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Alameda Produces Its Own Energy

Island residents sustain low rates

George Raine / SF Chronicle 13jan01

Alameda -- Alameda officials announced with glee yesterday that residents of the island city will not be hit with higher power rates like most Californians, thanks to the city's decision to continue producing its own energy.

The city, and 29 others in the state that operate municipal utilities, chose not to join the statewide movement for electrical deregulation four years ago, despite the hoopla that competition would lead to lower market prices.

After the state Public Utilities Commission's move last week to grant 10 percent rate hikes to PG&E and Southern California Edison, the municipal utilities are more than pleased to be avoiding the roiling California energy market, in which supply is woefully behind demand.

"We are not crowing, but we are proud of what we have," Alameda Mayor Ralph Appezzato said yesterday at a news conference called to reassure residents that Alameda remains self-sufficient in power generation.

There was another purpose: to promote the island city of 80,000 people, and a huge former Naval Air Station, as an city with more than enough power to supply new development.

Alameda has owned its own power utility for 113 years, making it the oldest of its kind west of the Mississippi River. The city was a founding member 30 years ago in the Roseville-based Northern California Power Agency, which owns geothermal facilities in Lake and Sonoma counties and hydroelectric generators in Calavaras County that are producing ample amounts of power to serve their customers.

Palo Alto and Santa Clara, the two other municipalities in the group, also have secure energy supplies.

No one in California, however, is immune from rolling blackouts, as were threatened this week, since the power grid is controlled by another entity, the state's Independent System Operator.

Still, Alameda's position is enviable, Appezzato said. The city is about to sign a contract with San Francisco-based Catellus Development Corp. for a commercial and residential project on the first 200 acres of the 800-acre abandoned air station -- the first of many projects, he hopes, given advantages of space and electricity.

What's more, the city has an old gas turbine at the former base that can be used to generate electricity.

"Who would have thought that a municipal utility would be an exciting place to work but I'm thrilled to be here," added Junona Jonas, hired two weeks ago as general manager of Alameda Power & Telcom, the city-owned utility, after working 20 years at PG&E.

"We are fiscally buffered from what is happening out there in the energy marketplace of California," she said.

Appezzato said he worried as the energy deregulation bill was moving through the Legislature that "it might bury us -- that the big (energy providers) would come in and completely cripple our ability as a publicly owned utility to function."

"It turned out to be the opposite," he said, as PG&E and Southern California Edison have said they are threatened by bankruptcy, blaming gouging by energy wholesalers.

"I would love to be able to tell you that we were so smart and we did this because we knew there was going to be a problem, but that is not true," said Appezzato. "We did what we did because it worked."

With the exception of the turbine at the old air terminal, Alameda has not generated its own power within city limits since 1924, when it shut down an oil-fired generating system when the price of oil became prohibitive at $1 per barrel.

The largest of the state's 30 municipal electrical utilities, which collectively produce power for one-quarter of all Californians, is the Los Angeles Department of Water and Power.

Other members of the Northern California Power Agency are the cities of Biggs, Gridley, Healdsburg, Lodi, Lompoc, Redding, Roseville and Ukiah and the Port of Oakland, Truckee Donner Public Utility District and Turlock Irrigation District.

Associate members are the Association of Bay Area Governments, BART, the cities of Davis and Santa Barbara, the Lassen Municipal Utility District, Placer County Water Agency and the Plumas-Sierra Rural Electric Cooperative.

E-mail George Raine at graine@sfchronicle.com

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