To: Board of Directors, Sonoma County Water Agency
Department or Agency Name(s): Sonoma Water
Staff Name and Phone Number: Brad Sherwood, 707 547-1927, Dale Roberts, 707-547-1979
Vote Requirement: Majority
Supervisorial District(s): First
Title:
Title
Sonoma Valley Treatment Plant Solar System Rate Agreement
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Recommended Action:
Recommended action
Authorize the Sonoma County Water Agency's General Manager to execute a Rate Agreement with the Power and Water Resources Pooling Authority for the Sonoma Valley Treatment Plant Solar Repower Project for up to one megawatt of solar power, in a form substantially similar to that provided, following review and approval by County Counsel.
(First District)
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Executive Summary:
This item recommends authorizing Sonoma County Water Agency’s (Sonoma Water's) General Manager to execute a Rate Agreement with its main power provider, the Power and Water Resources Pooling Authority. The Power and Water Resources Pooling Authority entered into a power purchase agreement to allow a third-party solar developer (White Pine Renewables, LLC) to replace the photovoltaic solar system at Sonoma Valley Treatment Plant, which is at the end of its useful life. The Rate Agreement would dedicate that power to Sonoma Water. White Pine Renewables, LLC, would remove the old solar system, then finance, design, construct, own, operate, maintain, and monitor the new solar system. The agreement with an initial rate of $0.1177 per kilowatt hour (kWh) with a 1.5% annual escalator is expected to save Sonoma Water a minimum of $4.2 million in power costs over the 35-year life of the agreement.
Discussion:
In 2023, Sonoma Water's Board of Directors (Board) adopted its Energy and Climate Resiliency Policy. Part of this policy directed Sonoma Water to continue to cost-effectively use a net carbon-free power supply for its operations. All power Sonoma Water receives through the Power and Water Resources Pooling Authority (Pooling Authority) is from renewable or carbon-free sources. This power primarily consists of (1) hydroelectric power from Sonoma Water's Warm Springs Dam, (2) power generated at solar facilities locally and around the state, and (3) California hydroelectric power resources from the Western Area Power Administration.
Sonoma Water continues to meet our goal of carbon-free water by developing renewable energy sources, encouraging customers to conserve water, and increasing the efficiency of our core functions. Sonoma Water first achieved carbon-free water in 2015 and continues to cost-effectively refine how it meets its carbon-free power needs.
Entering into a Rate Agreement with the Pooling Authority, which would revise its power purchase agreement with White Pine Renewables, LLC, would allow Sonoma Water to transfer ownership of photovoltaic solar system at Sonoma Valley Treatment Plant (Treatment Plant), which is at the end of its useful life, to White Pine Renewables, LLC. White Pine Renewables, LLC, would then finance, design, construct, own, operate, and maintain a new solar power system at the Treatment Plant to sell to Sonoma Water to meet Sonoma Water’s power consumption.
In June of 2025, Sonoma Water’s Board authorized the General Manager to execute various agreements to decommission, transfer ownership, and replace the existing photovoltaic solar system at Sonoma Valley Treatment Plant. At the time, the price in the power purchase agreement between the Pooling Authority and White Pine Renewables LLC was $0.0988 per kilowatt-hour with a 1.5% escalator over 35 years and no capital cost down. The power pricing in the agreement reflected the tariffs on solar equipment imported from overseas at the time. There was a recognized and highlighted possibility at the time of Board authorization that increased tariffs, property taxes, or other federal incentives relating to solar systems would be implemented by the federal government. As such, the power purchase agreement has a provision to increase costs by $0.004 per kilowatt-hour for every additional $100,000 incurred by White Pine Renewables, LLC, if such changes to federal law are implemented. Those changes have been realized due to increases in tariffs on solar panels, steel for mounting equipment, and inverters. In addition, decommissioning the existing solar power system is impacted by tariffs. The decommissioning cost for solar panels previously had substantial salvage value for the modules by shipping them to Africa and reselling them. That market no longer exists due to a massive influx of cheap, government-subsidized Chinese panels to Africa. As a result, the decommissioned solar panels must now be disposed of or recycled, which comes at a substantial cost.
The net cost increases due to tariffs today on solar panels, steel, inverters, and decommissioning totals $472,973 (Attachment 1). At $0.004 per kWh per $100,000, this results in a revised price of $0.1177 per kWh.
Like other hydropower and solar power sources that Sonoma Water purchases from the Pooling Authority, Sonoma Water needs to enter into a Rate Agreement with the Pooling Authority to dedicate the power from the Treatment Plant solar power system to Sonoma Water. The Rate Agreement would work as follows: as the solar power is generated, Sonoma Water would purchase this power at a cost of $0.1177 per kilowatt-hour with a 1.5% escalator over 35 years and no capital cost down. If no power is produced, Sonoma Water would pay nothing. Sonoma Water worked with the Pooling Authority to evaluate and analyze the proposal. The Pooling Authority and Sonoma Water staff believe that the price of renewable power from this project is among the lowest cost for renewable power on the market today. Energy produced would account for approximately 50% of the wastewater treatment plant’s annual energy usage.
The power purchase agreement was originally expected to save approximately $15.5 million over the 35-year period of the Solar Power Services Agreement. Attachment 1 - Revised proforma with tariff impacts shows a savings proforma including the increased tariffs described above. This proforma conservatively assumes utility transmission rates increase only 50% of historical transmission rate increases, no increase in average treatment plant power load over time, solar pv generation degradation of 0.5%, and the avoidance of PWRPA purchasing equivalent renewable power assets with environmental attributes worth $25 per Renewable Energy Credit (versus the going rate of $75 per Renewable Energy Credit included at the time of the original Board approval). But based on the revised increase in tariff-impacted pricing and revised estimates of Renewable Energy Credits, the system is expected to conservatively save $4.2 million over the life of the agreement.
The proposed arrangement of new solar panels on the site provides the best opportunity for Sonoma Water to encourage renewable energy development in a minimally impactful manner, primarily because the area is using the same footprint as the existing solar system. Besides the placement of the panels themselves, the new electrical equipment would be placed in the existing inverter cabinet, which will not be needed for the new system.
California Environmental Quality Act (CEQA)
The General Manager of Sonoma Water has determined that the project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15301 and 15302. Section 15301, Existing Facilities, provides, generally, that the operation and leasing of existing public structures and facilities involving negligible or no expansion of existing or former use is categorically exempt from CEQA. The examples in subdivision (b) of Section 15301 specifically provide that the existing facilities of publicly owned utilities used to provide electric power is exempt. Section 15302(c), Replacement and Reconstruction, includes the replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced, including existing utility systems and/or facilities involving negligible or no expansion of capacity. The project would allow Sonoma Water to continue to cost effectively meet its Energy Policy goal of achieving Carbon Free Water. Sonoma Water staff prepared a Notice of Exemption in accordance with the CEQA, the State CEQA Guidelines and Sonoma Water's Procedures for the Implementation of CEQA.
Sonoma Water staff recommend the Board authorize Sonoma Water's General Manager to execute a Rate Agreement with the Power and Water Resources Pooling Authority for the Sonoma Valley Treatment Plant Solar Repower Project for up to one megawatt of solar power, in a form substantially similar to that provided, following review and approval by County Counsel. The 35-year rate agreement at an initial rate of $0.1177 per kWh with a 1.5% annual escalator would save Sonoma Water a minimum of $4.2 million in electric power costs over the term of the agreement.
County of Sonoma Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Climate Action and Resiliency
Goal: Goal 2: Invest in the community to enhance resiliency and become carbon neutral by 2030
Objective: Objective 1: Design or retrofit County facilities to be carbon neutral, zero waste and incorporate resilient construction techniques and materials.
Sonoma Water Strategic Plan Alignment
This item directly supports Sonoma Water’s Strategic Plan and is aligned with the following goal, strategy, and action item.
Goal: 2. Planning and Infrastructure - Implement comprehensive, integrated, and innovative infrastructure planning to strengthen existing services, minimize life cycle costs, and prepare for the future.
Strategy: 2.1 Conduct planning that integrates and balances operational, maintenance, and infrastructure priorities.
Action Item: 2.1.4 Continue to identify opportunities to Implement renewable and efficiency-enhancing, energy projects to meet energy policy objectives.
Executing this rate agreement allows Sonoma Water to cost-effectively replace its aging and dilapidated solar power system with no capital investment and outsource the financing, design, construction, ownership, operation, and maintenance of a new solar power system to White Pine Renewables, LLC, which is better suited to do so.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
See attachment 4
Fiscal Summary
|
Expenditures |
FY26-27 Adopted |
FY27-28 Projected |
FY28-29 Projected |
|
Budgeted Expenses |
$260,494 |
$264,401 |
$268,367 |
|
Additional Appropriation Requested |
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Total Expenditures |
$260,494 |
$264,401 |
$268,367 |
|
Funding Sources |
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|
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|
General Fund/WA GF |
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State/Federal |
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Fees/Other |
$260,494 |
$264,401 |
$268,367 |
|
Use of Fund Balance |
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General Fund Contingencies |
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Total Sources |
$260,494 |
$264,401 |
$268,367 |
Narrative Explanation of Fiscal Impacts:
Budgeted amount of $260,494 is available from FY 2026/2027 appropriations for the Power Resources Fund. Appropriations for FY 2027/2028 through FY 2060/2061 will be budgeted in those fiscal years. The project would produce about 2,213,200 kWh of renewable energy in the first year of operation, or about six percent of Sonoma Water's annual energy load. At a rate of $0.1177 per kWh, Sonoma Water would purchase $260,494 of power in the first year, with an escalation rate of 1.5% per year for 35 years. Sonoma Water would already budget a comparable amount for purchasing energy, so the net fiscal impact is zero and hedges against escalation of rates of electrical energy over the life of the agreement.
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
Attachment 1 - Revised proforma with tariff impacts
Attachment 2 - Power Purchase Agreement between Power and Water Resources Pooling Authority and White Pine Renewables
Attachment 3 - Draft Rate Agreement
Attachment 4 - Prior Board Actions
Related Items “On File” with the Clerk of the Board:
N/A