Legislation

THE REAL COST OF CLEAN ENERGY, PART 2

BY RON KINGSTON

This second part of the two-part series focuses on the Legislature’s efforts, costs, and the reality of “electrifying” California’s transportation system with a special focus on the impact and potential impact upon the multi-family housing industry

For the past two decades, California’s electrical grid has suffered from many a heat stroke during the summer months; in fact, the last two summers in California have had close calls in keeping power on, as the supply of resources serving our electrical grid struggled to match demand. Last July, for example, during an extreme heatwave across California, a major transmission line at the California-Oregon border was impacted due to a nearby wildfire, bringing the California Independent System Operator precariously close to calling for rotating outages. This past summer, a western-wide heatwave drove temperatures into the triple digits throughout the state. Such heat not only drives demand on the system— in large part due to more air conditioning use—but impacts our supply through both a reduction in our imports as well as a reduction in output from older, in-state resources that become inefficient in higher temperatures.

Rotating power outages are the last, worst tool available to electrical grid operators and energy planners to manage any supply and demand imbalance. They are the tool everyone seeks to avoid, as outages can have devastating economic and health impacts, compounded under extreme weather events like heatwaves or fires. In California, these larger climate events are occurring alongside ambitious renewable energy integration and anticipated large increases in demand. These changes could lead to more prevalent and complex challenges beyond what was experienced in the summers of 2020 and 2021.

Recognizing this need and the insufficient pace at which new resources were being developed, the California Public Utilities Commission (CPUC) issued historic procurement orders in June 2021, requiring utilities that they regulate to purchase 11,500 megawatts of new electricity resources to come online between 2023 and 2026. These orders are meant to be fulfilled with preferred resources, such as distributed energy resources, renewables and zero-emission sources. The procurement orders represent the largest capacity procurement ordered at a single time by the CPUC. This past summer’s electrical capacity concerns initiated an urgent “gut and amend” of Senate Bill 846, which, up until August 2022, was a bill dealing with the sale of alcoholic beverages, but instead changed into an extension of the operation of the Diablo Canyon Power Plant.

The power plant is California’s only remaining operating nuclear power plant that was scheduled to retire operation of both its units by 2025. Diablo Canyon sits on approximately 900 acres adjacent to the Pacific Ocean in San Luis Obispo County and generates about 16,500 gigawatt hours annually, which is tantamount to approximately 8.5% of California’s in-state electric generation, and approximately 17% of California’s GHG-free electricity, with a capacity of over 2 gigawatts of baseload energy regardless of weather or time of day.

The Legislature has intended that the Department of Water Resources loan PG&E up to $1.4 billion to facilitate the extension of the operating period through October 1, 2030. The Legislature also passed funding for a Strategic Reliability Reserve, wherein the June budget appropriated over $2 billion to this fund to assist with the updated energy forecasts and additional $550 million to support distributed backup and utility-scale assets to support reliability.

Diablo Canyon Power Plant is California’s last-ditch effort to bridge the gap between actual energy consumption and our ability to rely on renewable clean sourced electricity. The Governor is leaning quite heavily on Diablo’s energy production until renewable energy equipment is constructed and installed to take its place.

For reference, it takes 3.125 million 320-watt photovoltaic panels, or 333 utility-scale wind turbines to generate only 1 gigawatt. On the flipside, 1 gigawatt can simultaneously illuminate 100 million LEDs, provide steady consumption of energy use in about 725,000 homes (not including EV charging), or almost give Doc Brown’s DeLorean enough power for he and Marty McFly to travel through time (it actually took 1.21 gigawatts).

There are approximately one million kilowatts in 1 gigawatt. There are 1,000 megawatts in 1 gigawatt. According to windustry.org the typical cost to build and install one utility-scale wind turbine is between $3-$4 million. And while photovoltaic panels have been the normal, new “monocrystalline” panels are being advertised as more efficient because they are cut from a single source of silicon, whereas its predecessors are solar cells with a blend of multiple silicon sources. And, yes … of course, monocrystalline panels are more expensive (about double the cost) than photovoltaic panels. So, what changes can we expect to face as technology advances and requires updated equipment?

In February 2022, Governor Gavin Newsom reported that California surpassed 1 million electric vehicles sold. As electric vehicles become more popular among California drivers, their charging requirements add more stress to an already overwhelmed electrical grid. In order to meet the demands, the Legislature has placed on our state departments to create renewable and/ zero emission energy, California would have to install one utility-scale wind turbine almost every day for the next two years in order to provide a capacity of over 2 gigawatts of baseload energy –to match Diablo’s capabilities.

All in all, has California put the cart before the horse by placing demands on an electrical grid that is incapable of meeting the State’s current demands, while enforcing expectations that will force the procurement of exurbanite expenditures? If it takes roughly 1.3 million horses to generate 1 gigawatt of power, it might be safe to say that the cart is surely to be trampled.

OAKLAND’S RENT REGISTRY: YOU DO THE WORK AND PAY THE CITY

BY MICHELLE GAMBLE

The Oakland City Council voted to establish a rent registry on June 21, 2022. The law requires owners of residential rental units subject to the Rent Adjustment Program (RAP) fee will be required to provide rental information for each covered unit on an annual basis. Rental property owners must fill out the registry online and register their units with the RAP for the first time by July 1, 2023 and then update it annually by March 1 each year.

Late last year in 2022, the discussion of the rental registry information being requested and the way the registry got developed lacked fair analysis. Based on information requested through the Freedom of Information Act (FOIA), the City Council seemed to arbitrarily decide on what information to request without doing proper due diligence to determine whether or not the requirements would place an imposition on the property owners. Since the registry must be filled out in order for property owners to increase rents or give rent increases, property owners will have no other choice than to adhere to it.

Property owners, who don’t have the resources to fill out the information for perhaps dozens of properties, face the demand of inputting that data into the rent registry. The City Council gave no consideration to how much effort would be needed to not only gather that information, but also upload it. They issued the requirements and the deadline and left the rest up to the property owners to figure out.

It’s not that a rent registry isn’t a valuable tool. Many experts support the creation of a rent registry. “A rent registry can have various values depending on its function and purpose,” said Yusaf Khan, head of business development at Startups Anonymous. “In general, a rent registry can help ensure that rental properties are registered and monitored, which can help improve rental conditions and protect renters. Furthermore, a rent registry can help property owners and renters identify and resolve any rental issues.” That description sounds acceptable, however, who benefits the most from it? Rent registries benefit city government the most. According to Ying He, a San Francisco Realtor, who is familiar with the rental registry program being implemented in San Francisco, “Most city governments have been under a tremendous amount of fiscal pressure due to COVID in the last a few years.

The number one goal for any city government was to increase revenue and balance the budget. The rent registry is considered a revenue-generating program. A quick Google search says Oakland has 94,693 rental units. At $101 per unit (per City of Oakland website), that is $9.6 million in RAP fees per year for the city of Oakland. That is recurring revenue.”

He goes on to describe the other benefits – all of which add value to city government while not appearing to give property owners any significant benefit. “The stated value of rent registry include better visibility of rental inventory for the city government and better control/tracking of rent increases. The city will have up-to-date rent and occupancy information as well. It does provide real value to the city government in reporting and governance. There is obviously value associated with a rental registry. What does not make sense is that property owners not only have to do the work but also pay the city a fee for the work.”

Whether it is fair to require property owners to do all of this work depends on the specific requirements of the rent registry program and the benefits it provides. It’s also important to note that rent registry programs are usually mandatory, whether fair or not, as they are established by the government. Let’s emphasize: owners do the work and pay for it too. City government collects information and insight from the property owners’ provided data while at the same time collecting money from them and enlisting their labor to accomplish the task. Does that sound fair and equitable? Most people would agree it does not.

Why wouldn’t city government like that deal? Property owners do the work, they pay for it, and the city uses it to their advantage. The City Council probably thought it was a great deal … for them!

City staff didn't consider a work or time study to fully understand data collection and management needs. They have little perspective of the resources and costs needed to maintain the system. How would the City Council, where the majority of the members don’t own property, know whether or not what information being requested is difficult to obtain and upload? Unless they do own property, the council members wouldn’t have any real-world experience in this area to make any accurate assessment of its requirements.

No other industry gets taken advantage of in this way. What kind of thinking went into this decision-making process? It’s called entitled thinking. The nature of entitlement when it comes to policy-making never bodes well, whether it be in public or private sectors. When leaders feel entitled then they have no qualms about placing unfair demands on property owners while also making them pay for it. That is like inviting your friend to dinner and then having that person pay for the whole meal while you order dessert without thanking them. Most people would call that behavior rude.

Restrictive housing policies and laws that have not been vetted or studied to determine impact, invariably lead to unintended consequences. The response is that small rental property owners take more rental units off the market — further exacerbating the shortage of housing and tax revenue. When people feel entitled to something, they lose compassion and understanding. An unvetted rent registry developed by entitled thinkers won't lead to positive outcomes.

Michelle Gamble is the editor of Rental Housing Magazine.

Feb 8th

According to the San Francisco Chronicle, "A cyberattack hit Oakland’s government offices, preventing residents from filing police reports and paying taxes, with city officials remaining tight-lipped about the cause.

"The city had shut down parts of its network while its Information Technology Department worked to investigate ‘the scope and severity’ of the digital attack, according to a statement posted on the city website.

"The city said ransomware was to blame for the digital breach. The software is frequently used to extort money from governments and other targets by threatening to publish confidential data or block access to files, with attacks on the rise in recent years."

This attack makes it imperative the property owners who participate in the rent registry should minimize their exposure by being conservative with information.