By Mary-Justine Lanyon
At the June 24 meeting of the Lake Arrowhead Community Services District board of directors, the board unanimously approved a contract with Staten Solar Corporation to install a solar photovoltaic system on property owned by LACSD in Hesperia.
Questions were raised by ratepayers about the project at that meeting and they persisted at the July 22 meeting.
At the June 24 meeting, General Manager Catherine Cerri noted that LACSD owns 350 acres in Hesperia. The project would be installed on about five of those acres. “It’s a perfect location for solar,” Cerri said. “We have been attempting to put solar there for about 10 years.”
LACSD had entered into an agreement with SunPower Corporation in 2015; however, due to litigation with the City of Hesperia, the project was delayed until 2024 when SunPower filed for bankruptcy. At that point, LACSD began evaluating other vendors.
The City of Hesperia brought two actions against LACSD to challenge the project. Both actions went to trial and then to the court of appeal; the courts found in favor of LACSD. They ruled that the City of Hesperia had waived its CEQA claims by not raising them on appeal; that the project location is within LACSD’s geographical boundaries; and that Hesperia had “unreasonably” delayed in bringing their claim about the geographical boundaries.
According to the information presented by LACSD, its energy costs currently exceed $900,000 a year and have increased an average of 12 percent a year over the last five years. LACSD stated that this project would reduce their energy costs by approximately 24 percent, depending on future increases in electricity costs.
In the June 24 packet, LACSD states that “the 30-year return on this project is estimated to be $5.3 million if Southern California Edison rates only increase by 3 percent per year but could be as much as $44 million at current escalation rates.” They added they may qualify for federal reimbursements from the Inflation Reduction Act but that is not guaranteed.
The contract cost for installation of the project is $3,687,000 with annual maintenance costs of $17,250, increasing 3 percent per year. Funding will come from the Wastewater Capital Improvement Fund, with $3,500,000 having been included in the 2025-2026 budget.
Public comment and questions
In public comment during the June 24 meeting, Garin Vartanian raised several questions: How much did LACSD prepay for equipment with SunPower? Do you plan to get that money back? Is LACSD listed as a creditor to the bankruptcy? What is the total amount LACSD spent on legal expenses? Is it over a half million? If so, is it over a million?
Cerri said because the item was on the agenda, they would defer the questions to that discussion.
At that time, she said the legal fees for both lawsuits were more than $500,000 but just under $1 million. Cerri also noted that they have in writing that SunPower was aware of LACSD’s ownership of the equipment.
Attorney Joseph Byrne added that “they are aware of what they have of ours.” He said he would look into it further with the Best Best & Krieger attorney who handled the case.
“The board determined the return on the project would make up for litigation costs,” Cerri said.
At that point, Vartanian wanted to ask additional questions but was told he had already used his three minutes. He reminded the board of that at the July 22 meeting when he reviewed amounts he said the district has already spent on equipment “that never materialized” and litigation fees.
According to Vartanian’s numbers, the district had signed a contract for $4.5 million for a total of $7 million for the project with an expected return of $5 million over the next 30 years.
“This is the ratepayers’ money you’re wasting,” he said. “Who should be held responsible for all these expenses? Where does the buck stop?” he asked President John Wurm.
“Those are fair questions to ask,” Wurm replied. “The project has gone on a long time and cost a lot more than we expected. Electricity has gone up a lot – the district uses a tremendous amount. We hope over the lifetime of the contract we will make back that money and be able to provide the district with the power we need.”
Ratepayer Ana Rojas distributed a paper to the directors, outlining the expenses and reiterating what Vartanian had said. “To me,” she said, “this is an irresponsible use of ratepayer money. It’s not your money to spend. You are the guardians of ratepayer money.”
Following the July 22 meeting, Cerri said that “estimating a return on a project requires a range of potential variables to calculate a range of potential returns.” Those who have raised questions about the project, she added, “are creating a worst-case scenario.”
Cerri noted that LACSD’s largest energy use is from the Grass Valley Wastewater Treatment Plant where they have seen increases in electricity costs from 9 to 22 percent a year over the last 11 years, depending on the time of use. Those who have spoken out against the solar project, Cerri said, “don’t believe electricity can increase more than 3 percent.”
She gave examples of electricity cost increases since 2014. The average increase for on-peak and mid-peak summer rates has been 22 percent. For off-peak summer, it was 12 percent. Winter mid-peak was also 22 percent with winter off-peak being 12 percent.
SCE historical rates can be viewed at www.sce.com/regulatory/tarrif-books/historical-rates.
“When we did our analysis,” Cerri said, “we used a range of potential rate increases, from 3 to 12 percent, which is conservative.”
0 Comments