SMUD could have killed a bad solar project months ago, but didn’t. Why? | Opinion
The Sacramento Municipal Utility District could have canceled its controversial solar farm contract known as Coyote Creek since September 2024, or so the utility says in an internal document.
Yet SMUD management only backed out of the deal on Monday after the project had gained a much-needed county permit and after a growing community backlash. Instead of killing this project more than 15 months ago when it had the chance, SMUD appears to have done everything possible to keep it alive for someone else to step in.
SMUD has only had three paragraphs to explain itself in a press missive on its website.
“Due to project uncertainties, SMUD announced today that they will not be purchasing power from the Coyote Creek project,” the utility said. “Some of the uncertainties include: supply chain constraints, rising prices, tariffs, schedule delays, environmental impacts and pending litigation.”
Missing is how SMUD could have done this months ago, but didn’t.
Instead, SMUD’s Board of Directors did nothing and said basically nothing until last month.
“I don’t fully understand what our options are regarding this particular issue, and I’d really like to get a briefing on that,” SMUD Director Dave Tamayo said at the board’s Dec. 11 meeting.
How the SMUD board boxed itself in
SMUD directors began to put themselves in a box when they unanimously voted to buy this solar power in 2021 without understanding the environmental or community consequences of what they were doing. And then the board wrote itself out of the loop by delegating the contract-signing authority to its long-time general manager, Paul Lau.
Lau did not return repeated requests for comment.
SMUD’s partner in the deal is the New York-based energy developer D.E. Shaw Renewable Investments, or DESRI. SMUD has repeatedly relied on DESRI to develop the carbon-free energy resources that the utility hopes to exclusively rely upon by 2030. An email to DESRI went unanswered.
The power purchase agreement details how SMUD could terminate this contract with DESRI for lack of performance for various reasons. What happened is all spelled out in SMUD’s official notice of termination delivered to DESRI on Monday, which SMUD provided to the Bee on Tuesday upon request.
DESRI agreed to have this project operational by September 2024. But three times in 2022, DESRI sought extensions based on changing circumstances. And Sept. 30 of 2024, SMUD determined that it could back away from the deal:
“Buyer (SMUD)... noted that it had the right to terminate the (purchase power agreement)... but declined to do so,” says SMUD in Monday’s termination letter.
County supervisors, kept in the dark
But all of this went down in private until Monday. What a mistake. Lau should have called for a public meeting of the SMUD board back in 2024 and solicited the public’s input on the utility’s options. Lau did not.
Meanwhile, SMUD left the public out of the loop and stood silently by as DESRI paid Sacramento County to be the lead agency and conduct the project’s required environmental review. It was then that SMUD and the public discovered that the loss of oak woodlands, and necessary land leveling and excavation, would be far more dramatic than initially claimed. More than 3,500 native oaks will be unearthed across 2.1 square miles.
Environmental groups and the Wilton Rancheria united to oppose the project, yet supervisors in November ignored the concerns and unanimously approved the environmental review and granted the necessary county permit.
County Supervisor Phil Serna noted how nobody from SMUD had the courtesy to attend the meeting.
“If an agency has so much to gain … or the narrative being that they have this understandable and applaudable goal by 2030 to be completely renewable, you would think that they would have some kind of presence,” Serna said.
Opponents, including the Wilton Rancheria, have since challenged the environmental document in Sacramento County Superior Court.
SMUD, despite its private misgivings about this project for months, allowed its good name and its energy goals to help this solar project get past county supervisors and secure this key permit. By the utility withholding its concerns about project deadlines and cost, the supervisors were left completely in the dark.
In its termination with DESRI, SMUD management all but blamed the energy company for the utility being misled about its own local politics. “Seller (DESRI) represented to Buyer (SMUD) that the Project had the ‘buy-in’ from the key stakeholders, including but not limited to Wilton Rancheria. Given that Wilton filed one of multiple different lawsuits that Buyer is aware of challenging the project, that certainly does not appear to be the case.”
A breakdown in due diligence and transparency
This feels like a complete breakdown in due diligence and transparency by SMUD. It was the utility’s job to vet this project with the public, not DESRI.
This is a public power utility that is supposed to do the public’s business in public. Somewhere down the line, DESRI became SMUD’s client, not ratepayers, not the community at large, while board members who are supposed to be in charge sat on their hands.
The real leadership moment on this project has come and gone. Now we have a destructive solar project in the wrong place, which, thanks to SMUD, appears to be still alive.
This story was originally published January 6, 2026 at 4:58 PM.