Until the media exposed it, Chevron Energy Solutions had a really good investment strategy going. Put down $10,000 after the election is in the bag and get a $70 million no bid contract. By my math, that’s a 700,000% return on investment.
The statute that allows this is Government Code Section 4217.12:
4217.12. (a) Notwithstanding any other provision of law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds:
(1) That the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases.
(2) That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract.
(b) State agency heads may make these findings without holding a
public hearing.
Mt. Diablo solar decision could leave Chevron in the dark
By Matt Krupnick
Contra Costa Times
Posted: 07/22/2010 04:45:28 PM PDT
Updated: 07/22/2010 05:36:12 PM PDT
The Mt. Diablo Unified School District has backed away from plans to award a no-bid $70 million solar project to Chevron Energy Solutions and instead will request proposals for the taxpayer-funded project.
The decision comes after the Times raised questions about secret meetings between the district's superintendent and Chevron.
The Concord-based district said this week that on Aug. 2 it would advertise its request for proposals, a step toward a formal bidding. Chevron Energy Solutions, a San Francisco-based subsidiary of the San Ramon oil giant, had spent 18 months pursuing a no-bid contract for the district project, Chevron spokeswoman Juliet Don said.
Some of the meetings with Chevron officials were held at the Walnut Creek home of Superintendent Steven Lawrence.
A state law allows public agencies to sign no-bid contracts for energy projects, and Chevron Energy Solutions has been the recipient of several such contracts, including solar deals at the Peralta and Chabot-Las Positas community college districts. In a written statement Thursday, Don said, "We respect any decision they reach."
Most Mt. Diablo board members said they were unaware of the private meetings between Lawrence and Chevron officials
"It was a matter of convenience," Lawrence said Thursday. "It was information gathering."
Lawrence said he has met with no other companies at his home. He said he could not remember which Chevron officials attended the meetings, and a Chevron spokeswoman declined to provide names.
Paul Strange, Mt. Diablo's board president, did not return phone messages left at his Walnut Creek law office. Board member Gary Eberhart, who has been involved in the solar discussions, said he was unavailable because of a family medical emergency.
Other board members said they had not been aware of the extent of the discussions between the district and Chevron. Trustee Linda Mayo said Lawrence told her about the home meetings recently.
"I don't know that the meetings were inappropriate," she said. "Perhaps the location could have been better."
Trustee Sherry Whitmarsh is a Chevron employee and said she has recused herself from discussions about the project. Board member Dick Allen also said he has not spoken to Chevron officials, but noted that a Chevron Energy Solutions representative attended a party celebrating the passage of Measure C.
Lawrence defended the meetings, saying no final decisions were made behind closed doors.
"Anything we do gets publicly vetted at a board meeting," he said.
The home meetings did not appear to violate any laws, but there is no reason Lawrence could not have met Chevron officials at a restaurant or at his office, said Robert Stern, president of the Center for Governmental Studies in Los Angeles.
"It's a little strange," Stern said. "The question is why. What was he trying to hide?" The 51-site solar project, billed by some at the district as the largest K-12 school installation in the country, will be financed through Measure C. The $348 million bond measure — which will cost taxpayers an estimated $1.8 billion over 42 years — was approved by voters in the Mt. Diablo district last month.
The superintendent declined to say why Mt. Diablo leaders had opted to change course from their nearly exclusive negotiations with Chevron, but the decision came as Bay Area News Group questioned the close ties between the district and Chevron. In regards to whether the public's perception of a potential no-bid contract played a role, Lawrence said perception "factors into every decision we make."
The law exempting energy projects from bidding requirements was passed by the Legislature in 1983.
Its author, then-Assemblyman Gray Davis, said recently that he thinks the exemption has outlived its purpose and should be repealed. At least one current lawmaker, Sen. Leland Yee, D-San Francisco, has said he may propose such a change in the coming legislative session.
Public agencies have used the exemption to push through solar projects more quickly than the bidding process allows. Recent changes to the California Solar Initiative, which gives rebates to customers who install solar panels, gave agencies more time to complete projects.
Officials throughout the state said Chevron often tries to persuade school districts to sign no-bid contracts. In most cases, the company walks away from districts that open a bidding process because Chevron's prices are usually higher than those at other companies, said Don, the company spokeswoman.
Earlier this year, Chevron commissioned an informational report on using bonds to pay for solar projects, according to Green Technology, which published the report. The paper was sent to school districts throughout the state, but it did not advocate the use of a specific company.
Matt Krupnick covers higher education. Contact him at 925-943-8246. Follow him at
Chevron gave $10,000 to Mt. Diablo schools' bond campaign
By Matt Krupnick
Contra Costa Times
Posted: 07/23/2010 04:11:54 PM PDT
Updated: 07/23/2010 06:17:34 PM PDT
Chevron Corp. donated $10,000 to a $348 million bond measure four days after it was approved by voters in the Mt. Diablo Unified School District last month.
The San Ramon oil giant donated the money to the Measure C campaign as a San Francisco subsidiary, Chevron Energy Solutions, continued to press the district to award it a $68 million, no-bid solar contract that would be paid by the bonds. District leaders told the company this week they planned to seek competitive bids on the project.
The June 12 donation, disclosed on documents obtained Friday from the Contra Costa County elections office, came the same day as a $5,000 donation from Camarillo-based SolarWorld California, which sometimes manufactures solar panels for Chevron projects.
Although the donations were apparently legal, they still raise questions about the district's close ties to its vendors, said Peter Scheer, an attorney and executive director of the First Amendment Coalition, a nonprofit open-government group.
"It's inappropriate, if not unethical, for them to be trying to influence the public's decision on a matter on which they will be profiting personally," he said.
The district's decision to seek bids came after Bay Area News Group questioned meetings between Mt. Diablo leaders and Chevron officials at the Walnut Creek home of district Superintendent Steven Lawrence. Some Mt. Diablo board members have said they were not aware of the meetings at the time they took place.
Staff writer Theresa Harrington contributed to this story. Matt Krupnick covers higher education. Contact him at 925-943-8246. Follow him at Twitter.com/mattkrupnick.
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