The Sonoma County Board of Supervisors had their first reckoning Tuesday with the financial risks posed by their switch to green energy sources.
After a lengthy debate, the board ultimately approved power purchase and lease agreements for a proposed chicken manure-fueled electricity and gas plant near the county airport.
The project by the private partnership OHR BioStar on 5.4 acres of county land near a existing wastewater treatment plant was seen by a three-member board majority as a key way to move the county Water Agency closer to carbon-free power by 2015.
But two supervisors, David Rabbitt and Shirlee Zane, voiced strong concerns about the agency's predictions that the new electricity — drawn from a 1.4 megawatt fuel cell powered by methane produced from chicken waste — would end up costing more than the power bought on the wholesale market.
That higher cost, pegged at $330,000 in the first year, could result in a $1.45 million increase in the agency's energy bill over the 20-year agreement, according to the agency.
Only in the 16th year of the project would it equal the wholesale power rate and thereafter begin to be cheaper, the projections showed.
"It has to be a shorter period," said Rabbitt. "I can't agree to raise our power rates for 15 years until we start to see some savings."
Water agency officials called that timeline part of the tradeoff for a greener source of power.
They also said that they expect other related factors to produce a net gain for the county of $2.55 million over the 20-year period. Those factors are annual labor and operational savings of $80,000 from the project, the plant operators' yearly $120,000 lease payment and the benefit of a locked-in power rate.
If those projections don't hold and the savings don't materialize, the higher energy bill won't be passed along to ratepayers, a Water Agency official insisted Monday.
On Tuesday, Grant Davis, the Water Agency general manager, acknowledged the project was a "calculated risk."
"This is about leadership on renewable energy. I'm comfortable saying we're making a good bet," Davis said.
The project received unwavering support from supervisor Mike McGuire, who represents the airport area, and board Chairman Efren Carrillo, who called it the "epitome of what public-private partnerships ought to look like."
Zane ultimately backed off her concern that locking the county into a 20-year agreement could result in the water agency missing out on rate declines. She joined McGuire and Carrillo in support of the project.
Rabbitt cast the lone &‘no' vote. He added that the debate likely prefaced a larger discussion later this year about the risks underlying the county's possible move into the power business.
Supervisor Valerie Brown was absent from the meeting.
The $48 million project is to be financed through bonds sold by the California Municipal Finance Authority. It will supply about a quarter of the Water Agency's power needs and sell unused methane — about three-quarters of the total produced — to PG&E.
Construction is to begin in October.