Tag Archives: Davis

A cautionary tale to communities negotiating with energy project developers

The City of Davis signed a lease option agreement on March 24 with a start up solar development company headed by a former CEO of a large renewable firm. How the negotiation process reflected a lack of sufficient knowledge on the part of the City staff is instructive to other cities and counties about the need to be fully informed when a renewable project developer approaches them about land or power deals. In this case the City gave away the potential for gaining tens of millions of dollars.

The agreement was negotiated in a series of closed sessions starting December 17 and approved in a rush under the premise that the project faced an April 15 deadline for submitting its interconnection application to the California Independent System Operator (CAISO). The deal immediately unleashed a storm of outrage from many knowledgeable citizens (several who are appointed city commission members) and the City responded soon after with a press release and “Q&A” that did little to quell the uproar. Two City Councilmembers then wrote an additional defense of the deal. The City’s Utilities Commission voted 5-2 to recommend that the City Council rescind the agreement. A request to “cure and correct” under the Brown Act was then filed April 23 by a group of citizens (including me).

Ashley Feeney, City Assistant City Manager, claimed at the Utilities Commission special meeting April 22 that the BrightNight lease option agreement and term sheet have “favorable terms to the City.”  No doubt it’s favorable to the developer — a low-cost lease option and lease terms at the average rate for agricultural use for a multi-million dollar solar energy project with no strings attached. The staff’s naivete comes through a close reading of the entire agreement.

What are so many people missing that makes this project so favorable to the City as the Council and staff claim? While the process of signing the lease option agreement with the developer was (a) unnecessarily secretive, (b) precluded useful citizen input, and (c) likely violated state law in several ways— at its core, the agreement is simply a bad deal. The City either failed to carry out its due diligence, or was seriously misled by the developer, or both. As a result, the City likely gave away millions of dollars over the next 50 plus years, failed to guarantee any clean energy for the City and failed to protect the City fully at the end of the project life. While the City may desire local renewable power, the agreement lacks any real commitment to advance the City’s climate goals while gaining local benefits.

The agreement (1) underprices both the lease option and the lease prices relative the actual value to the developer, (2) lacks any guarantee of plant power being sold to Davis or VCEA, much less at favorable terms, (3) lacks appropriate protection that sufficient funds will be available to decommission the plant, and (4) forsakes opportunities for more valuable alternative uses for those parcels for at least the next five years.

The first of those misunderstandings was that there was, in fact, no need for the developer to have site control for the CAISO interconnection process.  Whatever developer’s “standard” practice is has no bearing on how and what the City should decide in its own interest. The CAISO interconnection process requires either (1) a $250,000 refundable deposit regardless of site control plus a $150,000 study deposit, if the project is submitting under the Cluster application which is due by April 15, or (2) with site control there is no deposit except the same $150,000 study deposit under the Independent Study Process and no deadline. In this case, the City has essentially gifted the developer $225,000 by providing site control at a steep discount. The developers appears to have exploited the City’s lack of knowledge about the interconnection process by conflating the two processes.

Instead the City should have priced the lease option to reflect the developer’s value, not the City’s. That means that handing over the site control was worth the avoided carrying cost of that deposit each year. With a standard rate of return of at least 10% on real estate investments, that amounts to $25,000 per year, which translates into $106 per acre.  In any case, the minimum opportunity cost to the City is either using it for annual row crop agriculture or reflecting the delay in other uses such as organic waste processing, both of which far exceed the $20 per acre in the lease option.

The City should have specified that the project sell output only to either the City or Valley Clean Energy Authority (VCEA) at a favorable price. The developer is now in the driver’s seat and can solicit bids from the entire range of utilities and load-serving entities such as PG&E, SMUD and other CCAs. This will make the cost of this power more expensive even if Davis or VCEA wins the power output. But now that the agreement has been executed, the City no longer has any leverage in either the lease terms or an energy sale to VCEA, because it cannot force the developer into an agreement.

The City could have specified that the output be wheeled to City accounts through PG&E’s RES-BCT tariff that is available to public agencies. A wholesale solar power contract for the project is unlikely to be much more than 5 cents per kilowatt-hour. In contrast, if the project was structured to take advantage of the the power savings under RES-BCT would amount to over 8 cents per kilowatt-hour—at least 60% higher. (At least 35 megawatts is still available for subscription.) This benefit amounts to over $1.2 million per year at current PG&E rates, compared to an expected annual lease payment under the current lease agreement ranging from $40,000 to $80,000. The gain in value over 50 years could be $52 million in nominal dollars or $21 million in net present value. That delivers an equivalent to a lease rate of $5,000 per acre, not $340 or less.

Even if the City did not use the power output, it should have negotiated a lease price based on either (1) the value of rezoned commercial and industrial land since the developer would have to get that zoning designation to develop its project elsewhere, or (2) the highest agricultural value (not the average for the county). For agricultural land, the value a City commissioner and orchard farmer has calculated is $1,688 to $2,250 per acre, or four to five times higher than the rate that the City negotiated based on a naïve calculation.

Further, the term sheet specifies that the developer pay the property taxes. However, the value of the parcels will not increase if the project is built prior to the 2025 because of the solar property exclusion in state law. The County will receive a short term boost in sales tax revenues from plant construction, but the City will not receive any share of that since its outside City boundaries. The City could have negotiated an in-lieu payment from the developer based on the added property value.

While the lease agreement pays lip service to the developer’s responsibility for decommissioning and disposing of the project at the end of its useful life, the term sheet has no provision prohibiting the developer from declaring bankruptcy for its limited liability corporation (LLC) and just walking away. Since the project will have no income at the end its life, and the entity owning the plant is legally separate from primary development firm (or its successor), the obvious step is to simply dissolve the LLC through a bankruptcy.  Such a step would leave the plant for the City to dispose of at significant expense (likely more than $1 million at today’s prices.)  This will wipe out half of the current lease revenues. That is the route that PG&E Corporation took in 2001 when its subsidiary, Pacific Gas and Electric Company, declared bankruptcy in 2001, leaving the bill of the energy crisis to ratepayers instead of shareholders. The City failed to require a surety bond that would cover those costs. Such bonds or other endowments are typical for projects of this type.

An additional consideration that appears to have been ignored is that The City has been looking at other higher value uses of the site such as organics waste disposal or habitat preservation and restoration. These have been under study at several City Commissions, but now those efforts have been aborted.

Finally, some of have defended maintaining the agreement because abrogating it could expose the City to significant legal liability. The developer at this time cannot sue for more than its demonstrated losses, and since it does not yet have a power purchase agreement, it has no future income stream to point to. At most, the liability is the $150,000 deposit with the CAISO  plus a few thousand dollars expended preparing and submitting the interconnection application (which in fact can be remediated with a $250,000 refundable deposit).

The agreement still faces several hurdles including whether the process violated California’s Brown Act, approval with any Yolo County zoning changes, conformance between the agreement and CAISO interconnection requirements, and winning with an RFO bid.

Even if the City believes that it is compelled to go forward with this agreement, it should admit that it made a series of serious mistakes and needs to review its practices and processes that caused this mess. Unfortunately, it does not seem that the City could have done any worse in these negotiations.

Richard McCann testified at the California Public Utilities Commission on behalf of Santa Clara and San Joaquin counties about their RES-BCT projects, and analyzed solar net metering arrangements for agricultural and mobilehome park clients. He evaluated the fiscal impacts of solar projects on San Luis Obispo, San Benito and Inyo counties, and projected the costs of the Desert Renewable Energy Conservation Plan for the California Energy Commission. He is a member of the Natural Resources Commission, former member of the Utilities Commission, and was recently recognized with  the City’s 2020 Environmental Recognition Award for serving on the Technical Advisory Subcommittee of the Community Choice Energy Advisory Committee, leading to formation of Valley Clean Energy.

Davis Should Set Its Utility Reserve Targets with a Transparent and Rigorous Method

The City of Davis Utilities Commission is considering on February 19 whether to disregard the preliminary recommendations of the Commission’s Enterprise Fund Reserve Policies subcommittee to establish a transparent, relatively rigorous and consistent method for setting City reserves. The Staff Report, written by the now-departed finance director, ignored the stated objectives of both the Utilities and Finance and Budget Commissions to develop a consistent set of policies that did not rely on the undocumented and opaque practices of other communities. Those practices had no linkage whatsoever to risk assessment, and the American Water Works Association’s report that the Staff relied on again to reject the Commission’s recommendation again fails to provide any documentation on how the proposed targets reflect risk mitigation—they are simply drawn from past practices.[1]

The City’s Finance & Budget Committee raised the question of whether the City held too much in reserves over five years ago, and the Utilities Commission agreed in 2017 to evaluate the status of the reserves for the four City enterprise funds—water, sanitation/waste disposal, sewer/wastewater, and stormwater. A Utilities Commission subcommittee reviewed the current reserve policies and what is being done by other cities. (I was on that subcommittee.) First, the subcommittee found that the City was using different methods for each fund, and that other cities had not conducted risk analyses to set their targets either. The subcommittee conducted a statistical analysis that allows the City to adjust its reserve targets for changing conditions rather than just relying on the heuristic values provided by consultants.

The subcommittee’s proposal adopted initially by the Utilities Commission achieved three objectives that had been missing from the previous informal reserves policy. Two of these would still be missing under the Staff’s proposal:

  1. Clearly defining and documenting the reserves held for debt coverage. While these amounts were shown in previous rate studies, the documented source of those amounts generally not included and the subcommittee’s requests brought those to the fore. The Staff method appears to accept continuance of that practice. The Staff proposes to keep those separate, which differs from past practice which rolled all reserves together.
  2. Reserve targets are first set based on the historic volatility of enterprise net income. In other words, the reserves would be determined transparently with a rigorous method on the basis of the need for those reserves. The method uses a target that is statistically beyond the 99th percentile in the probability distribution. And this target can be readily updated for new information each year. The Staff report rejects this method to adopt a target that refers to the practice of other communities, and none of those practices appear to be based on analytic methods from research done by the subcommittee.
  3. Reserve targets are then adjusted to cover the largest single year capital improvement/replacement investment made historically to ensure enough cash for non-debt expenditures. Because the net income volatility is a joint function of revenues, operating expenditures and non-debt capital expenditures, the latter category is not separated out of the analysis. However, an added margin can be incorporated. That said, the data set for the fiscal years of 2008/2009 to 2016/2017 used by the subcommittee found that setting the target based on the volatility has been sufficient to date. The Staff report appears to call for a separate, unnecessary reserve fund for this purpose based on annual depreciation that has no relationship to risk exposure, and implicitly duplicates the debt payments already being made on these utility systems. This would be a wasteful duplication that sets the reserves too high.

The Finance and Budget raised at least two important issues in its review:

  1. Water and sewer usage and revenues may be correlated so that the reserves may be shared between the two funds. However, further review shows that the funds have a slight negative correlation, indicating that the reserves should be held separately.
  2. The water fund already has an implicit reserve source when a drought emergency is declared because a surcharge of 25% is added to water utility charges. I agree that this should be accounted for in the historic volatility analysis. This reduces the volatility in fiscal years 2014/2015 and 2015/2016, and reduces the water fund volatility reserve from 26% to 21%.
  3. Working cash reserves are unnecessary because the utility funds are already well established (not needing a start up reserve), and that the volatility reserves already cover any significant lags in the revenues that may occur. This observation is valid, and I agree that the working cash reserves are duplicative of the other reserve requirements. The working cash reserves should be eliminated from the reserve targets for this reason.

Finally, the Staff proposal raises an issue about the appropriate basis for determining the sanitation/waste removal reserve target. The Staff proposes to base it solely on direct City expenses. However, the enterprise fund balance shows a deficit that includes the revenues and expenses incurred by the contractor, first Davis Waste Removal and then Recology. We need more specificity on which party is bearing the risk of these shortfalls before determining the appropriate reserve target. Given the current City accounting stance that incorporates those shortfalls, I propose using the Utility Commission’s proposed method for now.

Based the analysis done by Utilities Commission subcommittee and the recommendations of the Finance & Budget Committee, the chart above shows the target % reserves for each fund without the debt coverage target. It also shows the % reserve targets implied by the Staff’s proposed method.[2] The chart also shows corresponding dollar amount for the proposed total target reserves, including the debt reserves, and the cash assets held for those funds in fiscal year 2016/2017. Importantly, this new reserve target shows that the City held about $30 million of excess reserves in 2016/2017.

[1] It appears the Staff may have misread the Utilities Commission’s recommendation memorandum and confused the proposed targets policies with the inferred existing policies. This makes it uncertain as to whether the Staff fully considered what had been proposed by the Utilities Commission.

[2] The amounts shown in the October 16, 2019 Staff Report on Item 6B do not appear to be consistent with the methodology shown in Table 1 of that report.

Housing can’t escape economics

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One aspect of the debate over housing policies is whether increased housing supply or some type of demand management will mitigate create a more affordable housing market. Davis is one of the centers of this debate, where strict load growth controls has led to lower income households being closed out of the market. But contrary to assertions by those who want direct interventions, the housing market isn’t immune from economics.

One problem is that critics in Davis of relying on market mechanisms work from the false premise that the housing markets across the region were all in equivalent equilibriums in 2010, immediately after the Great Recession. The fact is that the Davis housing market, due to a combination of its restrictive housing policies and education value premium, had not declined as much in price as other communities in the region. The amount of surplus housing stock that was available in 2010 had a wide variation across many cities. So of course the towns which were hit the hardest in 2008 have typically had higher price appreciation since 2008, no matter what their housing policies have been.

Here’s a few studies that support the proposition that housing supply and demand drive prices:

PG&E fails to provide safety support in Davis

This article on a local webnews site, the Davis Vanguard, describes how PG&E was slow to respond and has since failed to communicate with homeowners about subsequent measures to be taken. Note that in this case, the power lines run down an easement through the backyards of these houses. 

A transparent municipal utility’s reserve target

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As one of my civic activities, I sat on the City of Davis Utility Rates Advisory Commission. In my final action with that commission, along with Elaine Roberts-Musser and Lorenzo Kristov, we prepared what might be a first-of-its kind enterprise fund reserve policy for the four utilities managed by the city. Up to this point, the URAC had been presented with rates development reports that appeared to use somewhat arbitrary, and inconsistent, methods of setting reserve targets. The city also appeared to be holding tens of millions of dollars in those funds that might be unneeded to meet expected reserve requirements.

With the City Council’s approval and support from the staff and the Finance and Budget Commission, we identified the elements that needed to be covered by reserves, including working capital, debt covenants, unanticipated capital replacements, and revenue-expense volatility. The first two elements were fairly straightforward to calculate, and unanticipated replacements didn’t appear to be significant. It was the analysis of the relationship of revenue and expense volatility where the report innovates. Previous studies had used some variation of a percentage of capital assets with no underlying explanation. Our solution was to derive an estimate of the outerbound of an annual revenue shortfall for a utility as buffer to allow rate or management adjustments.

In the end, the target reserves generally didn’t change much, but the City now has a transparent target that it can use to determine when it has excess funds that might be used in different fashions instead.

A counter to UC’s skepticism about CCAs

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Kevin Novan from UC Davis wrote an article in the University of California Giannini Foundation’s Agriculture and Resource Economics Update entitled “Should Communities Get into the Power Marketing Business?” Novan was skeptical of the gains from community choice aggregation (CCA), concluding that continued centrally planned procurement was preferable. Other UC-affiliated energy economists have also expressed skepticism, including Catherine Wolfram, Severin Borenstein, and Maximilian Auffhammer.

At the heart of this issue is the question of whether the gains of “perfect” coordination outweigh the losses from rent-seeking and increased risks from centralized decision making. I don’t consider myself an Austrian economist, but I’m becoming a fan of the principle that the overall outcomes of many decentralized decisions is likely to be better than a single “all eggs in one basket” decision. We pretend that the “central” planner is somehow omniscient and prudently minimizes risks. But after three decades of regulatory practice, I see that the regulators are not particularly competent at choosing the best course of action and have difficulty understanding key concepts in risk mitigation.By distributing decision making, we better capture a range of risk tolerances and bring more information to the market place. There are further social gains from dispersed political decision making that brings accountability much closer to home and increases transparency. Of course, there’s a limit on how far decentralization should go–each household can’t effectively negotiate separate power contracts. But we gain much more information by adding a number of generation service providers or “load serving entities” (LSE) to the market.

I found several shortcomings with with Novan’s article that would change the tenor. I take each in turn:

  • He wrote “it remains to be seen whether local governments will make prudent decisions…” However, he did not provide the background which explains at least in part why the CCAs have arisen in the first place. Largely over the last 40 years, the utilities have made imprudent procurement and planning decisions. Whether those have been pushed on the utilities by the CPUC and Legislature or whether the IOUs have some responsibility, the fact is that neither institution sees real consequences for these decisions, neither financially or politically. In fact, the one time that a CPUC commissioner attempted to deliver consequences to the IOUs, she was fired and replaced by a former utility CEO. The appropriate comparison for local government decision making is to the current baseline record, not an academic hypothetical that will never exist. And by the way, government enterprise agencies, including municipal utilities, have a relatively good record as demonstrated as by lower electricity rates and relatively well managed, almost invisible capital intensive water and sanitation utilities. The current CCAs have a more extensive portfolio risk management system than PG&E—my calculation of PG&E’s implicit risk hedge in its renewables portfolio is an astounding 3.3 cents per kilowatt-hour.
  • Novan complains that CCAs have “dual objectives.” In fact they have “triple objectives,” the added one to encourage local economic development (sometimes through lower rates). I suggest reading the mission statements of the CCAs that have been created, including the local Valley Clean Energy Authority .
  • It’s not clear that “purchasing locally produced renewable energy will likely lead to more expensive renewable output” for at least two reasons. The first is that local power can avoid further transmission investment. The current CAISO transmission access charges range from $11 to $39 per megawatt-hour and is forecasted to continue to rise significantly (indicating transmission marginal costs are much above average costs). In a commentary on a UC Energy Institute blog, it was revealed that the Sunrise line may have cost as much as $80 per MWH for power from the desert. This wipes out much of the difference between utility scale and DG solar power. Building locally avoids yet more expensive transmission investment to the southeast desert. [I worked on the DRECP for the CEC.] In addition, local power can avoid distribution investment and will be reflected in the IOU’s distribution resource plans (DRP). And second, the scale economies for solar PV plants largely disappears after about 10 MW. So larger plants don’t necessarily mean cheaper, (especially if they have to implement more extensive environmental mitigation.) [I prepared the Cost of Generation model and report for the CEC from 2001-2013.]
  • It’s not necessary that more renewable capacity is needed for local generation. The average line losses in the CAISO system are about 6%, and those are greater from the far desert region. Whether increased productivity overcomes that difference is an empirical question that I haven’t seen answered satisfactorily yet.
  • Novan left unstated his premise defining “greener” renewables, but I presume that it’s based almost entirely on GHG emissions. However, local power is likely “greener” because it avoids other environmental impacts as well. Local renewables are much more likely to be built on brownfields and even rooftops so there’s not added footprints. In contrast there is growing opposition to new plants in the desert region. The second advantage is the avoidance of added transmission corridors. One only needs to look at the Sunrise and Tehachipi lines to see how those consequences can slow down the process. Local DG can avoid distribution investment that has consequences as well. Further, local power provides local system support that can displace local natural gas generation. In fact, one of the key issues for Southern California is the need to maintain in-basin generation to support imports of renewables across the LA Basin interface. [I assessed the need for local generation in the LA Basin in the face of various environmental regulations for the CEC.]

I was on the City of Davis Community Choice Energy Advisory Committee, and I am testifying on behalf of the California CCAs on the setting of the PCIA in several dockets. I have a Ph.D. from Berkeley’s ARE program and have worked on energy, environmental and water issues for about 30 years.

 

 

 

 

Make “Sustainable Food” the Economic Engine of Downtown Davis

 

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Many communities around the region, such as Sacramento and Woodland, have jumped on the “farm to fork” bandwagon to promote their relationships with agriculture. Davis can distinguish itself from the crowd by taking this a step further to promote itself as the center of “sustainable food.” In doing this, Davis can develop placemaking that is the key to economic development and vitality.

Davis is home to one of the top-rated food production research universities in the world in UC Davis. The City of Davis should leverage this position and strengthen its relationship to reinvigorate the downtown. The City has an opportunity as part of its Downtown Davis or Core Area Specific Plan to define a vision to achieve that goal.

Sustainable food minimizes damages to the planet in its cultivation, production, preparation, consumption and disposal. It is largely plant-based because this is the most direct way to deliver calories and protein to our diets. Animal production has much higher waste products, resource consumption, greenhouse gas emissions, and tainted food per calorie or gram of protein. For example, based on U.S. Department of Agriculture statistics, beef production emits four times as much greenhouse gases (GHGs) per calorie than soybeans or wheat and twice as much GHGs per gram of protein. Given California’s goal to be a “net carbon zero” emitter by 2045, the state will need to take a wide range of steps to cut emissions across the board, including in food production and consumption. Sustainable food is also more ethically consistent and healthful than our current food production and consumption patterns.

Sustainable food has been in the press frequently of late, with numerous stories in the Bay Area media. San Francisco has become the venture capital center of the world—especially for sustainable food–but real estate is becoming too expensive there to allow an industry that focuses on physical products sufficient space. Davis is close enough to that center for easy communication, but still has comparatively inexpensive land.

Creating a sustainable food ecology in Davis would have five aspects:

  1. Supporting innovation in sustainable food production and distribution
  2. Providing sustainable infrastructure to support companies that are innovating
  3. Serving and delivering sustainable food locally
  4. Preparing food that is consumed locally in a sustainable manner
  5. Attracting sustainable food-oriented tourism

The City can focus development of a sustainable food industry hub in the “Flex District” proposed for the G Street Corridor in the Downtown Plan. This area could house a wider range of facilities, such as test labs, within easy access distance of the UCD campus and the Capitol Corridor train to the Bay Area. Larger research facilities can be housed in other parts of the City where larger, industrial facilities are more appropriate.

Part of the attraction to companies locating here could be a sustainable infrastructure configuration starting in this district, with a district energy network and electric microgrid supporting fully electrified space conditioning and water heating systems. The other sustainability attributes identified in the Downtown Davis Plan should be incorporated and highlighted.

We can also encourage existing restaurants to serve more sustainable food on their menus, and attract new restaurants to cater to the new sustainable food businesses and their employees. The investors and workers at these companies are much more likely to follow their ethical beliefs in their consumption choices. The City could provide incentives through reduced fees to existing businesses, and evaluate how to speed the start up of new businesses.

As part of establishing a sustainable environment, the City should facilitate switching restaurants to more sustainable preparation practices. This includes switching from natural gas to induction cooktops and convection ovens, district water heating and space conditioning, and better management of waste. (Yes, we may need to recruit chefs for this new challenge.)

Finally, Davis can become a sustainable food destination. Less than 20% of our downtown visitors are from out of town according to analysis by consultants to City working on the Downtown Davis Plan. Given our location on the Capitol Corridor train route and Interstate 80, the community has much room for growth in tourism to boost our economy beyond UCD students’ parents visiting in September and June.

Davis already has a core attraction in its world-famous Farmers’ Market. With the addition of plant-based oriented restaurants and closer integration with the Mondavi Center entertainment area, a visitor could easily spend a whole day in Davis with a quick trip on the train from the Bay Area. Implementing this vision just needs closer coordination with UCD to bring events to Mondavi and the new Shrem Art Museum on Saturdays and setting up an electric bus shuttle between there and downtown.

UCD’s Robert Mondavi Institute for Wine and Food Sciences provides an example of how local development can be both sustainable and invigorating. That locale now has a microgrid that relies on renewable power. Both UCD and the City could benefit from a closer relationship centered around sustainable food in several dimensions.

Implementing all of this vision requires going beyond the form-based zoning codes that will come out of the Core Area Specific Plan. The City needs a comprehensive economic development plan, direction and resources for its economic development staff, and a willingness to focus on removing the barriers to bringing and supporting these businesses in Davis.

(with Anya McCann, COOL Cuisine)

Dunning gets it wrong again on VCE

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Valley Clean Energy Alliance (VCE) was in the Davis opinion columns this weekend again. First, Bob Dunning wrote another column in the Davis Enterprise that mischaracterizes the switch to VCE from PG&E as “mandated” and implies that local government didn’t trust Davis citizens to make the right choice. Then, David Greenwald wrote a column in the Davis Vanguard on how Dunning had ignored the authorization of the development and formation of VCE and is late to the game.

In both cases, the distinction between the choice to form VCE made by city councils and the Board of Supervisors after substantial study  is not distinguished from the choice that electricity ratepayers now have as to which entity will serve them. Previously, Yolo County ratepapers had no choice as to who should serve them–it took the formation of VCE to create that choice. If Dunning has a problem with that even offering that choice in the first place, then that’s a much more fundamental problem. But he is not being so transparent in his opposition, with is either disingenuous or ignorant.

I wrote the following email to Bob Dunning (I had an earlier letter to the editor already published in the Enterprise, that I also posted on this blog and the Davis Vanguard.)

You complain that somehow you’ve been “mandated” to sign up with Valley Clean Energy Authority. Yet you fail to ask the question “why was I mandated to sign up with PG&E all of those years?” Why does PG&E get a free pass from your scrutiny?

Instead now, you actually have a choice. We trust that you will make the right choice, whereas before you had NO choice. And you are not “mandated” to join VCE. You can act to switch to PG&E if you so choose. What has changed is the starting point of your choice. The default is no longer PG&E—it’s VCE. There’s nothing wrong with changing the default choice, but we have to start with a default since everyone wants to continue to receive electricity. (The other option is like they did with long distance service in the late 1980s with random assignment as the starting point, but that seems too much bother.)

 Send me your answers in your next column.

As to the Vanguard, I posted:

I think your column misses the fundamental point–contrary to everything that Dunning writes, we DO have a choice–it’s just that the starting point (default) isn’t what he wants. He prefers that the big corporations get the favored pole position.

 

One CEQA reform

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Yet another housing development in Davis is being threatened with a lawsuit under CEQA. Almost every project in town has been sued by a small cadre of citizens, with Susan Rainier the most recent stalking horse. This group was first encouraged by a suit in the 1990s that was settled for more than $100,000 that went to two individuals. (Part of those funds went to start the “Flatlander.”) That pattern has been the modus operandi ever since.

The problem is that these individuals and organizations have rarely been meaningful participants in the planning and permitting process for these projects. A valuable CEQA reform would be to require that any litigant to participate in a meaningful way in the preparation of the EIR, and that the litigant include any document or discussion in the suit that is filed. The intent of litigation in CEQA was to act on a check on failing to address any concerns raised during the deliberative process–let’s make that the case.

The legitimate environmental concerns are to be addressed during the deliberative process. The potential litigants need to develop a record during the deliberative process that fully raises their concerns. A suit should be limited to the issues raised during that process, and the required evidence clearly specified during the process. The litigants can then more fully develop counter evidence in a suit if that is the final outcome.

Bob Dunning gets choice on VCEA wrong

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Electricity customers in Davis and Yolo County are in the midst of choosing between the current incumbent electricity utility Pacific Gas & Electric (PG&E) and the new community choice aggregator (CCA) Valley Clean Energy Alliance (VCE). VCE is a joint powers authority (JPA) of the governments of the Yolo County, and the Cities of Davis and Woodland. (The Cities of Winters and West Sacramento have expressed interest in joining VCE as well.) By state law, customers are initially defaulted to the CCA at the outset before being given multiple chances over a six month period to choose to stay with the incumbent investor-owned utility–PG&E in this case.

Bob Dunning in his Davis Enterprise column August 8 confuses a lack of choice with just changing the starting point of the choice. Regardless of whether VCE or PG&E is the default provider, local customers still have exactly the same choice. But by having VCE start as the default provider, we level the playing field with the long-time giant monopoly utility, PG&E. (And customers can return to PG&E after 12 months if they are dissatisfied.) Why should we continue to give the big guy a continued advantage at the outset?

PG&E has all sorts of shareholder money to spend on improving its image and retaining customers. The utility’s biggest problem is that it is spending an additional 3.3 cents per kilowatt-hour to mismanage risk in its portfolio based on calculations I made in the power cost indifference adjustment (PCIA) rulemaking proceedings. Why stay with a company that has such a poor management record?