Expecting a deficit in the budget because of an economic downturn from the COVID-19 pandemic, the Williams City Council voted 5-0 to sell more than $500,000 in Rule20A credits from PG&E that the city could otherwise use on a road project. The city plans to sell the credits to Rohnert Park, who offered Williams 35 cents on the dollar.
” Rule 20A credits are earned by each municipality and is based on how many PG&Ę customers are in the jurisdiction,” said Wiliams Mayor Alfred Sellers Jr. ” The credits are used to pay for underground electric transmission lines.The city currently has $512,743 worth or credits, and earns approximately $15,000 worth of new credits each year.
Williams had previously offered Pismo Beach the credits, and had planned to spend the proceeds on fixing the citys pool, had the sale gone through.
Williams expects to receive about $179,000 from the sale of the credits to Rohnert Park, with the money going directly into the general fund.
City Manager Frank Kennedy recommended the action because, while the money would offset the cost of a road project, undergrounding electric transmission lines is a very expensive endeavor that the city cannot afford.
” You do get some of your street work done, but the problem is that you have to then deliver that electricity to the home or business, they have to get new breaker boxes, and (you must) restore the trench on personal property too,” Kennedy said. ” A half million dollars will go approximately a block.
Kennedy said the city does not have any projects of significant magnitude planned, in which the city could use the credits, and nothing planned in the foreseeable future.
” Logistically, it would take forever to get enough money to do this,” he said.
Additionally, Williams engineer Trin Campos said PG&E now has a rule to take back a percentage of the credits after five years if they are not used in a timely manner.
While cities buy and sell Rule20A credits regularly, Chuck Bergson, former Williams mayor, who called in to the citys Zoom meeting on May 20, strongly opposes the practice because the money comes from fees paid by PG&E customers to invest in street construction projects.
Bergson said the credits should not be sold so that city officials can spend the money on general fund expenses and not as they are intended.
” To give away a half million dollars of right-a-way and construction money given the (condition) of your streets is unfortunate,” he said.
Bergson said the city should be planning road projects, and that the credits could be leveraged with federal and state road construction funding.
” To state that you dont have any projects planned, thats the job of the city engineer,” he said. ” You should have projects planned. I think its really obvious what projects the city needs to do: E Street, 7th Street, and Husted Road.
Bergon said that PG&E would also work with the cities to extend credits an additional five years, if needed, so Williams should hold on to the credits to repair E Street, for example, which would cost $7 million to $11 million.
City officials, however, said holding on to the credits at this time was not practical, and that the city would not have the funding for a major road project anytime soon.
Councilman Sajit Singh said that if the city was willing to sell the credits at 35 cents on the dollar before the economic crisis, the city should be willing to sell them now that general funds are extremely needed.
” This is a good opportunity, in my opinion,” he said. ” It will shore up some of our losses. Not all, but some.
Although Singh said he spoke with Bergson and appreciated his position, he did not think Williams was in a position to keep and use the credits at this time.
Kennedy said if the city did plan a project in the future, they would buy credits on the open market from another city that did not have projects in the works.
Some cities have managed to purchase Rule28 credits for as little as 15 cents on the dollar, including Pismo Beach, which is why that city backed out of a potential deal with Williams, officials said.