Friday, April 25, 2014

City exploring publicly owned utility at cost of $1 million

From page A1 | January 30, 2014 | 4 Comments

It may cost the city a pretty penny to save you money on your electric bill.

At a time when the City Council is mulling whether to ask for more taxes to cover a $5.1 million structural deficit and pay for improvements, it plans to spend more than $1 million to pursue creation of a publicly owned utility for Davis.

The city’s general fund doesn’t have the cash, so it can’t pay that money without help. On Tuesday, the City Council authorized a loan of more than $600,000 from the wastewater fund to cover the cost. The cost will be paid incrementally, and Tuesday’s item was to wrap up the incremental costs into one promissory note. The city has spent more than $400,000 thus far to explore a publicly owned utility.

The motivation for a move away from PG&E isn’t purely financial. The city has strict greenhouse gas emission goals it believes will have better outcomes under a publicly owned utility. According to a Dec. 10 city staff report on the potential project, the city believes it will have local control, see better costs for ratepayers and realize a more diverse “energy portfolio” — in other words more renewable energy.

But to get to the point where the city can become a publicly owned utility, it has to have utility infrastructure, and for more than 100 years Pacific Gas & Electric Co. has maintained that infrastructure.

PG&E representatives met with city representatives last week, according to a Jan. 28 city staff report, following up on a vote the council made on Dec. 10 to explore a publicly owned utility for Davis.

“While PG&E expressed a desire for joint partnership to achieve results similar to the city’s desire goals … PG&E reiterated that their assets were not for sale,” the report reads. “Nevertheless, PG&E indicated a willingness to engage in further dialogue.”

In a public hearing on the issue Tuesday, Alisa Okelo-Odongo, manager for PG&E’s government relations division, repeated in public that the utility’s assets are not for sale.

Brandi Ehlers, a PG&E spokeswoman, said in an interview that the city’s estimates for the cost of PG&E assets, the cost of power and the cost to condemn the power lines would be far more than it realizes, although she did not mention a figure.

Similarly, the city staff report does not outline exact costs for the endeavor, which is part of the purpose of Tuesday’s approval to keep exploring.

Davis has been down this road before. In November 2006, Davis voters approved a move from PG&E to the Sacramento Municipal Utility District, but voters in Sacramento overwhelmingly rejected the annexation.

Mayor Joe Krovoza said Tuesday the city is not acting hastily with the vote to move forward because it is only exploring the issue.

Members of the public, including Kemble Pope, executive director of the Davis Chamber of Commerce, criticized the city for not making the process more well known, and for spending money it seemingly doesn’t have.

“The public is not educated on this,” he said. “Perhaps we are trying to put the frosting on the cake without the money to buy the eggs and flour to bake the cake.”

Krovoza countered later that the City Council is moving cautiously.

“In no way is this a quick decision of the Davis City Council,” he said. “Studies indicate so far that Davis could save 20 percent over the prices of PG&E.”

Councilman Brett Lee said he wants to hear from cities who have created publicly owned utilities before the council makes a decision.

Krovoza ordered city staff to create a dedicated web page on the issue, as it has done for other major projects.

— Reach Dave Ryan at or 530-747-8057. Follow him on Twitter at @davewritesnews 


Discussion | 4 comments

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  • ScottJanuary 31, 2014 - 10:29 am

    No one else finds this disturbing? The City Council wants to increase taxes because apparently there isn't enough money for serious things like road repairs and such but they feel compelled to spend over $1M to study the feasibility of a City owned PUC. Here's my quick assessment, if PG&E has already stated they aren't willing to sell their assets, how does the City plan to distribute power to anyone?

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  • mkJanuary 31, 2014 - 4:24 pm

    We find it hugely disturbing. This is the same city that refers us to PG&E when we report a streetlight that is out. It's a huge amount of money. Supposedly they already spent $400,000 since Dec. 10 - on what, it is not reported - and to whom? Now they want to spend an extra $600,000? What is the great pressing need behind this push? At Tuesday's meeting they said there was a big meeting December. Apparently the head of the Chamber of Commerce didn't know much about it, nor do many, many people in this town. The problem is, it is not the City's money per se; it is going to come out of our pockets, and at an alarming rate.

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  • Colorful ClayJanuary 31, 2014 - 5:32 pm

    This miss allocation of city funds is stunningly stupid.

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  • Jeff MarchJanuary 31, 2014 - 8:37 pm

    The Davis municipal government, which couldn't even run a bridal fair (failing dismally in two successive years due to lack of a promotional budget), and which miserably goofed up an attempt to operate the city's first cable TV franchise in the late '80s, now fancies itself operating a electrical power grid. City administrators have quietly peeled off $400k to "explore" the idea, and the City Council authorized borrowing another $600k to throw at the wall -- money it doesn't have because it has incurred a $5.1 million "structural deficit" -- a deceptive euphemism for spending more money than it has. Our civic leaders seem so enthralled with innovation that they forget whose money they're spending. Like a brine invasion of a freshwater creek, the city despoils and intrudes on private enterprise. Remember the Zipcar debacle? What's next? Will the city government open a discount bike shop to stimulate bicycle commuting? A restaurant to promote healthy eating? Subsidized insurance and tax preparation services? Ludicrous? Of course -- but no more so than the notion of expecting a tax-weary citizenry to support creation of a publicly owned utility. If anything, the city should create an inventory identifying which basic services a municipal government should perform, and which functions should be left to individual choice through the private sector. In the upcoming election, I will scrutinize the new City Council candidates to learn which have the most realistic grasp of fiscal responsibility and governmental propriety.

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