The truth is there is plenty of blame to go around for the failure of the city’s proposed Publicly Owned Utility. I may be the only one left who thinks it was a mistake to pull back at this time on the POU, but with the legions of local experts willing to put forth time on this, I think it could have gone forward with a minimal use of funding in the near future.
There were four votes to pull back on the POU and the truth is that there may have been four reasons for the votes. Councilmember Brett Lee was clearly frustrated at the lack of answers he got. Back in March he made it clear, “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 whether this will be millions of dollars in legal fees or whether it will be 10s of millions in legal fees. I don’t know whether the journey is a 1 year journey or a 10 year journey.”
This time he pounded on city’s Utility Manager Herb Niederberger, but never got the answers he wanted. So he asked for various community groups who support this effort to step forward and do some of the early, ground laying work. He stated, “I’m not supportive of spending this money, I’m supportive of asking people to help volunteer to provide this information.”
Lucas Frerichs, who may be leaning more towards reexamining the Community Choice Aggregation (CCA) option, was clearly concerned about the perception that the city would be spending money during times of budget crisis.
I look at this differently. Last June, then-City Manager Steve Pinkerton laid out the plan to me in its conception stage. The failure here has been the failure of the city in the last six months to clearly articulate its vision here. And it’s a sound vision.
But it is a vision that is different to get above the din. It’s easy to pound the city for spending $1 million even if the city came up with creative ways to keep the costs to the general plan to a minimum annual impact. It is easy to cast stones at the city and ask if the city cannot maintain its roads, how are they going to run a power company. Finally, it’s easy to see this as a move for green energy, when it perhaps first and foremost is a way to balance the budget in the coming years.
As we have argued, in a city that is looking at tens of millions of unfunded liabilities on pensions and retiree health care, hundreds of millions in infrastructure costs, and tens of millions in water rates, spending $600,000, over ten years at $66,000 increments, is not going to break the budget.
Put it this way – if the city can save $600,000 to $1.2 million on energy for running the water projects, then the expenditure is worth it. And if your argument is really the uncertainty of the savings, then the question is not one of budget, but rather one of operations.
The root of the plan comes out of the failure of the SMUD initiatives in 2006. What we saw was PG&E pump in $11 million to defeat three measures, two in Yolo County and one in Sacramento County. In order to get to SMUD, Yolo County had to agree to two measures and Sacramento County had to agree to let us.
Davis voted overwhelmingly to support the measures, but Yolo County other than Davis opposed the measures and Sacramento County overwhelming voted it down in the face of PG&E’s scare tactics and the lack of upside for Sacramento County.
So, building on a public power ideal, one strategy was to separate the questions. If Davis – where SMUD passed overwhelmingly – could muster the will to move towards public power, they would set the process in motion. Just as Davis’ city officials will not run the water project, it is a myth that Davis’ city officials would run the electrical utility – and yet, people bought into that idea.
The easiest thing for Davis to do would be to separate from PG&E and then put out an RFQ (request for quotation) for a private company to run its utility. One possibility would be SMUD and, separated from the vested stake of PG&E, it would be easier to convince SMUD customers to let Davis onto their grid.
There is no doubt that Davis would like to use the $4.3 million for Public Purpose Programs (PPP) to stay local and generate green energy assets locally. But that move was distorted into an assumption that the POU was primarily about green energy rather than cost savings.
Here’s the problem that the city faces. Right now we have a $5.1 million deficit. We are looking at a sales tax and parcel tax as ways to deal with it. But the deficit in 2018 actually goes up higher – much higher, perhaps up to $7 or $8 million.
Why? Water rate increases. And the last chart only went out to 2017-18, so we don’t know what happens with the deficit after that.
How do we cut costs? Well one plan is to look into less water intensive greenbelts, but the city is smart enough to know that this might not go over well. The city will also look to shift water usage on the parks and greenbelts in some areas (not all) to wells which will allow for a cheaper source of water.
But that only takes savings so far. One clear area of savings is the $6 million the city spends a year on electricity to run the surface water and waste water plants, if they can save 10 to 20 percent, that could be $1 million in savings.
The question of course is whether the plan will succeed in saving money. And that’s where the first $85,000 that was going to be allocated on Tuesday would have gone.
Maybe the group of experts can keep this going long enough to see the program revived.
On Wednesday, John Munn was arguing that this was just a bait and switch. He stated, “This is once again something where I think there’s a game being played, where Measure O is perceived to be in trouble, the public utility has gotten unpopular. Believe me, it’s coming back after the election.”
I don’t agree. PG&E has raised the stakes here. We saw what happened in San Francisco and Marin County. I don’t think, despite the intentions of council, this is coming back.
It’s too bad because PG&E is a huge company, it practices poor service and uses an outmoded electrical distribution model. But they have the resources to overwhelm the local stakeholders’ ability to get a message above the din.
Sadly, in Davis, they didn’t have to try very hard.
—David M. Greenwald reporting