Committee Approves Large Solar Deal After Contentious Debate
Ald. Bob Bauman's amendments attempt to set baseline, grow value of deal.
A proposal to build the largest solar array in the city on a closed landfill near Milwaukee Mitchell International Airport received its first approval Thursday morning, but only after a contentious meeting between city officials, council members and other project stakeholders regarding nuances of the complicated deal.
The Public Works Committee spent over an hour reviewing the proposal that would have We Energies construct a solar installation on the city-owned site capable of powering 400 homes. The utility would make lease payments to the city as part of the deal based upon a complicated, multi-factor formula.
Alderman Robert Bauman, the committee’s chair, has been an ardent opponent of the utility since 2011 when it raised concerns with the streetcar project. He introduced three amendments to modify the solar proposal after questioning multiple city officials involved in negotiating the detail. One would raise the value of the deal by 13 percent by delaying it until June.
“Hell will freeze over before I vote for doing business with We Energies,” said Bauman in January 2019 after the utility’s objections scuttled a city rooftop solar project and triggered a lawsuit. But Thursday he voted for the deal.
The utility would own and operate the approximately 8,000-panel solar farm capable of producing 2.25 megawatts of electricity. It’s proposed as part of the utility’s Solar Now program, first approved by the state Public Service Commission in December 2018, under which the utility secures space to install solar panels and makes lease payments to the property owner. Individual customers can have up to 2.25 megawatts installed.
“We all agree with the policy,” Bauman said of pursuing solar and other renewable energy sources. “I want to get into the details of the agreement, because that’s what’s before us.”
“We have a rent formula in this agreement that is unexplainable to the general public,” said Bauman.
“You take the MISO accreditation and you multiply it by the CONE,” said Ald. Nik Kovac, who holds a math degree from Harvard. “I don’t know what that means, but I read it.”
Shambarger attempted to explain it. MISO is the Midcontinent Independent System Operator that operates the regional power grid. CONE stands for the Cost of New Energy, a figure set by MISO that is set to increase by 13 percent in June.
In the first year of the deal, We Energies would pay the city for a 50 percent MISO solar accreditation level. In subsequent years, the percentage would fluctuate based upon the measured amount of sunlight as determined by MISO. A city report estimates that would range between 55 and 60 percent based on 30 years of historical data, but could be less.
“Or less. That’s the only point I’m making here,” Bauman said after a substantial back-and-forth with Shambarger and others that included cutting off multiple long answers. “The rent could go up or down.”
“Mr. Chairman,” said Ald. Michael Murphy to Bauman after one contentious moment. “I would really like you to not interrupt every person on this committee.”
“During our negotiations, we did ask for a floor and the response that’s not what the Public Service Commission approved,” said Shambarger.
Bauman introduced an amendment to require it, pending an opinion from the City Attorney’s office that it was legal. “I believe this amendment would effectively null the whole agreement,” said Shambarger. He said it could also add months of delay. “You know how the city is, they scratch their head and take months.”
“I wish Mr. Shambarger would not have said that and perhaps an apology is in order,” said Assistant City Attorney Jeremy McKenzie. He said an opinion could be rendered soon. Shambarger apologized and praised the office for their support on the deal.
“I don’t disagree with the concept of a floor, but the question is whether it’s allowed or not,” said the sustainability director.
Rick Stasik, the utility’s director of state regulatory affairs, said: “Our legal counsel… has concluded that the floor is not available through the tariff.” He was the lone representative of We Energies to speak.
“The fact that they have lawyers saying something means nothing to me,” said Kovac. “They are extremely late to this game, they have been publicly and actively working against solar until last year.” He said he expected Eagle Point, the city’s partner on the reconfigured library rooftop solar project, to prevail over the utility in court.
Area Alderman Scott Spiker, who does not serve on the committee, and area Milwaukee County Board of Supervisors representative Jason Haas both spoke in favor of the proposal. “We do want to brag about this in our district. This is a great opportunity. You’ve asked penetrating questions, which should be asked. I don’t take issue with that,” said Spiker. But Spiker said the amendment could kill the whole deal.
But Bauman was successful in getting two amendments approved, one of which would increase the value of the deal by 13 percent, potentially $13,000 or more per year.
The MISO-set value of CONE is set to increase in June, and Bauman introduced an amendment to delay signing the deal until it increases. The value in the contract stays set throughout the length of the 20-year deal. Shambarger backed the amendment, but warned it could stretch the project’s completion into 2021. The amendment was unanimously adopted.
Bauman also introduced an amendment that struck We Energies’ ability to use the city in a press release or other marketing without city approval. “We Energies wanted to use the City of Milwaukee in their propaganda, marketing materials, and they’re not paying us for that right,” said Bauman. Kovac suggested it was likely inserted as standard contract language. The amendment to strike the provision was unanimously approved.
After taking up the amendments, the committee unanimously endorsed the proposal. It will next go before the full Common Council.
Bauman pushed for bolder vision, to not cow tow to We Energies. Kovac compared the proposal to throwing a dog a bone.
“I’m going to gnaw on that bone with one half of my mouth while the other half snarls,” said Kovac.
About the Project Site
The 44-acre site at 1600 E. College Ave. is a natural fit for solar power, said Shambarger in a January interview. He said its past use as a landfill, now sealed with clay, makes it unsuitable for development. It’s also unlikely, given its proximity to the airport, that anything would be built nearby that blocks sunlight.
“We have had very little interest in it,” said Redevelopment Authority of the City of Milwaukee assistant executive director Dave Misky of the city’s attempt to sell it. The city acquired the site for use as a municipal landfill in 1942, using it as such until 1988. The fill is between four and 30 feet deep said Misky. Sinking has occurred in some places since it was covered. “Because of that settlement it was going to be very difficult to develop,” said Misky.
Bauman said the lease for the eight acres We Energies would occupy is estimated to pay 26 cents per square foot annually. Is it the highest and best use, he asked. Misky said it was.
Shambarger said an added bonus is that the site is already secure because it connects with the Wisconsin Air National Guard’s base and is fenced off.
Commander James Locke was in attendance and said the military views the installation as part of a strategy to secure the base’s electrical needs in the event of a grid outage.
Shambarger said the panels would not interfere with airport as long as the panels are oriented at least 10 degrees off of a due south orientation.
Renewable Energy Certificates
One of Bauman’s points of contention on the deal was the city’s decision to forego $591 a month in revenue to maintain control of the project’s renewable energy certificates (RECs). The certificates are used as an accounting method to determine who is actually the entity qualified to say they’re using renewable energy.
“That’s public relations. We’re talking real money here. I’m more interested in generating the revenue,” said Bauman. Shambarger said if the city doesn’t take ownership it couldn’t count the effort towards its sustainability goal and an organization like Starbucks could buy them.
“I don’t get this,” said Bauman. “Legally, what says this?” He pushed to know what law would bar the city from doing so and what would happen if the city did. Hittman promised to follow up with more information.
The solar array would not impact the city’s bills from We Energies as the electricity would go directly into the grid. The city cannot construct its own solar array on the site without substantial regulatory hurdles because it is not connected to a city-owned building.
The city currently spends approximately $4 million on building electricity and natural gas, $3.5 million on street lights, and $6 million on power for the Milwaukee Water Works.
The amount of solar power production in the city continues to grow. In addition to the new library installations and a 374-kilowatt array installed atop a Westown office building last year, a city report says at least 3.6 megawatts of solar energy have been installed in Milwaukee through January 2019 by public and private entities, including homeowners.
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