City of South Lake Tahoe seeks one-year franchise agreement with Liberty Utilities

SOUTH LAKE TAHOE, Calif. - The City of South Lake Tahoe wants to explore options for who will provide electric utility services to the community, including the feasibility of municipalization of electrical generation distribution.

During its January 10 meeting, the City Council rejected Liberty Utilities' request for a 25-year franchise agreement, and instead offered one-year as staff examines all possibilities for services in a first reading. At its January 24 meeting, the Council has the approval of the one-year plan on the consent agenda.

Liberty Utilities does not have to agree to one year and if they will is unknown. The utility company and the City have been in discussions on a new franchise agreement since early 2021. Since incorporation in 1965, the City has entered into two 25-year electric franchise agreements.

The most recent electric utility franchise agreement was a 25-year agreement with Sierra Pacific Power Company dated April 20, 1993. In 2010, the franchise agreement was transferred to California Pacific Energy Company, LLC (CalPeco), and in 2011, CalPeco was acquired by Liberty Utilities.
The parties inadvertently allowed the franchise agreement to expire in April 2018, but have been operating since then as if the agreement were still in place. Liberty Utilities has been providing power to the community and paying its annual franchise fees which are two percent of gross annual receipts. Liberty paid $265,863 in 2019, $250,660 in 2020, $285,453 in 2021, and $300,846 in 2022. The fees cover right-of-use in using city streets for power lines.

The parties began discussing the potential terms of a new franchise agreement in early 2021 since the previous one had expired. On August 3 of that year, City Council provided direction to pursue a new shorter-term franchise agreement with Liberty Utilities and to bring a Memorandum of Understanding (MOU) with Liberty Utilities at the same time to address cooperation on the City’s priorities which are centered around its Climate Action Plan which includes renewable energy and a solar tariff greater
than 1 megawatt and expanded battery storage, along with expediting underground utilities.

Liberty Utilities gave a statement this weekend on the pros and cons of undergrounding those utilities in South Lake Tahoe (See Here).

City Staff including the City Manager, City Attorney, Public Works Director, and Sustainability Coordinator have met with staff and attorneys from Liberty Utilities multiple times to discuss Liberty's current sustainability initiatives and a possible MOU that they would move towards greener goals. Liberty submitted an application under the California Public Utilities Code section 6231 for a 25-year franchise agreement with the City. Liberty told staff this past Fall that they are not willing to enter into any MOU with the City.

In November, Council shared its intention of a one-year agreement with Liberty as they explore alternatives in the future, specifically exploring the possibility of creating a municipal electrical utility.

When the alternative one-year agreement was on the Council's last agenda, a Liberty representative indicated they would be willing to consider an MOU that is not expressly tied to the franchise agreement. The MOU draft has been given to Liberty.

The goal for South Lake Tahoe via its strategic plan is to work with community partners to achieve 100 percent local, renewable energy for all entities by 2025.

If Liberty signs the one-year agreement, it could be extended per the new ordinance should the City need more time to work on a new plan.

Some residents of the west slope of El Dorado County and Placer County have moved to Pioneer Community Energy, instead of PG&E. In January 2022, some residents mainly near Cameron Park and Placerville signed on with Pioneer which serves a total of 156,000 customers west of Lake Tahoe. Pioneer has an option for customers to get its Green100 renewable energy rate, a choice for those interested in reducing their carbon footprint and the environmental impact of their electricity usage at home. The customer requests and 100 percent renewable electricity option.

The council agenda can be found here. The meeting starts at 5:30 p.m. and is at City Hall at the airport and can be viewed on Zoom, and the City's website.