Braving the Maze at State Leg Summit
I shouted “Hooray!” as I finally emerged from the elevator in front of Kip Lipper’s office in the California State Capitol. I learned the hard way that Kip’s office is in the older “historic” section of the Capitol building, and requires entry using a different elevator and set of stairs than the newer “Annex.” Suffice it to say, the secrets of the Capitol building began to reveal themselves to me on the afternoon of Tuesday, March 13th.
The 2018 State Legislative Summit was a window into the Capitol lifestyle that so many of my friends and colleagues live and breathe, but one that has remained mostly unknown to me. Organized by the Sacramento Metro Chamber of Commerce, ‘SLS’ (as it is known) is a day of meetings with the Sacramento region’s state-level elected representatives, staff, and consultants about policy issues that matter to our region.
I served on the Air Quality team this year, advocating for vital investments in clean air, transportation infrastructure, watershed protection, and more, alongside leaders from Valley Vision, the Sacramento Metropolitan Air Quality Management District, SMUD, Union Pacific Railroad, and other members of the Cleaner Air Partnership.
The day kicked off with a brief program focused on the statewide housing crisis with a number of powerhouse speakers. Eleni Kounalakis, candidate for Lieutenant Governor and former Valley Vision board member, spoke concisely about issues including affordable housing finance and rent control. She challenged many in the room to think differently about solutions to the housing crisis, but did it in a way that was unifying at the end of the day. University of California President Janet Napolitano talked about the power of the UC system to shape the state narrative around housing, and brought up the important issues of workforce development and the serious lack of “workforce housing.” Jeff Michael with the University of the Pacific shared some excellent insights on the new federal tax bill and how it could affect our region’s housing market, as well as the possibility of redevelopment funds coming back to California under a new Governor. Assemblymember Jim Cooper facilitated a rockstar panel as well – it really was a fantastic program!
Lunch was followed by the real meat of the event – select appointments with a bipartisan group of our region’s elected leadership in the Capitol building. Setting aside Kip Lipper’s office in the older part of “The Building,” the rest of the appointments (as well as the restrooms!) were much easier to find. By the way, I’ll never get used to calling it, “The Building.”
Our conversations at SLS went incredibly well – perhaps unsurprisingly, everyone cares about air quality! Our team listened as much as we spoke – gleaning knowledge from those in the room, following up about relevant issues or initiatives, and taking copious notes about general (but critical!) insights about the processes that guide decision-making in the Capitol.
Huge congratulations to Anna Ballard of Intel, who did an excellent job as 2018 SLS Program Chair, and the whole team at the Metro Chamber for making this year’s event possible. I know how much of a team effort that was – thank you all! The State Capitol building will always be a maze to me, but these organizers of State Legislative Summit made it a truly a-MAZE-ing experience. I’m already looking forward to SLS 2019! My homework until then: get to know that “historic” side of the Capitol like the back of my hand. Oh wait, I’ve never noticed that birthmark before…
Adrian Rehn is a Valley Vision Project Manager overseeing the Cleaner Air Partnership and Valley Vision’s online communications.
Why Our Region Must Learn from Silicon Valley
Silicon Valley is it’s own world. As much an idea as a place, it is our planet’s single most important tech innovation center. A place that contains companies with more cash reserves than whole countries; where cutely named firms that didn’t exist a few years ago are toppling whole industries. If you want to find the center for global business disruption, it is here, just 100 miles away from us. Yet more profound, Silicon Valley is also the place that, enabled by technology, is also disrupting cherished social contracts we have held between us for the past 300 years, and causing everyone to rethink them. Between employee and employer. Between student and teacher. Between residents and their government.
So when the annual “State of the Valley” conference comes each February, hosted by Joint Venture Silicon Valley, a Valley Vision-like organization led by my good friend Russ Hancock, I make a point to attend. This is where I get a heavy dose of what’s coming – the future we want, and things with foresight we might avoid.
Over 1,000 attendees from business, government, education, nonprofits, and neighborhood groups sat at attention to hear the latest update of the Silicon Valley Index – a wide-ranging set of measures that look at the health of Silicon Valley from all angles. It’s similar to checking your vital signs with your doctor each year, only it’s for a whole community.
The Bay Area added 107,000 new jobs since last year; 47,000 in Silicon Valley. The unemployment rate is now 2.3%, a rate never seen in the 20-year history that Joint Venture has issued reports; effectively full employment. Twenty-five percent of the Silicon Valley workforce is composed of tech company employers, but Russ acknowledged that business categories are blurring, making counts like these unreliable. His example? Uber is officially classified as a transportation company, not a tech company.
In the past 12 months Apple and Facebook alone account for half of all tech job growth. It seems we are going back to the future, quipped Russ, when firms like HP and Intel dominated the Valley in the 70s and 80s.
As for life in Silicon Valley, a person’s average annual earnings (all forms of compensation) is now $130,000. That’s double the national average. Same for the median household income. But with this stratospheric growth and wealth comes huge challenges.
Silicon Valley has the nation’s highest housing prices. Five of the nation’s top 10 housing re-sale markets are in the Valley. With the outlay required for just an average down payment, a family could buy an entire house in one of the square states, Russ said. Silicon Valley cities permitted just 12,000 new housing units, yet the area added nearly 4x the jobs in the same period. Sadly, just 287 of those 12,000 new units are affordable to median income residents there. Most are high-end homes.
Mobility is the Valley’s other major challenge. Daily traffic congestion continues to rise – it now takes the average commuter 58 minutes to get to work every day, one-way. He explained that 117,000 people per day leave San Francisco for work in Silicon Valley, and 120,000 people leave Silicon Valley to work each day in San Francisco, crossing paths on deadlocked streets and highways. Transit ridership is in decline but – in a bit of good news – CalTrain daily ridership has risen steadily each year.
This conference was not just a window into an advanced economy with all its societal opportunities and problems that we can learn from, but a message from a near neighbor whose forces directly affect us. There’s evidence that our home and rental markets are feeling the effects of the Bay Area’s troubles. Yet data also shows that our high quality of life, energetic urban spaces, desirable communities, and amazing recreation and open spaces are recruiting growth, especially from young professionals.
What does this mean for us?
Valley Vision is holding meetings with experts and bringing together business, government, and community leaders to grapple with these issues. An example: this week the Valley Vision board met with the leader from the Sacramento Area Council of Governments, James Corless, and his team, together with Barry Broome from the Greater Sacramento Economic Council, Darrell Teat from the Sacramento Metro Chamber, and Pat Fong Kushida from the Sacramento Asian Chamber. The 3-hour discussion centered on the Blueprint for Transportation and Land Use and its agreements about growth, the upcoming $35 billion Metropolitan Transportation Plan, our region’s competitive growth strategy, and our connections to the Bay Area.
These discussions are being informed by data and evidence. On behalf of the region, Valley Vision recently hired the Brookings Institute, a global research group based in Washington, DC, to conduct an “economic stress test” on our region to outline our competitive strengths and risks, both short and long-term. GSEC, Valley Vision, the chambers, SACOG, and other workforce and community groups are supporting this shared effort, and banding together to use these findings to inform action.
I love the quote from Robert Kiyosaki that “your future is created by what you do today, not tomorrow.” It’s a truth we should all live by in this profoundly disruptive age, on full display at the State of the Valley this year. This is also why Valley Vision exists – to help us plan and act to build the future we want. We hope you join us.
To collaborate or stay up-to-date with Valley Vision’s work, please subscribe to Valley Vision’s newsletters or contact us.
Bill Mueller is Chief Executive of Valley Vision.
Sacramento Takes Next Step On Solar
Sacramento has taken a significant leap forward in establishing itself not only as a driving force in California’s commitment to reduction of greenhouse gas emissions, but also in highlighting Sacramento’s capability and true potential behind being a 21st century economic hub.
On Thursday, December 14th, the Sacramento International Airport unveiled its Solar Farm, which lies over two solar array fields. The environmental and economic implications for Sacramento following the solar farm are monumental. Built on land that was previously underutilized, the Solar Farm, will now be responsible for providing about one third of the electricity needs of the Sacramento International Airport and equate to an average annual cost savings of $850,000 over the next 25 years. This solar facility is now the largest on any airport in California and one of the largest airport-based solar facilities in the entire U.S. The message that seeps through to employers, employees, businesses and residents is one of Sacramento’s dedication to sustainability, and above all, commitment to a ‘community of livable quality.’
The newly constructed solar farm is the fruition of a joint partnership between Borrego Solar Systems Inc. and NRG Energy Inc. Borrego provided the capital infrastructure, while NRG provided the financial support and will continue to own and operate the facility. Under a Power Purchase Agreement, NRG will sell electricity to the Sacramento International Airport at below-market rates—a mutually beneficial agreement for both parties. The infrastructure financed for the solar farm by NRG came with no up-front costs to the Airport of Sacramento County. Instead, NRG will be reimbursed over the 25 year period through the Power Purchase Agreement.
A particularly important benefit of this solar farm is that solar electricity is a renewable source of energy and does not contribute to greenhouse gas emissions. The annual environmental benefit generated by the solar facility is quantified as having a carbon reduction equivalent to that of removing more than 2,300 cars from the road, not consuming 25,000 barrels of oil, or not burning 11,500,000 pounds of coal. Using more than 23,000 solar panels, all of which are mounted on tracking equipment that follow the suns path over the course of the day, ensures ultimate efficiency and productivity.
Discussing these remarkable attributes at the press conference were John Wheat, Jackie Pitera, Kevin Prince, David Tamayo, Supervisor Don Nottoli, Senator Richard Pan and Assemblymember Kevin McCarty. A common theme stressed among these officials was the important role the solar farm plays in asserting and depicting Sacramento’s commitment to its communities. These leaders explained the importance behind a city’s commitment to community health by describing how at the heart of economic growth and prosperity lies health at the community level. In order to thrive economically, communities and the residents must be healthy. Seeing this solar facility project through is a step in the right direction—as Assemblymember McCarty stressed, “pushing hard to make California clean only leads to a multiplier effect”, and the implications for community health behind the ‘multiplier effects’ are critical.
Valley Vision manages the Cleaner Air Partnership, which helped the Sacramento region attain the federal particulate matter standard (PM 2.5), experiencing a 66% reduction in smog-forming emissions and a 63% reduction in smog-forming reactive organic gasses. This solar farm will help further reduce regional emissions. It is great to see progress being made by other entities and it is exciting to see what the future holds for environmental health improvements.
Subscribe to Valley Vision’s Cleaner Air Partnership newsletter to keep up with our region’s efforts to ensure clean and livable communities!
Alejandra Gallegos was a Valley Vision Project Associate working on the Cleaner Air Partnership and broadband initiatives.
Seven Questions with SMUD CEO Arlen Orchard
The Sacramento Municipal Utility District (SMUD) has been Sacramento County’s publicly owned, not-for-profit electric service since 1946. We recently sat down with Valley Vision board member Arlen Orchard, the CEO and General Manager of SMUD, to talk Cap-and-Trade, cannabis legalization, and cultivating a clean and sustainable economy in the Sacramento region.
1. Why is the extension of the Cap-and-Trade program important to SMUD?
SMUD has been committed to environmental stewardship for many years and has invested significantly to reduce greenhouse emissions for its customers and California. The extension of the Cap-and-Trade program over the next decade is the cornerstone of reducing greenhouse gas emissions in California and allows California to continue to play a leading role in addressing climate change. The extension includes continued allocation of allowances to utilities, a known and stable market structure, and important allowance price control mechanisms that will collectively provide a reasonable cost approach to deeper greenhouse reductions while providing the State with needed funds for greenhouse reduction investments. The extension of Cap-and-Trade program will help SMUD provide clean, reliable power at affordable prices and support our goals of electrifying transportation while significantly reducing greenhouse gas emissions in our region and throughout the state.
SMUD sees a surplus of Cap-and-Trade allowances at times, particularly during high hydro years, and has sold those allowances in quarterly auctions. The revenue helped fund several greenhouse-gas reducing projects in SMUD’s service area to benefit SMUD’s customers, including disadvantaged communities and customers. For example, SMUD funded three programs that delivered deep energy efficiency retrofits to low-income customers; a program to train high school students in underserved communities in energy audit techniques, leading to energy efficiency retrofits at the students’ seven schools and potential career paths for the students; and a program to fund and demonstrate deep energy efficiency retrofits at local non-profits and small businesses.
2. Washington State saw energy use increase by an unanticipated 20% rate after legalizing cannabis. What is SMUD doing to prepare for the high energy demands and other aspects of the emergent cannabis industry?
SMUD is taking a multi-pronged approach to serving new indoor cultivation loads. SMUD is working with these new customers to understand their facilities and loads while providing assistance with energy efficiency programs, like lighting and HVAC, to reduce the load as much as feasible. SMUD is also planning capacity additions to meet the new loads quickly and evaluating alternative ways of providing service to the customer as reliably and cost effectively as possible when standard distribution service may be costly or delay new service. SMUD is reaching out to various business partners to encourage new indoor cultivation in areas that meet their permitting requirements but also have utility system capacity available to serve this new load. This proactive approach ensures we can meet the needs of this growing industry efficiently and cost effectively.
3. Why is broadband deployment important to meeting greenhouse gas reduction goals?
While SMUD does not provide broadband or communication services to our customers, we recognize the important role that broadband plays in supporting economic development, access to information, and opportunity to disadvantaged communities. Along with ensuring the sustainable energy practices and investments that support disadvantaged communities, access to broadband can play an important role in creating sustainable communities. Specific to our business, widespread deployment of broadband allows SMUD to collect real-time data on customer behavior and energy usage, which can be used to design programs targeted to achieve various objectives. This includes design of programs and rebates that help reduce overall customer usage, especially during peak periods when higher pollution generating resources are needed to help meet customer loads.
4. Valley Vision’s Green Communities project has helped San Joaquin Valley households save over 13 million kilowatt hours. What opportunities do businesses and nonprofits have to conserve energy in their communities?
SMUD spends over $35 million a year and offers a comprehensive set of energy efficiency solutions to our business and non-profit customers. These include offerings addressing lighting, HVAC, refrigeration, data centers, and custom energy efficiency solutions. We offer convenient direct install services as well as financing that can make conserving energy easy for our customers. We also partner with our customers to test innovative new technologies that can help create savings in the future. Recent additions to our customer offerings focus on the use of efficient heat pump technologies to reduce natural gas use for heating and water heating and thereby help the state achieve its carbon reduction goals. The online enhancements we’ve added to smud.org include bill alerts; “My Energy Tools” for residential and business customers that help them save energy; “My Account” charts that show customers how their usage compares to previous months and years; expanded payment options; an online rebate center; and other easy-to-use tools that give customers more choices and options regarding their energy use. These options have been very well received. SMUD also redesigned its low-income assistance rate to provide discounts to the customers who need it the most.
5. How will SMUD’s agreement to help Japanese power companies with technology adoption benefit customers in Sacramento County?
SMUD’s new partnership provides several direct and indirect benefits to our customers. The continuing deployment of rooftop photovoltaic (PV) and successful energy efficiency programs has resulted in flat to negative load growth from SMUD. Yet, costs to serve customers with services, and operate and maintain distribution, transmission and generation facilities, continue to rise predictably. Revenue diversification will allow SMUD to fund new investments in grid modernization and new technologies to benefit our customers without asking our customers to foot the entire cost. Indirectly, SMUD is gaining valuable global knowledge about emerging technologies in the Smart Grid arena that NEC and Japanese utilities are deploying to meet their needs – knowledge that will help SMUD shape the products, services and options to our customers in the future. The emerging technologies include better utility asset management and operational tools to reduce costs and improve reliability of electric service, as well as customer sited technologies such as storage and electric vehicles to name a few. Additionally, as Japan continues its deregulation of its electricity system, SMUD gets to glean valuable information about how this may affect SMUD customers should California consider deregulation of retail energy again in California.
6. Taking into account the devastation caused by tropical storm Harvey, have lessons learned from this disaster caused SMUD to modify its business resiliency plans?
The impacts from tropical storm Harvey re-emphasize the significance of our maintenance, asset replacement and grid modernization strategies in ensuring a safe and resilient grid. Our journey towards a modern and more resilient grid began in 2009 with the SmartSacramento® project. With the assistance of a $127.5 million Smart Grid Infrastructure Grant from the U.S. Department of Energy, SMUD invested a total of $308 million in our SmartSacramento® project. SmartSacramento’s scope ranged from the installation of 617,000 smart meters and distribution automation systems to a digital operations wall map and an improved outage management system. These investments equip our operations staff with tools to be able to quickly determine which customers have lost service, allow them to remotely operate equipment to quickly isolate areas affected by outages, and inform restoration strategies.
Since the completion of SmartSacramento®, we’re continuing to invest in the deployment of additional line automation switches and retrofitting existing distribution substations with remote data acquisition and control functionalities. These functionalities provide our distribution operators visibility at more granular levels to keep outages times low, protect equipment and maintain the grid without compromising reliability. These projects, as well as implementation of an Advanced Distribution Management System and upgrade of our communications network, round out the investments SMUD is making to ensure that we continue on the path to a modern and more resilient grid.
7. What is one bold prediction for what the electric utility industry will look like in five years, and what does that mean for the Sacramento region?
The electric utility industry is undergoing tremendous change. The disruption of our traditional business model is driven by the 3Ds – digitization, decentralization, and decarbonization. In addition, increasingly sophisticated customer expectations are requiring utilities to focus on customer engagement and providing customers with more information, tools, and choices. Nowhere is this more evident than in the growth of distributed energy resources and services which are allowing customers to take control of their energy supply and cost. With a proliferation of distributed services, new devices and technologies promise to radically change energy use and control. The next 5 years will see an immense innovation which will redefine our customer relationships, force us to become more efficient and effective at what we do, and provide new opportunities to create new products and services that will benefit our customers and community. We will need to make major investments in new and developing technologies to provide the visibility into our distribution grid to allow us to optimize the proliferation of distributed energy resources to maximize the economic value of a decentralized grid for our customers, third party providers and SMUD. The utility of the future will be the glue that binds all of these new technologies and services together to ensure reliability, access to all segments of society, and the fair allocation of the economic benefits.
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Arlen Orchard is a Valley Vision board member and CEO and General Manager of the Sacramento Municipal Utility District (SMUD), Sacramento County’s publicly owned, not-for-profit electric service.