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New Irvine Council Could Look Again at Electric Utility Proposal

Votes are still being counted. If allies of Mayor Larry Agran win, the idea may be revived.

November 15, 2004|Daniel Yi | Times Staff Writer

After spending more than $400,000 and two years on studies, Irvine has scrapped plans to build a city owned electrical utility.

But last week's 3-2 decision to kill further consideration of the controversial proposal could change after Dec. 14, when as many as three new council members could take office, depending on a final count of votes.

"We will wait until the new council is seated, and if there is an inclination [to reconsider the issue], we will do it," said Mayor Larry Agran, who voted with Councilwoman Beth Krom to keep the proposal alive. The Irvine City Council is made up of the mayor and four members elected citywide.

The municipal utility issue was at the center of a political clash before the November elections. Outgoing Councilman Chris Mears accused Agran of promoting the utility in order to benefit a political ally who had a financial stake in the outcome.

Agran denied the accusations and called them politically motivated. Agran, who has served his allotted term as mayor but won election to the City Council this month, said his victory was vindication.

"All of the false accusations and innuendo fell flat in the court of public opinion because they were baseless," he said.

Mears stood by his allegations but said his overriding concern was about the proposal's economic viability.

"It just didn't pencil out," Mears said of the utility proposal.

According to a staff report, the proposed city utility could face about $14.2 million in start-up costs in its first 10 years and return about $17.5 million in net revenues in the following decade.

"It makes no financial sense," Mears said. "The rate of return is appallingly low, especially if you consider the risks."

Irvine is among dozens of California cities that have created public utilities following the brownouts and rolling blackouts of 2000 and 2001.

The utilities were a bid by the cities to gain more control over their energy supplies and to create sources of revenue, but most have existed on paper only.

Irvine's municipal utility is currently just a city-owned trailer served by generator power.

Critics of the idea point out that the state's electric power supply is still very volatile and that rate fluctuations could wipe out the finances of small municipal utilities.

But some have pressed forward. Moreno Valley in Riverside County switched on its utility in February and expects to have 1,000 mostly residential customers by the end of the year, said Tom Breitkreuz, a manager in the city's department of public works.

Like most of the proposed municipal utilities, Moreno Valley provides energy only in newly developed areas. In Irvine, the proposed utility could serve more than 16,000 residential and commercial customers in yet-to-be-developed portions of northern Irvine and the Orange County Great Park -- the 3,700-acre redevelopment plan for the former El Toro Marine base.

"This is a long-term investment," Agran said. "Unlike a personal investment where 20 years may seem like a pretty long horizon, we need to look 50, even 100, years down the road -- a city is forever

Agran is likely to get his way if his allies win, as it appears they are. According to the latest results from the Nov. 2 election, from which votes are still being counted, Krom was headed to victory over Councilman Mike Ward in the mayoral race, and Sukhee Kang held a small lead over Debbie Coven for a third council seat.

The new council majority could bring the public utility study back for review, but Ward and Mears said they would be watching.

"I didn't win the election," Ward said. "But that doesn't mean I am going away."

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