much like Palo Alto, Alameda, Burbank and Glendale. They are long-serving utilities incorporated in the late 1800s or the early 20th century without the controversy of having a high-profile court fight or regulatory battle with an investor-owned utility.”
Staff does include a table containing a list of Publicly Owned Electric Utilities that were established between 2003-2013. Of the 17 new public power utilities formed during this time, 7 are located in California. Of those 7 only 2 – McAllister Ranch Irrigation District and Port of Stockton Electric, which provides power to an industrial wharf in Stockton – have PG&E listed as their previous supplier. Neither of these utility companies appear to provide residential electric service.
If Davis continues to pursue a POU it is expected to face strong opposition from PG&E, who has made it clear that they will oppose such efforts.
It is reported that in 2006 PG&E spent $11 million dollars opposing a plan that would have allowed SMUD (Sacramento Municipal Utility District) to take over electric services for Davis and other parts of Yolo County that were served by PG&E. The investor-owned utility ran attack ads, conducted push surveys and sent mailers advocating against the annexation.
If tonight’s resolution is approved, staff is requesting that the city hire a temporary employee or a consultant to manage the implementation of the work program and engage a communication consultant to prepare and implement a communication plan that addresses public education and stakeholder outreach.