Santa Rosa raises Sonoma Clean Power stakes; Sebastopol votes to join

KEVIN MCCALLUM AND GUY KOVNER
THE PRESS DEMOCRAT

The prospects for Santa Rosa joining the launch of Sonoma Clean Power dimmed Tuesday after the City Council strongly signaled it won't participate unless several changes to the agency's governing structure are met prior to a July 9 vote.

The move upped the ante in the high-stakes game of power politics that's been going on for weeks between Sonoma County and its largest city, which is considered a key to the program's long-term success.

"It is disappointing," said Cordell Stillman, deputy chief engineer for the Sonoma County Water Agency and the lead staff member on the proposal, after he left the council meeting. "The best way to influence the process is to be a part of it."

Meanwhile, Sebastopol's City Council voted 4-1 to join the agency late Tuesday night, with Councilman John Eder casting the lone no vote. The city joins Windsor, Cotati and unincorporated Sonoma County as inaugural members of the agency.

"We can give people options," Councilman Robert Jacob said just before the vote at 11 p.m. "Anybody who doesn't want Sonoma Clean Power can opt out."

Most Santa Rosa council members made it clear they couldn't support joining the fledgling public power agency until numerous changes are made to the language outlining how the joint powers authority would be structured, financed and operated.

Asked why Santa Rosa should be given greater consideration than other cities, Councilman Gary Wysocky responded, "because Santa Rosa actually had the resources to do the analysis."

The three-member council subcommittee, which has been meeting in private for weeks, outlined a litany of concerns it said need to be addressed before the city makes a final decision, not after.

In a memo to the full council, the subcommittee argued "this is when the City has the leverage to make effective changes or resolve its concerns."

The subcommittee stressed that Sonoma Clean Power, which seeks to offer a more environmentally friendly alternative to PG&E, could potentially become a startup government agency with $172 million in revenue.

"In light of the magnitude of such a business venture, the committee is concerned about the lack of detail and specifics of a business plan, including the long-term financing and operational plans," the committee wrote.

Given this lack of information, the committee said that it could not be certain that the authority would actually reduce greenhouse gases, lower rates or create local jobs.

Councilwoman Robin Swinth explained that an even bigger fear is that if the city did join and things started to "go south" for the agency, ratepayers might be saddled with soaring costs.

"Passing huge expenses onto the ratepayers is politically untenable," Swinth observed.

Faced with such a situation, the committee worries that Santa Rosa might be pressured to post bonds or otherwise take financial steps to prevent huge rate hikes.

"You will find a lot of political pressure to agree," in such a situation, predicted Michael Dean, general counsel to the Northern California Power Agency who was hired by the city as a legal consultant. "That's really where the rubber will hit the road."

Dean also expressed concern that the city could be hit with substantial "exit fees" if it decides to join the program but then changes its mind and wants to withdraw.

Councilwoman Julie Combs said she had been told such fees could be in the "tens of millions of dollars." Dean would say only that if that happened the costs "would have the potential to be very large."

Swinth said it was clear in the current draft of the joint powers agreement that the costs of withdrawing would be prohibitively high. "There is no backing out," Swinth said.

The committee also wants to see that the city would have as many seats as the county on the agency's board, given that Santa Rosa, which accounts for 34 percent of the power sold by PG&E in the county, accounts for approximately as much power consumption as the entire unincorporated county.

The committee also wanted to see changes to the joint powers agreement requiring unanimous votes to amend it, the exercise of eminent domain, and any instance when a participating city is required to pledge its assets.

"Those are not trivial matters," Swinth said.

Another concern expressed by the committee included strengthening ratepayer protections by requiring a two-thirds vote to remove one of the seven ratepayer advocates.

The committee also suggested that the city, which has nearly 800 individual accounts and a dozen different rates, be given more time to decide whether its own accounts should be switched to the authority, preventing the city from having to "opt out" until a later phase.

It is also concerned about ongoing costs to the city, which the City Manager Kathy Millison estimated at $188,000 per year in staff time to support the city's representative on the board and help provide analysis for key decisions.

Councilwoman Erin Carlstrom, who has expressed strong support for the program, said she preferred to join first and then use the city's influence on the board to get the changes it wants passed. But she seemed to be the only one willing to do so.

"It sounds like a majority of the council members would like to see some of these things addressed at this point," said Mayor Scott Bartley.

Woody Hastings, the renewable energy implementation manager with the Climate Protection Campaign, a power agency supporter, said the council was raising important issues that need to be resolved by the agency's board and committees.

But demanding those changes before a vote seemed to him the wrong approach. "Making it a conditional vote is a mistake," Hastings said.

It's not clear how Sonoma Clean Power will react. Geof Syphers, the consultant just hired as the agency's interim CEO, said he's still hopeful.

"I'm optimistic that the city will join. But we'll see," he said.

In an email to City Attorney Caroline Fowler after the agency's June 25 vote, Deputy County Counsel Steve Shupe called Santa Rosa's participation "extremely important" but said he didn't see any way to make additional changes to the joint powers agreement before July 9.

The idea of a conditional approval by the city "would not be sufficient" because many of the proposed changes are substantive and would need to be discussed among the other participants, Shupe said.

"I really tried to come up with an alternative, and will continue to, but either I'm not creative enough or the problem is intractable," Shupe wrote.

The council took no formal action Tuesday. It instructed its staff to draw up an ordinance with a list of conditions that could be voted on at the July 9 meeting. He alluded to the uncertainty about how the council's action would be received.

"We don't quite know what the reaction from others will be ... but we'll find out next week I suppose," he said.

In Sebastopol, Mayor Michael Kyes was designated as the city's representative to the board of the fledgling public power agency.

The city council peppered Syphers with questions much of the evening.

Councilwoman Sarah Gurney told Syphers that his sincere, straightforward manner was "building confidence for me," adding that she was inclined to vote to join the local power agency.

"For my constituents, I would like to provide the opportunity for choice," Gurney said.

Syphers confirmed City Manager Larry McLaughlin's statement that July 9 is the absolute deadline for cities to make up their mind.

On July 10, Syphers said, the fledgling agency would start filing papers with the California Public Utilities Commission and seek contracts with power suppliers.

Cities that decline to join this month would most likely not get a chance to sign up until January 2015, he said.

Eder said there was "a general level of unease" about the cost of power from the agency.

Syphers said the cost has been estimated "within a few percentage points" and that cities, whenever they were to join, would have to do so "on the basis of an estimated rate."

Responding to another question from Eder, he said that Sonoma Clean Power is "not contracting for any nuclear power in this round."

Should the agency fail, power suppliers would be entitled to claim only whatever money the agency had in its bank accounts, Syphers said.

Syphers told the Sebastopol council that the agency would have no authority to weigh in on PG&E's requirements for SmartMeters. PG&E will continue to handle transmission, billing, metering, customer service and grid repair for Sonoma Clean Power customers.

"I'm sorry; I can't help with that," he said.

Sebastopol has been a ground zero in the protest against SmartMeters, which wirelessly transmit data on customers' electricity usage. The council previously enacted an ordinance prohibiting installation of the devices, and PG&E said it would not abide by the city's measure.

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