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Redding City Council candidates answer Question 5
We asked the eight Redding City Council candidates to answer one question a week for nine weeks until the Nov. 4 election. Answers appear word-for-word in the order in which they were received.
QUESTION 5
Very soon Redding Electric Utility will seek a new director.
What are your thoughts on REU’s internal controls,
oversight and public accountability,
and what criteria should be used to choose a new director?
Russell Hunt
Unfortunately, the current director has made us largely dependent on foreign natural gas to generate electricity. The most recent gas contract is shipping $600 million out of our area instead of keeping things locally. We need to make our own energy. The first step will be buying the powerhouse at Kilrac Lake near Whitmore rather than allowing it to be torn down. It generates enough electricity for 5,000 homes. Under the Healthy Forests Initiative, the Federal Government is encouraging the cleaning of the national forests of dead brush and wood. Most of it is being chipped and burned to produce electricity. We should do the same by converting one of the generators at the Redding Power Plant to burn wood chips.
Electric customers are subsidizing the general fund which is illegal. The City’s in lieu property tax on the utility adds $4,8 million to our bills. The REU has an investment fund of $140 million. The interest from those bonds, $4.2 million, is being given to cover the city’s deficit. Additionally, REU made a profit of $12 million last year. Yet the money was diverted to the Stillwater Business Park. If there were honesty in our city government, our electric bills would of been lowered by 20% because of these revenues. That’s why we need to put the REU under private management and employees will be paid market rates rather the inflated wages they are receiving.
Looking into the future, the REU, with other partners, needs to build the Tehama and Dutch Gulch Dams on Cottonwood Creek. These dams were approved by Congress in 1982. Powerhouses at these dams will lower our rates and encourage industry to locate here. Tourism will be greatly enhanced by these two new lakes as well.
With these factors in mind, a new director must eliminate the transfer of electric revenues to the general fund, put private management in place and generate our electricity locally to create jobs and lower our energy costs.
Ken Murray
Do the lights stay on and do we have a reasonable rate structure are the two basic issues for our electric utility. Redding Electric Utility can fairly be characterized as the most reliable provider of electric services in the State of California. During the brown-outs and black-outs across California in 2000 to 2003 the lights in Redding stayed on. That was not an accident, rather the result of careful long term planning. The rates REU customers pay are far lower than folks who live outside the Redding City limits and lower than most other municipal utilities. Some have suggested that we should “contract out” utility services. The City of Lodi owns it’s own electric utility, has very few employees and is only marginally reliable. Lodi’s rates are significantly higher than ours. Lodi contracts out it’s electric utility work. No thanks! Replacing our Electric Director will be very difficult. When I participated in the search for a new Director in 1995 (which resulted in the hiring of Mr. Feider) it was a tough search that was nationwide. I expect it will be equally hard to find the breadth of experience Mr. Feider has brought to Redding. We must not settle for someone just to fill the slot. Hopefully we can find a qualified person who will be in Redding for a number of years and do so without giving away the farm. I intend to actively participate in identifying the right man or woman for the job.
Dick Dickerson
The REU is one of the premier public utilities in all of California. The utility has a broad, diverse portfolio of energy sources, including hydro, natural gas, wind, bio fuels, and solar.
The Redding Electric Utility has produced affordable electric power for the people of Redding for many, many years. The utility is also able to sell power to the grid, which aids in keeping customer costs low.
This all indicates that the internal controls currently in place function very well.
In terms of public accountability, the utility informs the public on important issues on a monthly basis, via newsletters accompanying their monthly utility bills. The management staff and City Council members meet with business customers annually to discuss issues.
Oversight of the REU is the direct responsibility of the City Council. All policy issues, investments, contracts and other major decisions require the approval of the elected Council members.
The new Director will be a person who has the education, experience and skills necessary to achieve the principal goals of REU: Keep the power on and the prices low.
Gary Cadd
The position of Redding Electric Utility Director is exceptionally unique in that the utility business is extremely complex and replacing someone with the expansive knowledge that the former director, Jim Feider, exhibited will be a challenge. We need to ensure that the person entrusted with this job has superior knowledge of the utility operations nationally and regionally and has a good understanding of our municipal power agreements with our sister cities, Modesto and Santa Clara (MSR). In California, we are second only to Santa Clara for the lowest utility rates which shows the value of hiring competent staff that will manage this business with the best interests of our ratepayers in mind.
Although the City Manager is charged with hiring this person, I would hope that an individual currently serving under Mr. Feider’s guidance be considered. If that search proves unsuccessful, then the next best option would be to select someone who has a resume comparable to the current director. Further, the council needs to insist that our Redding Electric Utility increases its accountability to the ratepayers, preserves our competitive rates, and maintains its integrity as a city utility, rather than becoming a cash cow for the city’s general fund.
Jim McDilda
The City will have a very difficult time finding a suitable replacement for Jim Fieder. It is my opinion that REU is one of the finest assets this City has and I do not see any short falls in its operations. Jim Fieder has the highest respect from his coworkers and it shows in their level of professionalism and service to the people of Redding. Jim Fieder’s operating knowledge, level of experience, integrity make him an extremely valuable asset, in choosing the next director. I would be seeking his assistance in making that decision.
City council as a matter of service to the public should be reviewing the accountability policy presently in place. The capitol replacement reserves should be looked at closely and see if they adequately address the needs of the utility. The excessive reserves should be reduced and returned to the rate payers and not be used for low interest loans to the City. I have no knowledge of the inner workings of REU however I would be hard pressed to pass any rate increase when large sums of cash reserves are always available.
Missy McArthur
For some time now, there have been rumblings about possible improprieties at REU. Whether or not these are founded remains to be seen. However, once again the public starts to wonder, “What the heck’s going on?” As far as oversight of REU, I’d like to see all the departments do periodic presentations to the full City Council. I feel this would be an opportunity for City Council people to ask in-depth questions about the day-to-day runnings of various departments — including REU — that they might not know about. However, by no means do I recommend that the City Council start to micromanage. As far as hiring the new director, I would like to see the city manager and the City Council participate equally in this important decision.
Terry Oxley did not respond.
John Wood did not respond.
Previously:
QUESTION 1
QUESTION 2
QUESTION 3
QUESTION 4
1,013 views
With one exception, good and sound answers. It looks as if five of the candidates did their homework and understand what an asset it is to the city to have our own utility and that it is working great. Very insightful…
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The electric utility is not a “cash cow” for the general fund. In fact there are very strict laws preventing that from happening. The reserves exist for two reasons; to pay for scheduled system expansion with minimal borrowing and to stabilize rates so we don’t have perpetual rate increases as are common within the PG&E system.
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Mr. Murray, thank you for setting the record straight. I get a queasy feeling when people blurt out silly ramblings like that contained in one of the responses. Other people start spouting the same mistruth and pretty soon, it becomes part of the rumor mill and it’s very hard to tell what is reality and what is not. I’ve lived in PG&E territory and it ain’t a pretty sight to open that monthly bill.
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After reading the responses of the candidates, it is becoming very obvious who has done some of the research to be knowledgeable about the actual workings of the REU and who has simply accepted the “recommendations” of Mr. Feider and his staff and are willing to spend millions dollars based on them.
Mr. Hunt, your correct concerning the amount of money that REU staff intends to spend on natural gas over the next 12-18 months via the recent agreement with Gill Storage LLC. This “Take and Pay” arrangement is very similiar to the one that the REU staff convinced the Council into accepting from Constellation Energy in 2003 that included a $500,000.00 upfront cost arrangement. Unfortunately, when they called their contact with the company on several occasions to excercize the City’s “options” to purchase the natural gas for the Unit 5 gas turbine he was unable to be reached. This forced us to have to go out to the open market and purchase fuel that was much higher than our “paid for” reserves. When we curtailed this agreement it was my understanding that we also forfeited much of the $500,000.00 upfront money. I hope that we will be better protected in this contract?
Your idea of purchasing the Killarc-Cow Creek Hydroelectric project is interesting, but due to the enormous cost of updating the turbine-generator and the control systems to operate it makes it financially prohibitive. Since all of the analysis and data collection concerning the feasibility of installing photovoltaic / steam generating panels has already been by the operations staff at the Clear Creek project, why doesn’t the Council consider utilizing the 60+ acre site at Clear Creek to generate approx. 40 MW’s of environmentally friendly solar energy. We have the steam turbine / generator already in place and the sun shines approximately 325 days a year in Redding, plus the fact that according to the latest Power Mix(energy resources) in the Redding Connects we are utilizing 0% of solar to supply our demand.
Privatizing the Power Generation side of the REU is an excellent idea! It has been reported by the local press what the base salaries are of the supervisory, operations and maintenance staff at the Clear Creek project. When you start comparing their wages to power plant personnel in and around Shasta County, as well as nation wide average wages in these fields you can certainly make a case for privatization. I’m relatively sure that a Wheelabrator operator making $50,000.00 a year would gladly take a position as an REU operator who averages $75 - 85,000.00 a year, plus a lucrative CalPers retirement, for what is arguably the same job. When you add all of the costs of the personnel at the Clear Creek project, and amortize the future costs of what the ratepayers will be required to cover for their retirements(which would not be the case if privatization were utilized) it starts to make fiscal sense.
I for one believe Mr. Hunt has done his homework. Keep up the good work!
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Here is a fact that several City Council members, including Mr. Murray seem to have conveniently forgotten. During the timeframe of 2001-2003 the Federal Energy Regulatory Commission investigated, and found the City(REU) guilty of “gaming” the electrical transmission system and collosion with Enron power traders. The City of Redding, along with 25 other entities suspected of being a partner with Enron settled their cases. The city of Redding paid $6,300. The city of Glendale paid $25,000. The Modesto Irrigation District paid $60,000. These three entities all belong to TANC(Transmission Agency of Northern California) which our Mayor Stegall is a member of, and Modesto and Redding are partners in the MSR(Modesto,Santa Clara,Redding) Joint Venture Agreement that the City Council just ratified again in July 2008.(By the way, all of these entities also signed deals that specified no one did anything wrong. Nosirree, no wrongdoing here by any of the 25 parties. No fines either, just payments to the government in lieu of admitting any guilt. Additionally, several people that were intregal players in this issue have now retired from the City with no negative reprocussions?)
All of these illegal trading schemes(Fat Boy, Death Star, Red Congo etc.) that the City of Redding was found to be part of all required the use of our monies that we pay the REU. I’m not sure how the Council members view this kind of conduct, but I and many of the people that have spoken to me about these issues call this improper use of City funds. What’s worse is that a large group of individuals including the REU Director, several high level managers at the Clear Creek project, and the Risk Management Group all were aware of the activities and were directing subordinates to carry out these trades. Is this how we set an example to the young people of our community and to the citizens of Redding? We hope that the Council is more in tune to what is happening with the REU before choosing a new Director.
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