The City Council decided 4-1 to pull the plug on moving ahead with public power Tuesday night, rebuffing a staff recommendation to pay $85,000 to move further with an inquiry into establishing a public electric utility in Davis. A new council may take the issue up again this summer following the June 3 election.
Supporting council members said the move was motivated by discussions with local residents who believe the council’s previously spent $400,000 on studies and authorization of a further $600,000 — which could be spent only with each disbursement approved by the council — is a bad idea in a year when the city faces a $4.99 million deficit and is asking for a sales tax increase.
“In almost every conversation I have with people about the city, this issue of the (publicly owned utility) comes up,” said Councilman Lucas Frerichs.
“This is also the beauty of representative democracy,” City Councilwoman Rochelle Swanson said later. “…We have to be flexible.”
The benefits to creating a public utility are still fresh in the minds of all five council members Tuesday night, including a potential 20 percent savings for residents on their power bills and the city’s power bill — something that could save tens or hundreds of millions of dollars depending on how it’s calculated. Other benefits include local control over energy sources.
But city staff told the council they expect a fight with Pacific Gas & Electric Co. The investor-owned utility has repeatedly said its facilities are not for sale, and although that is no absolute impediment to the city being able to condemn PG&E facilities and buy them, it indicates a court and/or regulatory fight.
City utilities general manager Herb Niederberger said the process of setting up the utility could take three to five years and an estimated $1 million in legal expenses.
Interim City Manager Gene Rogers was able to establish a public utility for part of the city of Moreno Valley in Southern California when he was the city manager there.
While it was a wholly different circumstance and process, Rogers said Moreno Valley had to contend with an unfriendly ballot measure put up by Southern California Edison, an investor-owned utility there.
“It’s certainly a worthwhile endeavor when it’s completed,” he said of public power.
City Councilman Brett Lee introduced the motion to pull back on spending money on the public power inquiry.
He expressed frustration with community members who are asking the city to start a publicly owned utility, but are not stepping up to volunteer their services when the city is cash-strapped.
Lee also said the $600,000 enterprise fund cap is not “magic money” and it must be paid back to the wastewater fund from which it was borrowed.
The already-spent $400,000 also was borrowed from the city’s water and wastewater funds.
He said he supports the idea of a publicly owned utility, but he needs examples of cities like Davis who have gone through the process with investor-owned utilities, preferably with PG&E.
The city has tried unsuccessfully to get representatives from Winter Park, Florida, to explain their recent transition from investor-owned utility to publicly owned utility.
“The question before us is how do we move from investor-owned to publicly owned?” Lee asked, adding that the city could have an intern call up publicly owned utilities and get their experiences.
“Help us to the point we can get basic information,” he said.
“This is not intern work,” he said, adding that the city needs a report that is worth the paper it’s printed on.
But Lee found four votes on the council that sided with his eventual motion to table the issue until the new council convenes after the election — two seats on the council are up for grabs — not spend any money now and rescind the $600,000 authorization to borrow from the wastewater fund.
Mayor Joe Krovoza was the lone dissenting vote.
Plus, Lee’s motion called for him to round up volunteers to find out the information he wants about recently created public utilities, with an emphasis on California utilities.
— Reach Dave Ryan at [email protected] or 530-747-8057. Follow him on Twitter at @davewritesnews