Sophie Akins is a partner at Best Best & Krieger, and leader of the firm’s Renewable Energy practice group. She specializes primarily in solar and renewable energy projects, proceedings before the California Public Utilities Commission (CPUC) and public contract issues. She also provides general governance advice to public entities.
1.Tell us about working in a renewable energy practice and the work you’ve done over the years. Who are some of the clients you represent?
Renewable energy projects present both the greatest opportunities and some of the biggest challenges to the State. In terms of opportunities, my clients, many of whom are water agencies have been able to stabilize water rates via energy cost savings generated by their solar projects. My school district clients have been able to supplement their general funds through solar project energy cost savings, keeping more teachers on staff, providing for additional student programs and purchasing additional instructional materials. I just finished drafting the contracts for solar projects for the Southwestern Community College District as well as the City of Ontario. Both projects will be built by SunPower Corporation but each project presented its own set of challenges. For example, the Southwestern Community College will install over 2 megawatts of solar over carports on existing parking lots which presented a challenge in terms of timing the project build out to accommodate existing student and faculty parking. A traditional liquidated damages clause in such an instance didn’t necessarily work because we were constructing the carports on a rolling basis, so we needed to get a bit creative with structuring delay damages. As for the City of Ontario, we are putting solar on the roofs of the convention center and at the police department, so additional security clearance was required for contractors and we also had to be quite sensitive to scheduling as the convention center is used for events. As for Statewide challenges, the State has a grid that does not have sufficient transmission capacity in instances to accommodate some of the proposed solar projects, so the grid needs to be updated and maintained in a way that supports the expansion of renewables. There is also a broader discussion taking place regarding whether non-solar customers subsidize solar customers and whether the utilities should adopt solar-specific rates or adopt rate structures that reduce some of the economic benefits of solar. As an attorney interested in engaging in policy discussions and ensuring that current and future projects generate energy cost-savings for my clients, I have represented coalitions of public agencies before the California Public Utilities Commission on a variety of regulatory proceedings that would have significantly changed my client’s investments in renewable projects and, to date, we have fortunately been successful.
2. How has the industry changed in California over time? How have new regulations and standards in this area impacted cities in California?
The industry has changed significantly for the better since I started working in the solar industry. For example, it used to be difficult to find a qualified bidder pool of solar companies with experience working with public agencies and the myriad of regulations applicable to public projects. Now the industry is sophisticated and the larger solar companies have divisions devoted to public agency solar projects which ensures that my clients have a broader base of bidders and more competitive proposals. Additionally, solar panel pricing has dropped dramatically making projects more cost-effective for more consumers. Many folks in the industry say that we have hit the “sweet spot” in terms of solar project costs due to the federal and state incentives still available as well as the panel pricing. This means that notwithstanding a change in the law which made all public agency renewable energy projects subject to the payment of prevailing wages in 2012, the pricing for these projects continues to make these projects competitive and strong investments.
3. What is the biggest impediment to new solar projects in CA?
Regulatory and legislative uncertainty. It seems like the rules are changing every day for solar customers. We’ve had a significant policy shift in the State over the last ten years. For instance, the Legislature in enacting the State’s net-energy metering laws and allowing solar customers to roll their meters backwards acknowledged that there could be a subsidy by non-solar customers of the initial, cutting edge solar customers. Because there was a cap on net-energy metering initially, this subsidy was deemed by the Legislature as worthwhile to support a nascent industry. Now that solar has grown into the industry which it is today, there are efforts at every level to take away the economic benefits that the early solar customers thought they could count on when undertaking their solar projects. The recent net-energy metering proceeding before the California Public Utilities Commission is just one such example.
4. Tell us about a recent accomplishment or success story at BBK.
I recently represented a coalition of public agencies and renewable energy consultants and firms before the California Public Utilities Commission to successfully argue for a 20-year grandfathering period for net-energy metered customers who interconnect before the earlier of July 1, 2017 or the statutory cap being reached. As I stated above, with the amount of regulatory uncertainty at this time, it was very rewarding to ensure that most of my client’s solar projects will be protected for a 20 year period.
5. You were a speaker at the ICFA seminar, what was the key message of your presentation?
My presentation focused on how public agency renewable energy projects differ from other types of public works projects. Some of the differences are quite obvious, like the procurement flexibility granted to renewable energy projects under the Government Code. Other differences, like the interplay of renewable energy projects with utility rates and programs as well as how to secure and ensure ongoing, long-term performance guarantees are a bit more veiled and require not only due diligence but pretty tough contractual clauses to secure.
6. What are the regulatory hurdles that need to be addressed to advance alternative energy in CA?
The new net-energy metering proceeding that is commencing before the California Public Utilities Commission (CPUC), what we refer to in the industry as “NEM 2.0”, is going to be key in terms of directing the future of solar. The question is really: At what point will the economics make it unattractive for customers to install solar? Is a 13 year payback period too long? What about 15 years? Additionally, the utilities submit new rate cases before the CPUC every three years. The way in which the utilities structure their rates can significantly devalue existing solar and there might be a number of solar customers today, myself included, who see their energy cost savings whittled away over time through these rate cases. These regulatory activities make it very important that we stay engaged, defending our interests and rights in solar. The Legislature enacted the Solar Rights Act in 1978. In 2014, almost 40 years later, I think the Act needs to be amended to ensure that existing and future solar customers are not targeted by the utilities for disproportionate rate increases, special fees or other unfair practices.
7. How did you come to be focused on alternative energy and local government? Was this an early passion or did you fall into it, and why?
I started my practice working for public agencies on governance and public contracting matters. I’ve always had a passion for the environment which started early as a child. My parents love telling the story of when I was a kindergartener and I threw my arms around a tree that was planned to be cut down in front of our townhome by the HOA. I refused to let go because I did not want to see the street that I loved cut down. In my teens, I started a recycling program at my campus in high school by partnering with my local Rotary Club and a recycling company. So when the opportunity to specialize in renewable energy projects presented itself early on in my practice, I jumped at the opportunity.
8.Tell about a hobby or activity you enjoy outside of work.
I regularly run, bicycle and hike. In fact, I am headed out to the Santa Rosa mountains tomorrow to backpack over the weekend. I love being in nature, away from the billable hours, the deadlines, my iPhone, emails and phone-calls, just focusing on why I work so hard on renewable energy projects – the environment.
9. Anything else you want to talk about regarding these issues or BBK in general?
In my practice, I have been very fortunate to work for public agencies, like water districts and school districts, who are focused on reducing their costs by going solar or exploring other renewable energy projects, like in-conduit hydroelectric. These cost-savings are intended to stabilize water rates, add to the general fund, pay for more teachers and school materials, ultimately, benefitting all members of the public. It has been disheartening to then have to fight tooth and nail to protect these renewable energy investments in recent regulatory proceedings. Hopefully, the Legislature will protect public agencies who heeded the State’s call to install renewable energy so that we don’t have to raise rates, impose new fees or layoff staff in order to accommodate new State policies which penalize the early adopters of renewable energy.
