Paul Lau’s storybook career at SMUD is more than an ugly final chapter | Opinion
Paul Lau had a storybook career at the Sacramento Municipal Utility District, starting 45 years ago as a university intern and rising to chief executive officer and general manager some four decades later.
Its capstone was Lau’s announcement that he will retire some time later this year, as he has guided SMUD for the last half decade toward a future of carbon-free electricity, to be achieved at least 15 years sooner than the rest of California and most of the world.
There is no getting around how the final chapter in Lau’s time at SMUD will be his darkest. He has presided over the worst electricity decision he and his Board of Directors has made this century, to buy power from a giant new solar farm in a pristine oak woodlands landscape when there were far more nature-friendly options.
The timing of how Lau decided on Monday to abandon the power contract with Manhattan’s DESRI Inc., and to announce his retirement four days later, may be purely coincidental. It’s not worth asking, because neither Lau nor SMUD, stung by the wave of litigation from environmentalists and the Wilton Rancheria against this project, is saying much of anything substantive right now.
Setting aside SMUD’s self-created mess of the moment, and looking at all of Lau’s chapters at SMUD, it is a reminder of how fortunate we all are to live in a community with a public utility with broader public purposes.
For years, a winning team
It is no easy feat to convert a grid run primarily on fossil fuels to be totally dependent on renewable sources. Power plants run by natural gas provide steady streams of power that can reliably handle the baseline needs. That makes managing the peak demands of a hot Sacramento summer a lot easier when much of the power load is locked in.
Renewable energy sources like solar and wind are far more fickle and less reliable. The peaks and valleys of their production have to be managed with batteries, hydropower and other technologies.
To create a zero-carbon Sacramento grid is a chess game of nearly unimaginable proportions. And Lau has been our grandmaster, leading Sacramento towards a historic feat while keeping rates at a fraction of those of California’s investor-owned utilities.
At a 2023 global energy conference in Dubai, “watching Paul talk to the leaders of the world in energy, to have the room so quiet, you could have heard a pin drop,” said SMUD Director Heidi Sanborn of Ward 8 at the district’s December meeting. “They couldn’t believe what we were doing at this utility. The whole world knows about SMUD.”
Back at headquarters, “Paul is really loved by the employees here, and that is not always an easy thing to do.” said Rosanna Herber, the Ward 4 director. “He’s fair, he’s honest, and I think that’s really important.”
A rare SMUD blunder
Amid this heady and historic era for SMUD, Lau’s ugly final chapter began to unfold. Directors in 2021 agreed to purchase power from DESRI, the solar farm at a scenic ranch in the oak woodlands of the southeast county. Similar arrangements had worked well. But the project known as Coyote Creek would come back to haunt the utility.
Last year, the environmental analysis revealed that the project was far more damaging than initially portrayed, eliminating an estimated 3,500 oak trees. Records showed how Lau and SMUD management began privately suggesting to DESRI as early as 2024 to move onto other projects. Yet DESRI and SMUD stayed the course, securing a pivotal permit from Sacramento County supervisors in November, which triggered litigation and opposition to the project that continues to grow.
Lau and SMUD simply didn’t have any institutional reverence for this unique landscape of oak trees or any instinct to leave this beautiful corner of Sacramento County alone. SMUD’s decision to back out of the power agreement does not end this project and in many ways makes the original decision even worse.
Lau championed it long enough for DESRI to get critical permits before he backed out of the deal. Coyote Creek may still be a thorn in SMUD’s side long after Lau is gone. The general manager has refused interview requests, yet Lau and SMUD can only hide from this mess for so long.
Correcting course
SMUD is perfectly competent at commencing a search for a new leader, and for many stellar candidates to be interested in Sacramento. And when SMUD, hopefully in five years, has that historic ceremony announcing that our power will never again require the combustion of carbon, Lau should be at center stage for his remarkable contributions.
Yet confident organizations also have the capacity to learn from mistakes. This is a SMUD learning moment. And the emerging weak spot does not appear to be Lau or management. It appears to be the Board of Directors.
In a world as complicated as electricity, it is wise for elected officials who are novices in the field to defer to staff for a path into the future. But there is a big difference between delegation and abdication.
Any board member for months could have requested Lau to discuss in public how Coyote Creek was going and whether it was time to correct the course. That is what is known in government as oversight. Yet the word does not seem to be in this board’s vocabulary.
This SMUD board chose ignorance over leadership.
Paul Lau is no fall guy leaving in disgrace. He is leaving behind a cutting-edge utility. It will need a stronger board for SMUD to keep adapting and to reliably live up to its good name.
This story was originally published January 10, 2026 at 5:00 AM.