Politics makes strange bedfellows

Director James Hanks and former Director Erik Ortega joined together in Wednesday’s Imperial Valley Press to “clear the record” and to “[set] the record straight” in response to my opposition to an unprecedented $159 million energy contract. Both doubled down on arguments that do not comport with the inconvenient truths of the eye-popping energy contract to date or its five-year, exit-free extension that will spike local power bills.

While no formal rate increases were approved last week, the massive added costs from the contract can only be recouped by spiking parts of our summer power bills by over 25 percent in the next five years amounting to extra charges to an average family of $15 a month. Hardly reassuring.

The directors also argue that IID received the most favorable agreement possible, and further, that the power from the contract is low cost, green and reliable. However, IID received numerous offers for power at less than half the cost of what Desert View Power offered at an astounding $111 MWh – double prevailing costs.

The plant is also perhaps one of the least green renewable energy sources available. The plant burns agricultural waste producing a moderate amount of power, but also prodigious amounts of smog and soot impacting the air quality and health of eastern Coachella Valley residents.

The supposed reliability benefits touted to justify the grossly inflated costs of the contract have not been borne out when the plant has been reduced to half capacity during peak summer hours and months forcing IID to scramble to find and pay for replacement power on the spot at skyrocketing costs. That is why I made a motion insisting that IID ratepayers be adequately repaid for replacement power if and when the plant fails to deliver for customers over the next five summers. That motion was rejected.

The core argument both directors employ is that the fear of a fluctuating market justifies buying sizable amounts of power with no flexibility for a half-decade at inflated costs. In all candor, this troubled reasoning is what got IID into major trouble in the gas hedging fiasco fifteen years ago. The fear of then rising natural gas market prices led the district to overreact and purchase enormous amounts of gas at inflated fixed prices bound up in longterm contracts. The deal went sour when the natural gas priced plummeted and the fixed prices IID was locked into became painfully expensive in comparison.

This fear of a modern hedging scandal that would pass on massive costs to ratepayers is why I made a motion to counter the Desert View Power contract with provisions to allow IID the flexibility to terminate or continue the agreement after two years. That motion failed in favor of the action to lock IID into a $159 million five-year contract with no way out. Those same concerns about preventing another hedging scandal are also why the IID has professional teams on staff whose sole job is to crunch numbers, weigh and balance risk and cost.

IID expert staff at every level and every step of the way made clear that they did not recommend the Desert View Power contract and that better options for greater reliability and lower costs were available. The ratepayer-led Energy Consumers Advisory Committee recommended that the board negotiate for better terms. Both recommendations were ignored.

If the greatest factor in awarding a $159 million contract to a private company – despite best available professional and ratepayer recommendations to the contrary – was purely about securing reliable power for summer months, such a scheme is absurd on its face in that the contract commits IID to take power from the plant for extraordinary costs all 12 months of the year for five years when the district only requires an additional small amount for four summer months in the next one to two years.

For the eight non-summer months of the year, IID will be forced to unload surplus power from the plant onto the market at often negative prices. To be clear, IID will literally be forced to pay other utilities to take large amounts of surplus power from Desert View Power that our customers do not need and will have paid double-cost to buy.

Director Hanks opined that making difficult decisions is not popular. I would argue that it isn’t always popular to make the right decision, but one gets the benefit of sleeping soundly at night. If my iPhone’s sleep quality tracking app is any indicator, the night of my dissenting “no” vote on the unprecedented special contract to hike energy rates for half a decade was one of the best nights of sleep I’ve had in months.