State College Borough on Monday became the latest governmental entity to agree to sign on to a long-in-the-works, multi-agency solar power project.
Borough Council voted 6-1 to authorize State College’s participation in the 15-year Solar Power Purchase Agreement (SPPA), an initiative that’s been in development for five years with the goal of acquiring renewable energy at reduced costs for its participants. Council member Josh Portney was the sole no vote.
State College is the third largest consumer by share among the10 governmental agencies still anticipated to participate in the project, with a share of about 8% of the energy generated. The largest, State College Area School District, authorized moving forward in November, and the second largest, the State College Borough Water Authority, is scheduled to discuss the agreement at its meeting on Thursday.
The borough will acquire 80% of its energy through the SPPA from solar developer Prospect 14 at a rate of 7.6 cents per kilowatt hour in the first year followed by a 1.5% escalator annually. The agreement is projected to save the borough $9,599 in the first year, $16,960 annually after that and $254,405 total over the 15 years, according to project documents.
The agreement also includes a five-year contract with Direct Energy for transfer of electricity generation, and the borough will continue purchasing solar renewable energy credits to account for 100% of its electricity use. A six-year contract with consultant GreenSky Development will provide ongoing management services related to the project.
Project costs, including consultant and legal fees, are billed proportionally among the participants, and each will have its own individual contract. State College’s anticipated cost is $56,340, with payback expected by year four or five of the agreement.
Prospect 14 will build, operate and maintain a a 22-megawatt solar array on leased farmland in Walker Township, and participants will purchase solar energy from the project at predetermined rates. Total project costs for all SPPA participants are $563,310.
The land development plan for the solar field still requires review and approval by the Centre County Planning Commission and Walker Township. The developer and township did reach a conditional use agreement after an appeal which requires, among other things, maintenance, stormwater management and decommissioning plans.
The contract sets a target operational date of Oct. 31, 2026 and it must be in operation by June 30, 2027 or Prospect 14 will face penalties.
If Prospect 14 should be unable to acquire the necessary approvals to construct the array in Walker Township, the contract requires it to provide the electricity from another of its solar projects, SPPA Working Group Chair and school board member Peter Buck said at a working group meeting November.
Council member Gopal Balachandran said part of the appeal of the agreement is that the risk is largely on the developer.
“The thing that I wanted to point out about the agreement, which is, I think, very ingenious, is that the agreement seems to cause most of the risk of the project to be borne by the developer, not by the entities themselves that are entering into it,” Balachandran said. “So we have these upfront costs, but … the risks really shift to the developer once we enter into the agreement. And I think that’s a really a strong argument in favor of the PPA because if there’s some problems with the developer, it’s the developer not the municipality.”
Legal Fees Led to Dispute
The project has generated some controversy. Portney has been among its most vocal critics, raising concerns about $123,000 in additional legal fees beyond the $165,000 initially approved by the participating entities.
When additional work became necessary, project attorney Chris Berendt of the firm Faegre Drinker agreed earlier this year to work “at risk” — meaning the participants could refuse to pay — and agreed to waive about $70,000 in fees. Participants had the option to not pay their share of the additional fees, though all have agreed to.
After the total for the additional fees came to light in August, Portney and others, like Halfmoon Township Supervisor and Centre Region Council of Governments Chair Ron Servello, repeatedly said, most frequently on the Tor Michaels radio show, that the handling of the legal costs was irresponsible. Portney said it was becoming a “financial scandal” and Servello suggested he might call for a state investigation, though did not indicate what agency might investigate it.
On Monday, Portney made a motion to remove approval of the legal fees from the resolution authorizing the borough’s contracts, but it received no second.
“We set budgets for a reason (and the $165K budget here was set after much debate), but when they are exceeded, we deserve to know why,” Portney wrote in a statement after Monday night’s meeting. “We should never retroactively approve money that was committed or spent above what we had already budgeted for, when there is no specific, tangible reason for doing so.”
SPPA Working Group members and other local government officials have said the additional legal fees could have been better communicated to individual governing boards, but were not improperly handled. Borough Manager Tom Fountaine said in September that State College doesn’t necessarily have a fixed budget for legal fees and usually pays for them the way it does other contracted services: when it receives the bill after the work is completed.
Portney has also argued the borough could generate its solar energy with panels that it owns and controls on municipal property, without using farmland. He added that in an “extremely fluctuating” market, the borough would be unable to take advantage if a better deal becomes available during the 15-year contract.
The disagreements have led to several public spats. On Monday night Borough Council President Evan Myers pushed back on suggestions that called into question the integrity of the SPPA Working Group and other officials, and the idea that council was acting as a “rubber stamp” for the project, noting the numerous discussions that have taken place.
“All council members have been afforded the opportunity to ask as many questions as they like, no matter how trivial,” Myers said. “There has been an attempt to distract us from the issue of solar power and saving money by intimating some kind of nefarious activity by the Solar Power Working Group. Some have claimed corruption and even criminal activity. Some of those claims have been made outside the regular order of our council meetings and outside the regular order of other governmental board meetings.
“Yet, when push has come to shove, none of those claims have actually been made at these meetings with any presentation of any evidence of corruption. Those kinds of claims, based on innuendo, undermine the confidence of the public and the ability for us to do our jobs. And perhaps that’s the aim of their claims. I don’t know.”
He acknowledged that the project has had cost overruns for legal fees, but said those fees “will allow us to save money for the residents.”
“That will allow us to save tax dollars, and we’ll work to continue to implement the borough’s strategic plan of reducing our carbon footprint,” Myers said. “This is a good deal for our residents and will save money. This is no rubber stamp vote. This is a carefully considered and deliberated vote.”
Balachandran said it’s important that the questions are asked, that he believes better communication about the legal fees would have precluded the controversy and that full transparency is needed in the future. But, he also said, the SPPA Working Group “has been looking at this issue for years and years and years, and at some point I think there needs to be some respect and humility and trust given to those individuals on the group who have worked really hard and have looked at these issues and know things about the energy markets.”
Who Else Is Participating?
In addition to the borough and the school district, two other entities have already committed to signing on to the project.
The Centre County Board of Commissioners voted unanimously on Dec. 10 to authorize the participation of county government, which has the fourth-largest share of the project. Harris Township’s Board of Supervisors, which previously voted in September to withdraw the township from the project, reversed course on Dec. 9 with a 3-2 vote in favor of joining the agreement.
College, Ferguson and Patton Townships, the State College Borough Water Authority, College Township Water Authority and Centre Region Council of Governments still must vote on whether to proceed.
The Centre Hall-Potter Sewer Authority recently decided to withdraw from the project. The authority has decided to explore installing solar panels on its own facilities and has already reached out to the Centre County Refuse and Recycling Authority (CCRRA) to learn about how it implemented a similar project, Centre Region Sustainability Planner Pam Adams told StateCollege.com
CCRRA, CATA, the Centre County Housing Authority and Halfmoon Township were all previously part of the working group but dropped out for varying reasons over the past two years.
