Local control benefits residents
Santa Clara, Alameda reap rewards of owning utilities

by Elizabeth Khuri

Palo Alto is not the only city with a municipally owned power supply. Santa Clara and Alameda are also reaping the benefits of local control as California's energy crisis continues to dominate the state's attention.

For the last century, Santa Clara has controlled its power supply. In 1896, Santa Clara's utility department began providing electricity to the city with the purchase of 22 arc lamps and a diesel generator. Now the department is known as Silicon Valley Power and is one of the three largest municipally owned utilities in California.

Silicon Valley Power acquires energy from several different sources. They own their own power plants, co-own other plants with various cities, and enter long-term power contracts with outside sources.

Because of this diversity, the city enjoys some of the lowest rates in the Bay Area--on average 35 percent less than residents of neighboring towns.

Larry Owens, division manager of customer services for Silicon Valley Power, said, "The fact that the company is over a century old and nonprofit only helps to emphasize their efforts to maximize benefits for their community."

According to Owens, this stability translates to low prices, even in the face of California's energy crisis.

Flexibility is another benefit.

"Because of local control, we can respond to our customer base, and our power is much more reliable, which is especially important for our Silicon Valley customers," Owens said.

Applied Materials, Intel, National Semiconductor, Sun Microsystems, 3Com and Yahoo all use Silicon Valley Power.

Local control also enables the community to exercise influence over where their power comes from. Owens stressed that the majority of Santa Clara's power--85 percent--is non-fossil-based and non-nuclear, stemming instead from geothermal and hydroelectric sources.

Alameda also profits from municipally owned power. For the past 113 years, Alameda Power & Telecom--formerly known as the City of Alameda Bureau of Electricity--has supplied power to its residents. Alameda's municipal enterprise is the oldest in California, in fact, the oldest west of the Mississippi.

It was founded in 1887 with an initial investment of $40,000. Approximately 30 years ago, Alameda co-founded the Northern California Power Agency with several other cities, including Palo Alto and Santa Clara. Now almost 99 percent of Alameda's power comes from the Roseville-based agency, which owns geothermal facilities in Lake County and Sonoma County.

The agency also owns hydroelectric generators in Calavaras County.

The collective clout of the agency ensures that member cities can afford power from a variety of sources. Alameda has not produced power within the city limits since 1924, when the cost of oil reached the then-exorbitant price of $1 per barrel.

Alameda's residents also enjoy stable prices in the current vortex of skyrocketing utility costs. This past year, there have been no increases to the community's electric utility rates. Some of the profits are also donated back to the community to fund the police, parks and fire departments.

When state Assembly Bill 1890 passed in September of 1996, municipal utilities companies were required to donate 2 percent of their gross profits back to the city, a goal Alameda had already exceeded.

"When 1890 passed we were already giving more than that to the community, so it was just transparent," said Alameda Power & Telecom Communications Officer Matthew McCabe.

But the biggest benefit for residents, according to McCabe, is the level of control local jurisdictions can exert over their own destiny.

"Most employees live and work in the city, so they can be held directly accountable for their hard work," he said. "Decisions here are directly influenced by residents, and decisions are made by a local board in front of TV cameras, not in the back room of some corporation far away."