The status quo stinks for Davis. Public power is superior.
That was the conclusion of a 200-page report written by economist Charles Cicchetti, who was hired by the city of Davis to outline what the city might expect going forward with its own publicly owned electric utility.
The Davis City Council is using that analysis as a launching pad to explore the issue. So far, the city has spent $400,000 and last week authorized up to $600,000 more to be spent in increments over time by borrowing from a wastewater fund.
The report estimates it will cost $20 million for the city to acquire PG&E’s power infrastructure — a cost Cicchetti believes will have to be set by regulators or a court.
Davis Mayor Joe Krovoza said there are several options that could become available over time as a way for the city to buy the assets, including paying PG&E in installments if regulators will allow it. But despite the money spent so far, Krovoza said questions about purchasing PG&E’s assets are somewhat premature.
“All we’re doing now is methodically exploring the issue,” he said.
PG&E representatives have already told the City Council the investor-owned utility’s assets are not for sale, setting up a scenario where regulators or the court may have to determine the value if the city is forced down a path to condemn the facilities.
Meanwhile, Davis residents have been receiving mysterious phone surveys that cast doubt on the city’s plans. PG&E told KOVR 13 News it did not pay for the surveys.
Some residents took notes; local attorney Bernie Goldsmith was one. His Facebook posting about the survey was picked up by other users and spread around the web.
“They asked me how I felt about specific Davis politicians and specific unions,” he wrote. “Then, and I can’t believe this, they asked me how persuaded I felt by specific talking points against such a measure, laying out for me their entire anti-campaign.”
In the survey, Goldsmith said PG&E claimed the city would save only roughly $4 million. Cicchetti’s report said the city’s residents and businesses likely would save between $5 million and $9 million annually “compared to the $44 million PG&E currently charges them for less reliable service.”
This would be accomplished, theoretically, by being divorced from the infrastructure expenses imposed on PG&E by regulators following the deadly 2010 San Bruno pipeline explosion and not having the same administrative overhead and operating expenses.
Goldsmith said the phone survey also cast doubt on politicians’ ability to run a power company. The city has experience with utilities, however, such as the water company.
But other questions raised by PG&E might be sussed out over time, such as whether UC Davis would choose to get power from the city, and whether the city will need to perform environmental impact studies.
But Davis’ push for public power isn’t all about dollars and cents. It has environmentally green aspirations, trying to provide a greater mix of energy sources from renewable energy. Davis has a goal of being able to control the utility, something unimaginable under PG&E’s current structure.
“One of the most important advantages is that a POU (publicly owned utility) would not simply inherit PG&E’s tariffs and cost allocations, but would design its own tariffs and cost allocations,” Cicchetti’s report said. “It is particularly significant that the public goods charges PG&E currently collects would be transferred fully to a POU as a matter of right.”
What does that mean? Cicchetti thinks a Davis-run electric utility “could determine its own public purpose priorities, programs and funding levels.”
Not everyone is as convinced as Cicchetti seems to be.
Janet Thatcher, a retired electric utility consultant and Sacramento Municipal Utilities District distribution line manager, said Cicchetti’s analysis could be flawed because it’s from the perspective of an economist, not a utility operator. She said as much in an email to City Councilman Lucas Frerichs last Wednesday.
In another email to the Enterprise, Thatcher said she is concerned that the city is rushing into the public power space.
“My impression is that the mayor and council do see a public utility as a cash cow for the city,” she said. “If the utility is a city department, funds from the utility can be used in the general fund. I believe that the whole idea is being sold promising everything to everyone — lower electric costs, renewable energy, better reliability and a solution to the city’s financial woes.”
Privately, some city officials scoffed at the idea of using the publicly owned utility as a “cash cow.”
Krovoza focused on the city’s fact-finding mission.
“All we’re trying to do now is trying to assess whether this could be beneficial to Davis,” he said. “The city of Davis has not made a decision.”
Still, even with PG&E sending representatives to warn the council by saying its facilities are not for sale and sending a representative to tell the city’s Natural Resources Commission it was monitoring it, the mayor said the city has no bias against PG&E.
“We’re not antagonistic to PG&E,” he said. “If we learn there’s not a benefit to the community or much of a benefit to the community, we will change course.”
— Reach Dave Ryan at firstname.lastname@example.org or 530-747-8057. Follow him on Twitter at @davewritesnews