written 14 September, 2025
published 21 September, 2025
Last week I described our current electrical power situation, listing the forces demanding change, and how Ukiah has a unique opportunity. Let's consider what that might look like in terms of economics.
Ukiah buys power from the Northern California Power Agency (NCPA), which contract with power providers, and owns some generation facilities. What we pay for this power is determined by how many megawatt hours we use in each five minute increment, times the cost of the power as set by the statewide power market at that moment. The power is shipped to Ukiah over the transmission grid owned by PG&E, which charges a flat rate for each megawatt hour.
In 2019, the annual average wholesale cost per kilowatt hour (KWh) paid to NCPA was 4 cents, with another 2.5 cents paid to PG&E. This wholesale cost of 6.5 cents was 41 percent of the residential retail rate of 15.4 cents.
Though the retail rate charged to Ukiah customers is constant throughout the day, the wholesale rate Ukiah pays to NCPA varies wildly. Over the course of a single day, prices can change by more than a factor of ten, as the total demand on the grid changes. Power is cheapest midday, when all the solar production in the state is pushing power onto the grid, and most expensive in the evening as the sun goes down.
This daily swing provides an economic opportunity. With sufficient local battery storage, cheap midday power can be stored and then used in the evening instead of buying expensive power off the grid. In 2019, battery costs and service life at the time meant storage could save about 1/4 of the cost of the battery. However, in the last 6 years, battery chemistries have changed, costs have dropped significantly, life times have more than doubled, and our wholesale power costs have almost doubled, so a battery today would save about twice the cost of the storage system.
About 30 percent of NCPA power is generated from finite fossil fuels, vulnerable to increases in global fuel prices. All power brought into Ukiah is subject to increases PG&E unilaterally makes on their shipping rates.
Consequently, Ukiah could help stabilize power costs by collecting some solar power locally. Being collected locally, there is no payment to PG&E for shipping. The cost of the hardware is a fixed cost for the life of the equipment, which can be decades. Other than that, the power collected is free.
A simple survey of Ukiah shows we have enough commercial roof top area and parking lot area to install over 40 megawatts of solar array. However, some of the buildings might not be structurally able to bear the weight of solar on the roof. Many of the businesses don't own their parking lots. Sorting all that out would take time. But the simplest situations could be developed first. Additionally, Ukiah owns some vacant land within the city limits, and land outside the city limits could be purchased to install even more arrays.
When the Ukiah School district used grants to install canopy arrays on three of their campus parking lots, they paid about $3 per watt. Over an expected 25 life of the system, that will produce power costing about 8 cents/KWh, which is less than we currently pay for our wholesale power today.
But beyond just saving money in the normal course of affairs, local power production and storage builds power resilience in the face of grid blackouts, which promise to become more frequent due to growing climate impact and rapid demand increases stressing our aging and limited grid system. In 2019, Ukiah experienced a four-day planned PSPS grid shutdown. Ukiah lost about $7M in business sales and another $1M in spoiled food. We were fortunate the event didn't last any longer, as ice used for cooling food was at the limit, and backup power systems at cell towers and other critical facilities were reaching their planned limits. Having some power for our critical social and economic functions is a form of insurance against that kind of adverse economic impact.
But the Distributed Resource Operation (DRO) electrical system described above needs money up front, as we are prepaying our electric bill for the next 25 years. Furthermore, operating a DRO requires a more complex power management structure than our existing utility. Addressing these concerns from the beginning is essential. Stay tuned.
