Sonoma Clean Power is a program being developed by the Sonoma County Water Agency to purchase electricity for Sonoma County customers. This program has multiple benefits and risks, is complex and not well-understood by Sonoma County residents and businesses. In order to help the North Bay Business Journal readers understand the various aspects of Sonoma Clean Power, the Journal is partnering with the Sonoma County Water Agency to publish a series of articles discussing the various aspects of this effort. This article discusses what a joint powers authority is and how its formation, which was approved Dec. 4 by the Board of Supervisors, impacts Sonoma Clean Power’s operation and governance.
What is a Joint Powers Authority? A joint powers authority (JPA) can be formed by two or more public agencies havng common powers. Once formed, the joint powers authority is a separate legal entity that can hold property, contract and engage in any other activity specified by the agreement forming it. Significantly, the public agencies forming the joint powers authority can specify that they are not liable for any debts or liabilities of the authority. In this way, a joint powers authority can function like a corporation, protecting its members agencies from liability in much the same way shareholders are protected from the liabilities of a corporation.
Joint powers authorities are governed by a Board of Directors comprised of representatives from the entities which make up the JPA. Being a public body, JPAs are subject to the Brown Act and all of the “open meetings” laws which city councils and the county Board of Supervisors are subject to.
What does Sonoma Clean Power’s Joint Powers Authority look like? The initial joint powers authority for Sonoma Clean Power is composed of the Sonoma County Water Agency and the county of Sonoma. The previous plan was to form Sonoma Clean Power through a JPA which included the eight eligible Sonoma County cities. This process would be very lengthy and complex, likely taking a year or more to complete. In contrast, creating the authority with just the Water Agency and County of Sonoma dramatically decreases the time needed to form an entity and allow critical information to be obtained, and therefore available to cities, before they make the decision to participate.
How would this impact risk to city and county general funds? A major concern expressed at public forums is that the debts and liabilities of Sonoma Clean Power could be attributed to the cities or the county and put their general funds at risk. While the joint powers agreement insulates all participants in Sonoma Clean Power from general fund debt and liability, the possibility of risk is still a concern for many cities. With the initial JPA being formed with only the Water Agency and Sonoma County, cities can simply participate in the program and do not have to join the JPA as formal members. Cities choosing to participate will have representation on the Sonoma Clean Power governing board as if they were members of the JPA and thus a voice on Sonoma Clean Power policy matters.
In addition to providing critical financial information to cities without committing them to join Sonoma Clean Power as a formal member of the joint powers authority, the new path could also save money. Almost all of the power providers who participated in a recent “Request for Information” process stressed the importance of taking advantage of the historically low natural gas and power rates by locking in price contracts sooner rather than later. By moving forward expeditiously, this could result in lower rates for Sonoma Clean Power customers.
By forming the new authority the water agency and county boards is not making a final decision to move forward with implementing the Sonoma Clean Power program. That decision will not be made until the additional information about program costs and rates is obtained.
