These four fixes could keep SMUD from making more bad power decisions | Opinion
As citizens complained about a controversial solar farm being considered at a December meeting of the Sacramento Municipal Utility board, a project that would destroy thousands of oak trees, board member Dave Tamayo confided he didn’t know what he could do.
“I don’t fully understand what our options are regarding this particular issue,” Tamayo said of the project known as Coyote Creek.
On January 5, outgoing SMUD General Manager Paul Lau terminated SMUD’s power purchase agreement with the New York-based project builder, but not before DESRI Inc. had secured a pivotal permit from Sacramento County to move ahead with the project with or without SMUD. The lawsuits and public scorn resulting from this poorly considered decision represents the worst publicity SMUD has gotten in decades.
On Wednesday, SMUD directors hold their first public meeting since Lau’s unilateral decision on Coyote Creek, followed four days later by his announced retirement.
This board prides itself as setting policies and then allowing management to figure out how to move SMUD toward a carbon-free grid as early as 2030.
Tamayo’s admission of uncertainty of what he could do underscored how the Board of Directors simply failed the public on this project, by refraining from discussing it meeting after meeting ever since approving it in 2021.
The silence was particularly wrong in light of a county environmental analysis last year that revealed a far greater sacrifice of mature oaks (more than a thousand at least 250 years old) than anyone had previously imagined.
A utility board with comprehensive policies would have behaved very differently than this one. Coyote Creek should have automatically come back to the board and the public multiple times, as opposed to never.
I say this with a little bit of experience in the field. I worked for 16 years at a Southern California utility (water) that serves more than 12 times SMUD’s population. I was its strategic communications and policy advisor.
It appears that SMUD could use a little policy advice.
Here are four new policies this SMUD board should begin kicking around, starting Wednesday:
Contract breaches should reach the board
Any breach of a power purchase agreement large enough to qualify for termination must be promptly reported to the board, in public, and let the board decide what to do.
The SMUD board could have terminated DESRI’s power purchase agreement for literally years. That’s because the company was failing to meet numerous progress milestones detailed in the power purchase agreement.
“SMUD has no intention of terminating the PPA,” the utility wrote to DESRI in September 2024. But that was private decision of management without public notice or comment.
Cost hikes are the board’s business
Rather than withholding information, SMUD management should promptly notify the board, as part of an agenda in a public meeting, that an agreement will need a second vote when the seller of power is balking at the agreed-upon price. This is not some state secret. This is a public power utility doing the public’s business.
Back in 2021, the board unanimously directed staff to sign this power purchase agreement at a specific price for the generated electricity. Any higher price would have triggered another vote.
DESRI had privately told SMUD that it would no longer provide the electricity at the agreed-upon price and wanted more. Precisely when is unclear based on public records currently available. But SMUD mentioned this in its letter to DESRI last week as it terminated the agreement.
DESRI “has indicated that it cannot perform its obligations under the PPA at the agreed contract price,” SMUD wrote.
Environmental reviews merit public discussion
SMUD must always understand the enviornmental consequences of its decisions in a timely, public manner.
It wasn’t until March 2025 when county planners released the draft environmental analysis of the Coyote Creek project. This is when the public got the first knowledge that Coyote Creek would kill more than 3,500 oaks in southeast Sacramento County.
SMUD directors were not briefed in a public meeting on this finding. What a mistake. And that’s because they don’t routinely receive environmental updates on their own power projects. Had they been shocked like many of their customers were, they also could have terminated the power purchase agreement for delayed performance. Because by then, SMUD had the clear grounds to do so. But the directors didn’t seem to know that either.
The board shouldn’t let management hide
When county supervisors in November reviewed Coyote Creek’s final environmental report, critics challenged the county’s assertion that this project was necessary to meet SMUD’s zero-carbon goals. This criticism was all but confirmed by the release of a SMUD letter in 2024 urging DESRI to pursue other projects with the utility to meet those goals.
Supervisors were not able to ask SMUD directly whether the project was needed, or whether the utility could back out of the agreement. That’s because nobody from SMUD attended the Nov. 18 supervisors meeting. The absence of SMUD management was noted by Supervisor Phil Serna at the time. The supervisors’ decision has prompted lawsuits from environmental groups and the Wilton Rancheria.
No public agency should intentionally hide from the public, particularly when the lack of public information can influence the outcome of an important decision. It’s good policy for SMUD leadership to always attend meetings of other governments deciding the future of an important SMUD matter such as a power purchase agreement. How SMUD dodged the supervisors last November was simply inexcusable.
Bad outcomes are the result of bad policies. Coyote Creek was the worst decision by SMUD in decades because the board and management set themselves up for failure.
This story was originally published January 14, 2026 at 5:00 AM.