After a lengthy debate that stretched into the wee hours of Tuesday morning, a split Palo Alto City Council decided to commit the city to two 20-year contracts with the energy firm Ameresco, which converts escaping landfill gas into electricity. The two contracts will cost the city about $233.7 million over their terms.
With the decision, the proportion of electricity the city receives from renewable sources will increase from 22 percent to 28 percent in 2013. The city's goal is to get 33 percent of its electric load from renewable sources by 2015.
But the new contracts also mean that the city's renewable-energy portfolio is dependent, more than ever, on landfill gas. The portfolio now consists of seven landfill-gas contracts with Ameresco and two wind-energy contracts. With the two agreements, Ameresco accounts for 56 percent of Palo Alto's renewable-energy supply and 16 percent of its total supply.
The City Council reached the controversial decision a month after a similarly split Finance Committee failed to reach a consensus or offer a recommendation to the full council. Greg Scharff and Greg Schmid, the two council members who opposed making major commitments to Ameresco during the Finance Committee meetings, once again urged their colleagues not to sign the two contracts.
Both warned about the potential of new and better technology emerging over the next two decades and wondered aloud whether the Ameresco plants, which burn methane gas, can truly be considered "green." Mayor Pat Burt and Council member Karen Holman voted with them to sign just one of the two contracts recommended by staff.
Karen Holman said she wouldn't feel right buying energy from the San Joaquin landfill, which she learned still accepts materials such as wood and cardboard. She equated the city's decision to buy energy from a landfill that accepts such materials to "looking the other way.
"I really feel we'd be fostering bad practice if we support the activities at San Joaquin," Holman said. "If there are things actually going into the landfill, I feel it is a very bad policy and an inconsistent message that we're sending if we support both contracts."
The second contract is based on the Crazy Horse Landfill in Salinas, which closed a year ago and no longer accepts waste. The San Joaquin landfill is expected to remain in operation until 2059.
But a five-member council majority, led by Larry Klein, argued the two contracts are a good bargain for the Palo Alto, whose Utility Department normally has a hard time competing with energy giants like PG&E for long and lucrative contracts. Klein also pointed to the city's commitment to hydroelectric power, which he said proved to be wise.
"This is an area that lends itself to long-term contracts," Klein said.
Klein's argument ultimately prevailed with Vice Mayor Sid Espinosa and council members Gail Price, Nancy Shepherd and Yiaway Yeh joining him in supporting the two contracts.
Burt called the Ameresco contracts a tough decision but emphasized that the city's goal isn't to use more renewable energy, but rather to use less nonrenewable, so-called "brown" energy. In fact, earlier in the evening, the council unanimously approved a new 10-year energy efficiency plan, which seeks to curb the city's electricity consumption by 7.2 percent over the next 10 years through a wide range of programs.
Burt called the city's new renewable contracts as means to that end, not ends in themselves.
"The higher objective should be reduction of brown electricity," Burt said.