LAKEPORT >> The Lakeport City Council selected the prepaid power purchase agreement financing strategy for its solar power project and granted approval to the staff to shop for investors or creditors.
According to Finance Director Dan Buffalo, the council chose his recommendation because of the total cost savings — more than $8 million in 25 years.
“They liked it compared with the others,” Buffalo said. “They were pretty excited about it being a green project.”
By using the strategy, the city must repay an approximately $2.9 million loan in 15 years and most likely will have to offer up some of their real estate assets as collateral just as the city did with the CalPERS refinancing last year.
That loan will either come through a private bank or an investor(s) and with borrowing rates as low as they are the city is hoping for three to four percent interest. The annual payments, Buffalo said, will be paid by the general, water, and sewer funds.
The expenditures of each would be based on their historical usage of power. Currently, sewer operations use 55 percent, so it may pay for nearly half of the amount, he added.
Yet, despite a significant decrease in its PG&E bill, the city will still be connected to the grid. According to company spokesperson Ari Vanrenen, Lakeport will still have to use power when the sun isn’t out or when power demand exceeds the system’s capacity, which will be based off current energy expenditure.
“At PG&E we have been 100 percent committed to solar energy over the last decade,” Vanrenen said, claiming that the utility giant doesn’t have a problem with the move. “For any customer that wants to connect, we are here to connect them to our energy grid.”
Both Vanrenen and the finance director believe that the city won’t be charged a fee for the move but that remains to be seen.
Now, the city will soon release a proposal request to potential vendors while finding the funding for the project. Buffalo said he’d like to present everything before the council by the end of May.
