As CalWatchdog reported earlier this week, the San Diego Chargers are much closer to moving to Los Angeles, having gotten the formal blessing of team owners at a meeting in Irving, Texas, to leave if they choose by the Jan. 15 deadline the NFL established a year ago. But the situation in Oakland with the Raiders seems cloudier — at least in California media, as opposed to websites that specialize in the NFL.

With the Raiders, the seeming good news for fans who want the team to stay starts with the fact that the Oakland City Council and the Alameda County Board of Supervisors appear enthusiastic about working with Fortress Investment Group, which is led by NFL Hall of Famer Ronnie Lott and billionaire investor Wes Edens, on a stadium plan. On Bay Area talk radio, supporters of the plan have dropped hints of having deep-pocket supporters who might come forward to minimize how much taxpayers would have to pay for the billion-dollar-plus new stadium the Raiders and the NFL want.

NFL officials who have criticized San Diego officials for their response to the Chargers’ stadium needs are offering praise for what’s happening in Oakland.

ESPN reported this week that the league told Oakland’s leaders to not worry about the threat the team would leave even though Nevada state leaders have committed to provide $750 million in public funds for a $1.9 billion NFL stadium in Las Vegas. The team would only have to pay $500 million toward the stadium, with the rest of the tab largely picked up by Las Vegas Sands chairman and CEO Sheldon Adelson. One of the world’s richest persons, Adelson hopes to end up a minority or majority owner of the team.

The implication of the remarks by NFL executive Eric Grubman to ESPN is that the league very much wants the Raiders to stay in Oakland even if a better deal is available in Las Vegas. When allowed to comment anonymously, officials with other NFL teams have said that the league should be wary of having a team in the city that is the capital of American sports gambling.

Raiders may sue to leave if NFL owners say no

But optimism about Oakland keeping its team is less apparent on Pro Football Talk, a niche website now affiliated with NBC Sports that has broken dozens of stories in recent years because of its network of NFL insider sources. Site founder Mike Florio wrote this week that Adelson and Raiders owner Mark Davis were struggling to finalize a deal that would bring the team to Las Vegas.

But Florio has long depicted the Raiders’ exit as close to a done deal. On Nov. 22, he reported that Davis would sue the NFL to allow his team to move to Las Vegas if he could not get the support of three-quarters of the league’s 32 owners to relocate his team, as NFL bylaws require.

Davis’ father, NFL Hall of Famer Al Davis, successfully sued the league after it sought to block him from moving the team from Oakland to Los Angeles, where it played from 1982 to 1994 before moving back to Oakland.

Florio has interviewed Mark Davis dozens of times off the record. While he honors the rules and doesn’t quote Davis directly, the impression his coverage always gives is that the Raiders owner sees becoming the first major pro sports franchise to set up shop in Las Vegas — a tourist-centered metropolitan area with 2.1 million residents — as akin to a no-brainer.

Many reporters have also made the obvious point that the Raiders’ image as edgy, unconventional outsiders conforms with Las Vegas’ image.

Florio believes a final decision will be made by September.

In a move that considerably increases their odds of leaving San Diego, the Chargers announced Wednesday a new leader for their Carson stadium project — Bob Iger, the chairman and chief executive of the Walt Disney Company.

 

The deal matches the team with arguably the world’s most successful and powerful entertainment-industry executive. In addition, Iger received an option to become a minority owner of the Chargers or the Oakland Raiders, the team’s partner on the Carson project.  …

 

For fans who hoped the Chargers were just using Carson to bluff San Diego officials into making a better stadium offer, the deal represents a serious setback. For the NFL’s 32 owners, it offers a soothing tonic to those worried that Chargers CEO Dean Spanos and Raiders owner Mark Davis might bungle the league’s reentry into Los Angeles, the nation’s second largest market.

 

Without question, the deal “has a dramatic impact,” said Marc Ganis, a sports consultant based in Chicago who helped the Raiders and Rams leave Los Angeles two decades ago. “At the risk of mixing sports metaphors, it’s a grand slam home run.”

The Los Angeles Times framed the development in similar fashion:

Carmen Policy, a former NFL executive who now serves as executive director of Carson Holdings, the joint venture between the Chargers and Raiders, called the addition of Iger a “game-changer.”

 

“We now have the kind of leadership and expertise that should calm any concerns about any NFL teams going into L.A. and getting off on the right foot and pursuing the right course,” Policy said. “Who could we get to better guarantee fan experience than the man who runs ‘the happiest place on earth?’”

 

Iger would be chairman of Carson Holdings and would continue to serve as chairman and CEO of Disney under the terms of his contract.

‘Get ready for Raiders to leave. Again’

Bay Area News Group columnist Marcus Thompson noted the strong ties between Iger and the NFL and the fact that the league appears to want the Chargers and Raiders to add minority owners to beef up their finances before moving. He thinks the league is tipping its hand about its preference:

[The] connections and resources are there but the NFL and the Raiders prefer to use them for L.A. Not for Oakland. They’ll stay if they can make millions, even billions, off a new stadium if they only have to pay a portion of the cost. But if it’s all on them, they chose L.A.

 

That makes sense, too. That’s the new landscape of sports. That small-time model doesn’t return the profits required when you consider how much all of this costs. These figures are getting so astronomical, the league and teams must do all they can to ensure a profit. And the return on investment, theoretically, stands to be much bigger in Los Angeles than in Oakland.

 

That means, Raiders fans, start preparing for your Raiders to leave. Again.

Mike Florio of Pro Football Talk has among the best NFL sources of any journalist. In league circles, he writes, the Iger announcement is also considered a big deal:

With the ownership vote on L.A. looming, this could be the Hail Mary play by the folks in Carson that gets their attention, and that in turn makes the Christmas Eve meeting between the Chargers and Raiders in Oakland even more memorable. Possibly for all the wrong reasons.

Dueling schemes

“Under the current rules, homes served by Southern California Edison pay higher prices for higher electricity use. That would still be true under the new rules, but the pricing differences wouldn’t be nearly as stark, with costs rising for those who use the least and falling for those who use the most,” the Desert Sun reported. “The new rules would also mandate a minimum bill for all residential consumers, set at $5 for some low-income customers and $10 for everyone else.”

The proposed pricing system resulted from a prolonged research effort. Both the PUC and the utilities that would be affected by the change quickly moved to rebut criticism. “Utilities have framed the proposed changes as a matter of fairness, arguing that above-average energy users are currently subsidizing below-average energy users,” the Sun noted. “High-end users, the thinking goes, are paying more than their fair share to maintain the electric grid, while low-end users are paying less than their fair share.”

The PUC will have to keep working if it wishes to reach a unanimous consensus on its own proposal, however. One commissioner, Mike Florio, has put forth a much different plan, backed by the alternate energy and environmental advocacy groups that dismissed the PUC plan.

“I’m concerned the tier flattening of the Proposed Decision shifts too many costs from high-usage to low-usage customers,” Florio said in a statement. “Low-usage customers typically have fewer means of conserving; their consumption is already limited to basic needs.”

Activists were cautiously optimistic that Florio could have an outsized influence, perhaps nudging the PUC to consider making revisions to the dominant plan. As Utility Reform Network staff attorney Matthew Freedman told the Sun earlier this month, “I’d like to say there was an audible gasp from the utilities, but there was not. From our perspective, it’s very encouraging to see that there’s an alternate on the table.”

Golden Staters worried about their fate will be kept in suspense for at least another month. “The California Public Utilities Commission will consider both options and a decision is not expected until the agency’s June 25 meeting at the earliest,” according to the San Gabriel Valley Tribune.

Opening greener markets

The debate has played out over a high-profile spike in energy technology — a marked turnaround from the days of Solyndra’s bad PR and ultimate failure. For that, California has owed Elon Musk, the serial entrepreneur who recently unveiled Tesla’s new “Powerwall” home battery units.

Nevertheless, as the Wall Street Journal observed, the market for home batteries hasn’t expanded quickly. “Even Mr. Musk concedes the battery doesn’t make much economic sense right now for individual homeowners; grid power is still cheaper than solar-battery combinations. But a trend toward sharply higher electricity prices may change that,” the Journal noted. “The cost of traditional grid power is rising, while solar power costs are plunging.”

In his book on successful ventures, Musk’s fellow superstar entrepreneur Peter Thiel has argued that startups should seek monopolies in areas where robust, competitive markets do not yet exist.

Faced with the proposed changes to California electrical rates, environmentalists have claimed that electricity providers are jacking up rates to head off big losses to cheaper solar. “Monopoly utilities nationwide are struggling to respond to competition from solar companies,” argued the Sierra Club’s Evan Gillespie in the Los Angeles Times. “Instead of adapting their business model to the 21st century, utilities have launched a lobbying campaign to convince the public and the PUC alike that these changes are in everyone’s interest.”

By DAVE ROBERTS

“Sunshine is the best disinfectant,” said Supreme Court Justice Lewis Brandeis regarding the need for governmental transparency – but apparently not when it comes to solar power and other renewable energy sources. California has embarked on an ambitious, unprecedented program to provide one-third of its power from renewable energy sources by 2020. It’s likely to be expensive replacing oil and cheap natural gas with costly, inefficient solar and wind power. But Californians aren’t being told how much extra they’ll have to pay.

“I don’t understand what the size of the bill will be for it all,” said Robert Michaels, a Cal State Fullerton professor of economics and an energy expert. “Basically, what’s happening is everybody is being kept in the dark about this. Allegedly because it’s necessary to maintain competition among projects. It’s a drama that none of us is allowed to see, and none of us is allowed to get the figures on.”

Many of the purchase power agreements for renewable energy projects are coming in at above the market rate for energy — a cost that will be passed on to ratepayers. But the amount is known only to the California Public Utilities Commission, which keeps the figures under wraps for years.

The CPUC approves nearly every renewable project that comes before it, regardless of cost. But that’s not how it was supposed to be. The enabling legislation in 2002 for what is known as the Renewables Portfolio Standard, SB 1078, required that the cost of proposed renewable projects be compared to the market price of energy, and that procurement be restricted if the project’s price is too high. It also provided for above-market costs to be paid from a state-controlled above-market fund, rather than passing the extra cost on to the consumer.

This was reaffirmed in follow-up legislation. In 2006, SB 107, by State Senator Joe Simitian, D-Palo Alto, increased and accelerated the renewable target goals while continuing to limit procurement if prices were too high. Likewise in 2007 with SB 1036 by then-Sen. Don Perata, D-Oakland. And similarly in last year’s SBx1 2 by Simitian.

But as the pressure has increased to meet the state’s renewable energy goals, the prices have also increased — and cost-containment has gone by the wayside like a golden eagle after flying into a windmill blade.

The average bids for solar projects doubled while wind projects increased about 50 percent from 2005 to 2007, according to the CPUC’s Division of Ratepayer Advocates in a report last August titled “The Green Rush.” Fifty-nine percent of renewable contracts have been awarded at above-the-market rates in recent years, with PG&E leading the way with 77 percent of its contracts.

But what about that above-market fund that was supposed to pick up the tab for the high-cost contracts? As of last August, $773 million had been allocated — but a whopping $6 billion is needed to pay for all of the above-market contracts that have been approved. Michaels said that fund has since run out of money.

Pay for It

“Essentially you now have no choice but to pay whatever the contract price is for the renewable,” he said. “Renewable energy in California means wind and solar. Wind is expensive and solar is astronomical, particularly for the power you get. So what you have got now is a more interesting problem: People are not allowed to find out what the actual bills for these projects will be. The reason is because the PUC has agreed with utilities complaining, ‘We can’t let ordinary people know what the price of these things are, because you can cause competitive problems and it can result in price fixing’ — or something like that.”

Michaels cited what he called an “outrageous project” — PG&E’s solar project in the Mojave Desert. The plant could cost an estimated $1.6 billion while generating only 250 megawatts. Although scheduled to be completed it 2014, it may not be hooked up to the electrical grid until 2018 after needed upgrades are made.

Likely emboldening PG&E to lay out that kind of money for a questionable project is that it comes with a $1.2 billion loan guarantee from the U.S. Department of Energy. That’s the same DOE that provided a $535 million loan guarantee for Solyndra.

“That’s a staggering amount to pay for the kind of power you are getting — it only works when the sun is shining,” said Michaels. “The Division of Ratepayer Advocates is very upset about all of this. But there’s nothing that can be done about it. This is only the start. When we get closer to the 33 percent requirement, it’s just going to get worse, because the resources will be even more expensive.”

Shortly after the PUC approved PGE’s 25-year contract for the Mojave project in November 2011, the Division of Ratepayer Advocates sent out a press release headlined, “DRA Troubled By Continued CPUC Approval of Overpriced Renewable Projects.” It pointed out that the CPUC had also recently approved the overpriced North Star Solar project in Fresno. Both approvals ignored the legislative directive to contain costs.

“The Commission has the power to keep the cost of renewable energy reasonable,” said DRA’s acting Director, Joe Como. “Instead … it is signaling to the market that California will accept overpriced renewable energy, and that it is willing to lock customers into higher rates for decades to come. I agree with Commissioner [Mike] Florio [the only vote against the Mojave project], who said that we should be getting twice the amount of renewable energy for the price of this contract.

“The CPUC must get serious about reducing greenhouse gas emissions from power plants, and it can’t do that by ignoring the costs. DRA strongly supports the state’s renewable energy goals, but fears that customer backlash against high energy bills will hurt the state’s efforts. Sending a message to renewable energy developers and investors that the cost of renewables must be reasonable will support the effort to reach California’s goals to reduce greenhouse gas. We simply can’t afford to do otherwise.”

Encouraging Development

One of the encouraging developments in renewable energy recently is the significant price drop for photovoltaic energy due to the increased production of solar cells (ironically a contributing factor in Solyndra’s demise because its products were made at a higher price). The cost of these systems dropped 19-23 percent in California (depending on the size of the system) from late 2008 to mid-2010. But, at the same time the utility bid prices for photovoltaic systems actually increased, according to the DRA.

Also concerned about the increased cost of renewable energy is the state watchdog agency the Little Hoover Commission. It held a hearing Feb. 28 at which Commissioner David Schwarz asked what can be done to get the CPUC to put the brakes on the renewable energy “spending binge.”

Matt Freedman, an attorney for The Utility Reform Network, responded, “The era of approving overpriced renewable generators has passed. Most were in 2008, 2009. For years the PUC has pretty much approved whatever the utilities wanted. It goes to the oversight of utilities by regulators who feel it’s their job to give the utilities what they want when they want it. There’s been a spending binge.”

But that binge may not be over, according to Como, who said, “The commission has accepted all but two contracts in the last several years. There have been about 170 contracts from 2003, and only two have been rejected. It does speak a lot to the fact that there are political and other pressures that go into the final decision other than ‘best fit, least cost’ analysis. I think we are still looking at contracts that are overpriced. The prices are confidential. But we do look at the trends.”

Schwarz accused Como’s group of not sufficiently advocating for ratepayers by not fighting the confidential pricing system. “Aren’t you doing your constituents a disservice?” Schwarz asked. “I would like to see confidentiality lifted so we have transparency.”

Como responded, “I’m in support of modifying confidentiality, not lifting it. Three years of confidentiality may be too long. Six months to a year would be good. Nevada doesn’t have a confidentiality cloak on its procurement.”

Asked what the cost impact will be to customers in order to achieve the 33 percent goal, Como said, “It’s probably about 5 to 7 percent on a typical bill of a customer. The above-market costs that we have identified, that’s probably what the impact will be.”

Cost Unknown

But Freedman said that no one knows how much it’s going to cost. In 2009, a consultant estimated there would be a 7 percent increase, but that study is already out of date because “all of the assumptions are totally wrong in respect to price. For example, it was thought solar thermal, big mirrors in the desert, was going to be the primary way we would reach the 33 percent target. It assumed 7,200 megawatts of solar thermal. Half of that has been canceled. It assumed photovoltaics would cost between 29 and 47 cents a kilowatt-hour. We have been looking at prices in the 11-to-14 cent range approved last year. They are lower today than last year, and it looks like they will be going lower still. Every long-term model ends up being wrong. In the field of renewables, we have seen a very dynamic market with extremely fast-changing prices, more than anybody could ever predict.”

The energy experts are confident that California will be able to meet the renewable energy goal by 2020. The big question remains the size of the bill that Californians will get stuck with.

“It would be wonderful if we can make this work,” said a dubious state Sen. Mark Wyland, R-Carlsbad, who is also a Little Hoover commissioner. “To me right now the bottom line is what is the cost to the user. Particularly in a state where we have the second-highest unemployment in the country, where privately a very senior official in this government has said, ‘We all know the real rate of unemployment is closer to 17 percent,’ where the human cost is really, really, really difficult, and at the same time when we have some companies leaving. I just think at the end of the day we need to know: Can we deliver this in such a way that it doesn’t hurt jobs? We’ll see.”