City Hall to Run on Solar Power

After nearly a year of considering the possibility, the city of Murrieta will take the leap to powering with the sun.

With a 3-0 vote--with Councilwoman Kelly Bennett absent and Mayor Randon Lane abstaining because he works in the public utilities sector--Murrieta will move ahead in a power purchase agreement with Temecula-based Commercial Solar Power, Inc.

At a cost of about $1.5 million, the company will install carports equipped with solar power at the adjacent The city will then pay for power generated by the panels, which is expected to save the city $500,000 over a 20-year contract period, according to a staff report.

Commercial Solar Power approached the city a year ago, offering free installation and equipment accompanied by escalating rates over 20 years. Year one, the city will pay .145 cents per kilowatt/hour. The rate will increase 3 percent each year, to .254 cents at the end of the agreement.

City staff sought similar contracts from two Murrieta-based companies, but neither could compete with what Commercial Solar Power was offering, according to Senior Management Analyst Brian Ambrose.

While council members admitted they are not able to foresee what electric rates will be in 20 years, they could not see them going down.

"This is a risk, but it is a calculated one," said Mayor Pro Tem Doug McAllister. "Sure, (Southern California) Edison’s prices could theoretically go down, but it is a fair bet that they won’t."

City Hall has averaged 60,000 kilowatt hours per month for the past two years, for an average bill of $8,500, according to Ambrose. The highest bill, in September 2010, was $14,951.

Calculated out, the initial solar rate the city will pay is equal to the average it has been charged by SCE.

"This is a hedge. We are hedging against SCE’s future potential rate increases," Ambrose said.

He said SCE has consistently requested rate increases from the California Public Utilities Commission.

"In July, SCE submitted a first-year rate increase of 5.8 percent for mid-level business/industrial accounts, with additional future increases."

Ambrose said staff negotiated the terms with Commercial Solar Power over a period of several months.

"They did walk away from table two to three times. If the 3-percent escalator was taken out, I would assume they would walk away from the table."

There were three prevalent solar financing options, all of which were reviewed by staff prior to recommending the power purchase agreement. One method, purchase, was to buy the panels with the responsibility of maintaining and insuring them. Another method, lease, was to pay a fixed amount to a company but not own the equipment and pay to insure them, Ambrose said, without the assurance of optimal output.

The third method, power purchase agreement, was the most advantageous, according to Ambrose. There was no up-front cost, and the company installs, maintains and insures the panels.

McAllister did express concern about the longevity of the agreement, questioning the scenario should the company by chance no longer exist in 10 years.

City Attorney Leslie Devaney said her office had reviewed the agreement "extensively" and worked with staff to get the "best deal."

"I can’t really imagine anything more that they could warrant to ensure that they will fulfill this obligation...it represents the best possible place you can be in," Devaney said.

McAllister conceded.

"The worst-case scenario is we are back with Edison and we have these really nice carports out here," he said.

Staff also brought up the benefits for the police department, as the cars will now have shade during the hot months.

Councilmen Alan Long and Rick Gibbs did not raise opposition to the deal.

"We are probably better off for making this long-term agreement," Gibbs said. "There are lots of caveats...but what we can pretty much agree on is SCE and SDG&E are essentially monopoly providers...This is a little bit of taking a stand.

"In three to five years, we will probably take a look and say 'my that was a good deal.'...For us in this one building, it is probably worth the risk."

The move to a solar-powered City Hall adds to a recent report compiled that ranked Murrieta as No.9 in California among cities whose homeowners are choosing solar power. The city is currently offering a rebate program for residential solar installations.

Elsewhere in Murrieta, the Murrieta Valley Unified School District last week at all its facilities.

City Manager Rick Dudley advised against waiting for technology to improve even more.

"This doesn’t satisfy our entire need; it is a good start, it satisfies our main energy need," Dudley said.

"There are a lot of opportunities ahead of us, this is just the one we are able to get a hold of now."