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The Imperial Irrigation District infuriated customers last year when it abruptly closed a popular solar program to new applicants, putting rooftop solar out of reach for many families who could no longer afford it — and leaving more than 1,000 homes and businesses that had already decided to go solar in financial limbo for months.
But a solar project developed by an IID consultant, ZGlobal Inc., applied for the publicly funded solar program, known as net metering, just in time. ZGlobal’s solar project was so large that it helped prompt the sudden end of net metering and at least temporarily kept hundreds of regular IID customers from enrolling, newly obtained documents show.
ZGlobal led the development of that solar project, at Imperial Valley College, while the consulting firm also helped run IID’s energy department. ZGlobal’s project was three times larger than the size limit for the utility’s net metering program — and 600 times the size of an average rooftop solar system. That means it would have taken up 600 times more of the limited space in IID’s solar program than the typical home solar installation.
Less than a month after getting net metering applications for the Imperial Valley College project, IID suddenly closed the program to new applicants, saying it had inadvertently accepted too many applications and might not be able to enroll everyone who had applied. That was stunning news for the thousand-plus IID customers — many of them in the Coachella Valley cities of Indio, La Quinta and Coachella — who had applied for net metering but hadn’t yet been approved. Many of those homes and businesses had already paid for rooftop solar systems based on the expectation of net metering.
Without net metering, which pays solar generators for the electricity they produce, those customers weren’t sure whether solar would save them money or raise their energy bills.
After six months of growing political pressure, IID finally let most of the stranded solar customers enroll in net metering. But the utility provided little information to those customers in the interim, leaving many of them anxious that the tens of thousands of dollars they had agreed to pay rooftop solar installers would turn out to be a losing investment. In some cases, IID encouraged its stranded customers to sign up for a new, less generous solar program known as net billing, creating more confusion and anxiety.
“I’ve already paid for the system. I’ve got my investment just sitting there, doing nothing,” Indio resident Paul Nelson, who had solar installed in early 2016, told The Desert Sun as he waited for word from IID last year. “I figured my return on my investment would be the reduction in my monthly bills. Well, guess what? I’m still getting monthly bills.”
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ZGlobal disputed the idea that the college solar project had anything to do with net metering’s abrupt closure.
Kassy Perry, a Sacramento-based public relations consultant working for ZGlobal, said Imperial Valley College never actually received net metering benefits. She said the college ultimately agreed to switch to IID’s new, less generous net billing program before its solar project came online, so that more homeowners could enroll in net metering.
Perry also suggested IID staff had caused the over-enrollment problem by continuing to accept net metering applications even when they knew the program was nearing capacity. The suggestion that ZGlobal’s Imperial Valley College project helped prompt the end of net metering “is based on erroneous facts,” Perry said in a written statement.
After net metering ended, a ZGlobal client stood to benefit from a new solar initiative that IID staff framed as a response to public anger over the closure of net metering.
As more than 1,000 IID customers waited months to find out whether they’d get net metering, utility staff told IID’s board of directors they were working on a plan that would allow ratepayers to keep accessing solar power. ZGlobal employee Jesse Montaño worked on that plan, which would involve IID buying power from a large-scale “community solar” farm. IID gave a ZGlobal client a $75-million contract for that solar farm, to be built on land owned by a limited liability company with close ties to ZGlobal.
“I’ve done business with a lot of government agencies, and I haven’t seen one that’s operated in that manner,” said Kirk Weiss, regional sales manager for Planet Solar, a Palm Desert-based rooftop installer. “If you’re an insider, you get special treatment.”
ZGlobal terminated its $9.1-million consulting contract with IID in October, a year ahead of schedule, in the midst of an investigation by Imperial County’s district attorney into the relationship between the consulting firm and the utility. That investigation was sparked by a series of articles in The Desert Sun focused on potential conflicts of interest at IID.
READ THE SERIES: Imperial Power Players: A Desert Sun investigation
IID launched an internal investigation in response to The Desert Sun’s reporting, which so far has led to the cancellation of two energy contracts, collectively worth $82 million. Utility officials had said they would release a report this week outlining other potentially problematic contracts, but IID’s board of directors blocked the report’s release until after the completion of a planned mediation between IID and ZGlobal.
IID didn’t respond to detailed questions from The Desert Sun for this story. But in an emailed statement, the utility’s general manager, Kevin Kelley, said: “To the extent there are issues, including the one you are asking about involving (Imperial Valley College), IID will address them in the mediation process by availing itself of the potential remedies under Government Code Section 1092.”
Government Code Section 1092 allows public agencies to void any contracts that were made in violation of California’s conflict-of-interest law. The law says elected officials, public employees and private contractors working for government agencies “shall not be financially interested in any contract made by them in their official capacity.”
ZGlobal founder and president Ziad Alaywan has denied that he or ZGlobal ever acted improperly, saying the consulting firm has boosted the Imperial Valley’s economy by bringing solar developers to the area and helping IID keep electricity rates low.
The Imperial Irrigation District is a publicly owned utility that provides electricity to 150,000 customers in the eastern Coachella Valley, Imperial County and a small portion of San Diego County. Since 2005, IID has hired ZGlobal 15 times, agreeing to pay the engineering firm a total of $18 million, as The Desert Sun has previously reported.
The same week ZGlobal signed its largest-ever contract with IID, the consulting firm pushed Imperial Valley College to take advantage of the utility’s net metering program.
On Oct. 20, 2015, IID’s board of directors agreed to pay ZGlobal $9.1 million over three years to help run the utility’s energy department. Six employees from ZGlobal would work full-time for IID, including Jesse Montaño, the consulting firm’s vice president of strategic planning and a former IID employee. The contract took effect immediately.
The next day, Montaño made a presentation to Imperial Valley College’s board of trustees on behalf of the solar developer Green Light Energy Corp., a ZGlobal client. Montaño advised the trustees to buy a solar project from Green Light. Part of his presentation was a warning that IID’s electricity rates “will not be decreasing!!!”
Montaño’s presentation described Green Light as the developer, but listed just three members of the project team: Montaño and two other ZGlobal employees. As the Desert Sun has previously reported, Green Light and ZGlobal share offices and representatives across more than a dozen limited liability companies, most of which are managed or owned by ZGlobal founder and president Ziad Alaywan. Most of those LLCs list longtime ZGlobal employee Melissa Vaa as their registered agent in state records. Green Light’s CEO is Melissa’s brother Jeremy Vaa. A third sibling, Eric Vaa, also works for ZGlobal.
Imperial Valley College had asked companies to submit proposals for a solar project in early 2015. The college got two proposals, both of which were obtained by The Desert Sun, along with other bidding documents, under a California Public Records Act request.
Green Light’s proposal touted the developer’s connections with IID. One of two references listed for Green Light was IID employee Jamie Asbury, whose son Cameron Bucher had worked at ZGlobal until a few months prior. One of four references listed for ZGlobal was Jim Hanks, a member of IID’s board of directors. Earlier that year, two of Hanks’ adult sons had been hired by a subcontractor to do pre-construction work on a solar project being developed by a ZGlobal client, on land owned by ZGlobal’s Alaywan.
Imperial Valley College staff selected Green Light’s proposal, giving it higher scores for its more detailed description of possible project options, as well as the company’s local presence. The college’s board of trustees voted in October 2015 to finalize a one-megawatt solar contract with Green Light. The trustees later agreed to expand the project to three megawatts, after a presentation by Green Light CEO Jeremy Vaa.
A two-page handout provided by Vaa to the trustees said the college would pay Green Light about $15 million for electricity over the next 25 years with a three-megawatt, net-metered solar project, compared to an estimated $24 million it would otherwise pay IID.
The handout described net metering as “a VERY limited time program.”
Vaa didn’t respond to a request for comment for this story.
Perry, the ZGlobal spokesperson, said it wasn’t a conflict for the engineering firm to work for IID while also working on the Imperial Valley College solar project. She said ZGlobal disclosed its private-sector clients, including the college, to IID. She also said it didn’t matter to ZGlobal whether or not the college ultimately received net metering, since ZGlobal “get(s) paid a fixed cost regardless of IID payment to the owner of the meter.”
Imperial Valley College’s solar project went online in early 2017. John Lau, the college’s vice president of administrative services, wouldn’t say whether the project ever received net metering benefits, or whether it agreed to switch to the less generous net billing program, as Perry claimed. Lau said the college is currently reworking its solar contract with IID, although he declined to provide details until a new contract is finalized.
Lau also said ZGlobal’s connections to IID had nothing to do with the selection of Green Light’s solar proposal.
“Their relation with the IID never came in. That wasn’t even a consideration,” Lau said. “Maybe we were ignorant or something, but we just assumed that whatever the rules were, we would end up working with them and get a project that was allowable.”
The average home solar installation is about 5 kilowatts. IID’s net metering program was limited to solar projects no larger than 1,000 kilowatts, which equals one megawatt.
Green Light appears to have tried getting around that size limit by submitting the college’s three-megawatt project to IID as three one-megawatt projects. The Desert Sun obtained copies of three one-megawatt net metering agreements between the college and IID. The agreements are signed by Lau and dated Jan. 26, 2016, although they haven’t been signed by anyone from IID yet.
Other records corroborate those documents. Spreadsheets produced by IID, listing thousands of projects that applied for net metering, show that Green Light submitted three applications for solar projects of about one megawatt each on Feb. 5, 2016.
Those spreadsheets were obtained from IID by the California Solar Energy Industries Association, a trade group that fought the utility’s decision to end net metering. The trade group provided the spreadsheets to The Desert Sun.
ZGlobal rejected the suggestion that the Imperial Valley College solar farm was too big for net metering. Perry, the ZGlobal spokesperson, said net metering was designed to benefit all electricity ratepayers, not just homeowners, and that the college’s three-megawatt solar project was in “complete compliance” with the public utility’s rules.
“IID’s Net Metering Program was available on a first come first served basis to any residential or commercial ratepayer with established meters, and limited to one (megawatt) per meter, not one (megawatt) per ratepayer. Many commercial entities have more than one meter due to their larger energy needs,” Perry said in a written statement.
But IID says on its website that net metering was available to utility customers with a “power production source with a capacity of less than 1 megawatt.” The utility uses similar language on a net metering FAQ page, explaining that an “eligible generating system is…less than 1,000 kW (1 MW) in total nameplate rated capacity.”
The utility’s net metering agreement with Imperial Valley College says net metering exists to “facilitate terms of service to customers with (solar) or wind power production systems, or a hybrid system of both, with a capacity of not more than one megawatt.”
READ THE SERIES: Imperial Power Players: A Desert Sun investigation
Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association, said solar installers often build projects right up to the one-megawatt size limit of utility net metering programs. But she said it’s not normal for a developer to try squeezing a single project so much larger than the size limit into net metering.
“This stringing together of one site with one customer in order to get three different (net metering) qualifications — that is unusual,” Del Chiaro said.
A spreadsheet produced by IID earlier this year showed that just five solar projects larger than 900 kilowatts, or nine-tenths of a megawatt, had ever been energized under the utility’s net metering program — and two of them were developed by ZGlobal. Those one-megawatt-projects, which came online in 2014 and 2015, power an industrial facility in Plaster City, a remote outpost in southwestern Imperial County.
Less than a month after Green Light submitted net metering applications for Imperial Valley College, IID suddenly closed the program to new applicants, saying it had inadvertently accepted too many applications and might not be able to enroll everyone who had applied. That set off six months of uncertainty for more than 1,000 IID customers trying to go solar, and brought the local solar industry to a screeching halt.
IID was required by state law to keep offering net metering until it hit the 50.2-megawatt mark, although the utility could have chosen to keep the program going after that. A few months after the initial shutdown, IID staff proposed raising the limit to 55 megawatts, which would have allowed most of the thousand-plus stranded customers to sign up.
But the utility’s board of directors rejected that proposal, arguing that net metering was an unfair subsidy that transferred public money from low-income families to wealthier ratepayers who could afford to go solar. It’s a common argument that utilities have made against net metering. But IID board members were especially concerned, given the importance of low electricity rates to the Imperial Valley’s many low-income residents.
“I support rooftop solar… but I do not support it to the point where other ratepayers are having to subsidize it,” Jim Hanks, the IID board member who was listed as a reference for ZGlobal in the college solar proposal, said at a May 2016 board meeting.
“It’s not our responsibility to make the homeowners’ asset more valuable,” Hanks said later in the meeting. “Putting that rooftop (solar) on there, under the auspices of (net metering), adds value to the value of that house. My responsibility is to the ratepayer.”
Public pressure ultimately overwhelmed IID on net metering. Faced with a bill in the state Legislature that would have required the public utility to let the thousand-plus stranded solar customers sign up, IID leaders struck a deal with the solar industry, agreeing to let most of those homes and businesses enroll in the popular solar program.
In the meantime, IID unveiled a new program for future solar customers, called net billing. Under net metering, solar generators were credited at retail rates for electricity they sent into the grid. Under net billing, they would be credited at a far lower rate. Critics said the new program would make solar too expensive for most homeowners.
A year and a half later, several rooftop installers say those fears have come true.
“We’re still doing business in IID, but it’s probably half of what it used to be,” said Kirk Weiss, from Planet Solar in Palm Desert.
Joe Deisenroth, a Palm Desert-based sales consultant for the rooftop installer Revco Solar, said his business was “95 percent focused on IID” when net metering was in place. But ever since IID replaced net metering with the less generous compensation program, Deisenroth said, he’s done just one installation in IID’s service territory.
“It’s dramatic. It’s affected everybody,” Deisenroth said.
ZGlobal’s Montaño helped IID develop net billing, the less-generous solar program that replaced net metering. In July 2016, Montaño described IID’s efforts to develop a new solar program to IID’s Energy Consumers Advisory Committee. He emphasized that the new program would include safeguards to stop homes and businesses from building solar systems that were too big, which he said was intended to “protect our customers.”
Perry, the ZGlobal spokesperson, said Montaño’s work on the net billing program was “technical in nature and did not benefit or hurt ZGlobal.”
Montaño also helped IID develop another new solar initiative that stood to benefit a ZGlobal client.
As IID fielded customers’ complaints about the end of net metering, utility staff told the board of directors in May 2016 that they were working on a “community solar” program that would make solar power available to low-income homes and other customers who wanted it. The idea was that IID would sign a contract to buy power from a large solar field, then re-sell the electricity to its own customers at an affordable rate. Staff said the program would benefit all IID customers, including those who couldn’t afford their own solar systems or lived in apartment buildings where they couldn’t install rooftop panels.
Montaño discussed the community solar initiative at a September 2016 meeting of IID’s Energy Consumers Advisory Committee.
“Our goal is to offer more than 20 megawatts of solar for our customers that would like to sign up and participate in this regional neighborhood solar program that we’re offering,” Montaño told the committee. “I’m not a PR person, so I haven’t come up with the good name for it yet. But this is something that we’ve been really working on, and the price that we are getting for solar is unreal. It’s very, very aggressive.”
The low-priced community solar project that Montaño alluded to was being developed by Regenerate Power, one of ZGlobal’s private-sector clients. After a public bidding process, IID staff had chosen a community solar proposal by Regenerate, which planned to build a project on land owned by Alaywan, ZGlobal’s founder and president.
Perry, the ZGlobal spokesperson, said Montaño “was asked by IID to help out and he did but (he) was not in any position to make a decision and was not involved in contract negotiation.” Montaño was “exclusively working with IID,” Perry said, in accordance with the engineering firm’s consulting contract with IID, which said ZGlobal employees working for the public utility couldn’t also work for ZGlobal’s private-sector clients.
HELP US INVESTIGATE: Do you have information that could lead to further reporting? Please contact the reporter at (760) 219-9679, or by email at sammy.roth@desertsun.com.
The IID-Regenerate community solar contract was delayed after it came to light that IID staff had asked Alaywan for input on the negotiations. IID’s general counsel, Frank Oswalt, said at a board meeting in March 2017 that Alaywan’s involvement on both ends of the deal was a potential conflict. Oswalt said that Alaywan had agreed to sell the land, and the community solar project would be put back out to bid. Oswalt also said ZGlobal had agreed to stop working for private-sector clients seeking to do business with IID.
READ MORE: How public money kept flowing to ZGlobal in the Imperial Valley
After a new bidding process, IID again chose Regenerate, signing a $75-million solar contract with the developer. But despite Oswalt’s assurances that the potential conflict had been eliminated, the Regenerate subsidiary that signed the contract with IID still listed Melissa Vaa, a ZGlobal employee, as its registered agent in state records, as did the company that owned the land. The landowning company also said in state records that it was owned or managed by Green Light CEO Jeremy Vaa, Melissa Vaa’s brother.
IID ultimately canceled the $75-million contract as a result of scrutiny by The Desert Sun. The utility later signed a new community solar contract with Citizens Energy, a nonprofit, agreeing to pay $36 million over 23 years for the output from a smaller project.
Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.
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