'Taxation without representation': Why the Coachella Valley can't vote in IID elections

It's been a tumultuous year for the Imperial Irrigation District.

On the energy side, IID canceled tens of millions of dollars in contracts following allegations of financial conflicts of interest against the consultant ZGlobal Inc. On the water side, the publicly owned utility was jolted by a court ruling that could make it more difficult to limit the use of Colorado River water by Imperial Valley farmers.

Voters will have a chance to judge IID's response to those developments on June 5, when three of the five seats on the agency's elected board of directors are up for grabs.

But even though the Coachella Valley is home to more than 60 percent of IID's energy customers, only Imperial County residents will be allowed to vote.

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The origins of the Coachella Valley's unusual relationship with the Imperial Irrigation District date back nearly a century, to the laws and agreements that made possible the construction of Hoover Dam and the canals that bring Colorado River water to Southern California. As a result, nearly 95,000 homes and businesses in the Coachella Valley buy electricity from IID but have no representation on the public agency's board of directors. They can't run for office, and they can't vote.

The simple version of the story is this: IID sells energy in Imperial County and the eastern Coachella Valley, but it exists primarily to provide Colorado River water to Imperial Valley farms. The idea of political representation for the Coachella Valley has long been a non-starter for IID, which zealously guards the Imperial Valley's water rights.

But for some Coachella Valley officials, the lack of representation feels especially frustrating in 2018, following a Desert Sun investigation into IID's relationship with the energy consultant ZGlobal.

The Desert Sun's reporting revealed that ZGlobal's private-sector clients received tens of millions of dollars in contracts from IID while the consulting firm helped run the agency's energy department. The investigation also found that IID paid private investigators to scrutinize Renova Energy, a Coachella Valley-based rooftop solar company whose chief executive is one of IID's loudest critics.

Steve Sanchez, a La Quinta city councilmember, saw the public utility's use of ratepayer funds to investigate a private business in the Coachella Valley as a disturbing reminder of the power imbalance at IID. The agency brings in more than $250 million annually from energy sales in the Coachella Valley, accounting for 40 percent of its operating revenues. But the elected board is only accountable to Imperial County residents.

Sanchez called the power imbalance "a classic case of taxation without representation." The IID board sets energy rates and decides where to build new infrastructure, which is critical for growing cities like Coachella and Indio. The board also has the ultimate responsibility for keeping the lights on — not to mention the air conditioning.

"They're making decisions that affect La Quinta, Indio, Coachella, unincorporated areas of Riverside County," Sanchez said. "That is the issue that I have. We have no say."

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Imperial Irrigation District officials have a different view.

From their perspective, any conversation about Coachella Valley representation stokes concern over the Imperial Valley's water rights, which make possible the region's multi-billion dollar farming economy. IID is entitled to 3.1 million acre-feet of Colorado River water annually, which is more than two-thirds of California's total allocation, and as much as the allocations of Arizona and Nevada put together. In recent years, federal officials have pressured IID to transfer some of its water to growing coastal cities, and to leave more water in reservoirs as a safety net against drought and climate change. IID officials have largely met those demands. But they remain staunchly opposed to any political changes that could potentially give outsiders a say over the region's water rights.

Jim Hanks, the president of IID's board of directors, brought up Coachella Valley representation earlier this year at an annual breakfast hosted by the Imperial County Coalition of Labor, Agriculture & Business, or COLAB. Hanks told attendees that some Coachella Valley residents "either want a vote or a seat on the IID board, or they want a standalone electric utility." He said the agency has "no choice but to resist that move."

"Anything that makes the IID board weaker doesn't make its water users stronger," Hanks said at the event, according to a recording published by the Desert Review, an Imperial Valley news organization. Hanks is up for re-election June 5, along with his colleagues Norma Sierra Galindo and Juanita Salas.

Hanks also alluded to the fact that IID offers much lower electricity rates than Southern California Edison. IID raised its base electricity rate in 2014 for the first time in 20 years, but still estimated the average customer would pay $133 per month, compared to $225 for SoCal Edison customers and $261 for San Diego Gas & Electric customers.

"You don't hear much from the residential people in Indio, Coachella, Mecca and other parts. They're very happy," Hanks said.

Why IID sells energy in the Coachella Valley

The Imperial Irrigation District ended up in the Coachella Valley because of water.

In the early 1930s — as thousands of construction workers built Hoover Dam, creating the largest reservoir on the Colorado River — IID and the Coachella Valley Water District couldn't agree on how much water each agency was entitled to. IID had signed a contract with the federal government to build the All-American Canal, which would bring Colorado River water to the Coachella and Imperial valleys. But it wasn't clear how much water the Coachella Valley would get, and how much farmers there would pay.

It also wasn't clear which agency, IID or the Coachella Valley Water District, would have the right to generate and sell hydropower from the water running through the canal.

In February 1934, IID and CVWD struck a deal. In addition to settling the water rights question, they agreed IID would have exclusive rights to sell electricity in the eastern Coachella Valley, in CVWD's water service territory. In exchange, IID would give the Coachella Valley water agency 8 percent of the net proceeds from its total energy sales.

"The political boundaries are always going to be viewed through the prism of water, and water rights," said Kevin Kelley, IID's general manager. "That compromise agreement, it was a water agreement that also defined the electric utility relationship."

"For almost 90 years, that compromise agreement has served the energy ratepayers in both valleys very well," Kelley added.

The 1934 agreement is still in place today. But it's set to expire in 2033, 99 years after it was signed. Sometime in the next 15 years, IID and CVWD will either extend the deal or the cities of Coachella, Indio and La Quinta will need to find a new electricity provider.

Fifteen years may seem like a long time from now, but for utility companies — which plan their infrastructure investments decades in advance — it's like the blink of an eye.

IID mangement is already thinking about what to do with its Coachella Valley service territory come 2033. Hanks, the president of IID's board of directors, said at the COLAB breakfast that the agency had recently hired the high-powered law firm Munger, Tolles & Olson "to do a review of this 99-year agreement, the terms, exit strategies, opportunities and so forth."

The law firm will report back to IID's board in closed session this Tuesday, Kelley said.

John Powell Jr., president of the Coachella Valley Water District's board of directors, has also given some thought to the end of the 99-year agreement. He thinks the Coachella Valley has an opportunity to extract concessions from IID in exchange for keeping the deal going — possibly including representation on the agency's board of directors.

"The majority of the power sales that IID realizes are in the Coachella Valley," Powell said. "That puts us in a fairly strong position, because there's obviously a lot of revenue associated with that."

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Mark Johnson, who retired from CVWD in 2016 after 12 years as the water district's director of engineering, also sees an opportunity for the Coachella Valley in the expiration of the 99-year agreement. In addition to political representation for the east valley, Johnson thinks CVWD should push for the right to generate its own electricity. When he worked there, he said, the water district wanted to build solar facilities but was blocked by the 99-year agreement, which bars CVWD from competing with IID in the energy business.

"I think when that day comes (in 2033), the residents of the Coachella Valley need to get a better say, a better deal on the power part of the whole thing," Johnson said.

Kelley, IID's general manager, said he's worried about what would happen if the two valleys' utility companies can't reach a compromise. The energy and water sides of IID are interdependent, he said. For instance, the utility uses its water facilities to generate hydropower, and its water rights-of-way make it easier to build energy infrastructure. Energy sales also make up nearly three-quarters of the IID's revenues.

"These are both essential resources that people rely on, especially in the desert. And the model of an integrated utility that provides both services, it's served both valleys well," Kelley said.

If the Coachella Valley pushes too hard for representation, Kelley said, "you could see just a knee-jerk retrenchment on the part of the water users here in the Imperial Valley."

"If the IID board ever had to make that hard call on choosing between (energy and water), I have no doubt that IID would come down on the side of water. Because we can always go out and procure new energy resources. But water, it's the Colorado River or nothing," Kelley said.

Hanks, the IID board president, thinks the Coachella Valley is getting a good deal under the 1934 agreement. Referring to IID's annual payments of 8 percent of its net energy proceeds to CVWD, he told attendees at the COLAB breakfast that if Coachella Valley residents don't think they have representation, they should "send our money back to us."

"If they think they're going to sit on our water board, they're in breach of that agreement. We just turn their power off tomorrow. That’s how important water is to this area," Hanks said.

A fight over representation

Some Coachella Valley officials say the region should have representation at IID.

CVWD hasn't taken a position on whether Coachella Valley residents should be able to vote or hold seats on IID's board. But Powell, the president of CVWD's board of directors, said he personally thinks the east valley should have representation at IID.

"I'm not alone. I know there are other folks in the valley that think that we could do better in terms of representation with our power providers," Powell said. "So that's certainly something I’m interested in pursuing over the next 10 years."

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Lupe Ramos Watson, who has served on Indio's city council since 2004, thinks the eastern Coachella Valley ought to start its own power agency come 2033. She pointed to plans by the Coachella Valley Association of Governments to launch a community choice energy program in the west valley this August, which will give residents of Palm Springs, Cathedral City and Palm Desert an alternative to Southern California Edison. Rancho Mirage started a similar program earlier this month. Cities served by IID could launch their own community choice program or join CVAG's, Ramos Watson suggested.

Ramos Watson, who also sits on IID's Energy Consumers Advisory Committee, isn't worried about electricity rates going up in the absence of IID.

"We're subsidizing their water department. I think our rates would be even lower if we didn't have IID," she said.

The last time IID's leadership was forced to confront the question of representation was in 2008, when Bonnie Garcia, who represented the Coachella Valley in the state Assembly, introduced a bill that could have required the agency to cede some control of its board to the Coachella Valley. One possible outcome of Garcia's legislation would have been the formation of a new utility, with elected board members from both valleys, to deal solely with energy issues, leaving all water decisions in the hands of the existing IID board.

That kind of arrangement sounds reasonable to Shorty Hickingbottom, a longtime member of IID's Energy Consumers Advisory Committee, who moved to the Imperial Valley in 1954 at age 16. Even though he lives in the Imperial Valley, he supports voting rights for the Coachella Valley because most of IID's energy customers live there.

"Your largest customer, you need to protect and take care of," Hickingbottom said.

But in the face of strong opposition from IID, Garcia's bill never gained traction. Instead, the agency agreed to reconstitute its Energy Consumers Advisory Committee, giving the Coachella Valley 10 seats on the 20-member advisory group. Today the committee includes two members each appointed by the cities of Coachella, Indio and La Quinta; one member jointly appointed by the cities of Palm Desert and Rancho Mirage, where IID serves a few thousand homes and businesses; and three members appointed by Riverside County. IID serves customers in several unincorporated parts of Riverside County within the Coachella Valley, including Bermuda Dunes, Mecca and Thermal.

Steven Bayard, a retired community college administrator, has served on the energy committee since 2010, representing Riverside County. He said the IID board is generally receptive to the advisory board's advice. He recalled one situation years ago when the committee objected to a planned rate decrease, saying it could force IID to delay critical maintenance work. The board listened, Bayard said, deciding not to lower rates.

"They do not have to take our advice. But most of the time they do," Bayard said.

George Christopher, who has represented La Quinta on the advisory committee since January 2017, said the meetings would be more useful if IID staff let the committee weigh in on the bidding process for major energy projects, rather than just presenting the winning bidder and asking for the committee's blessing. He noted that IID recently canceled two energy contracts, a $75-million solar deal and a $7-million battery deal, after The Desert Sun's reporting on potential conflicts of interest involving ZGlobal.

"If you had more eyes on it, it would create better transparency," Christopher said.

Kelley, IID's general manager, said he thinks the energy advisory committee serves the purpose it was intended for, giving Coachella Valley residents a voice at the agency.

"I'm aware that there are two schools of thought, depending on which valley you reside in," Kelley said. "But from my standpoint, the (advisory committee) does function a lot like a planning commission. We certainly approach it that way."

Still, the committee is advisory, not a governing body.

"Do I think I have influence? I hope I do," said Sanchez, the La Quinta councilmember, who also serves on the committee. "But hoping and being able to have actual influence are two different things. Without voting representation, that's all it is, is just hope."

IID's 'opposition research' into a Coachella Valley solar company

In recent years, two conflicts flared up at the energy advisory committee that pitted some Coachella Valley representatives against IID management.

At a committee meeting in March, Sanchez raised the issue of IID paying private investigators to conduct what IID general manager Kevin Kelley described as "opposition research" into Renova Energy, a solar installer based in Palm Desert.

IID had hired the Baker Street Group, a private investigations service based in San Diego, in response to The Desert Sun's reporting on potential conflicts of interest related to ZGlobal. Baker Street was supposed to help conduct an internal review. The public agency paid the private investigations firm nearly $40,000 for the work.

But Baker Street investigators working for IID spent at least some of their time scrutinizing Renova's chief executive, Vincent Battaglia, a frequent IID critic who had asked state officials to investigate the public agency in light of the allegations against ZGlobal.

The Desert Sun reported in February that at least one former Renova employee, the company's former bookkeeper, was contacted by a Baker Street investigator looking for information about the solar installer. Renova co-founder Thomas Hall, who is no longer with the company, also told The Desert Sun he was contacted by Baker Street.

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Kelley, IID's general manager, has defended the use of ratepayer dollars to scrutinize Renova. Kelley has said Battaglia "wasn't just a critic — he was communicating directly with our counsel and making fairly outrageous claims and allegations."

But at the energy committee meeting in March, Sanchez said it should be "troublesome to everyone" to see a public entity like IID "flexing its muscle on private citizens."

"It is everyone's right to be able to bash their own government without fear of repercussion," Sanchez said. "To use ratepayer money to go after somebody who speaks out against you — that's like me directing my city manager to go against somebody just because they speak up against me."

The Baker Street controversy wasn't the first time Renova Energy was at the center of a conflict between Coachella Valley residents and the Imperial Irrigation District.

In 2016, IID abruptly ended its net metering program, which compensated homes and businesses with rooftop solar panels for the electricity they contributed to the grid. The agency replaced net metering with a less generous compensation program, which installers said would undermine the economics of going solar for most homeowners.

Renova CEO Battaglia was a leading critic of that decision. He paid for radio and TV ads criticizing IID. He also urged Riverside County's board of supervisors to pass an ordinance requiring the agency to bring back net metering, although that effort stalled.

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The rooftop solar debate exposed the tensions that can exist between Coachella Valley residents and a board of directors elected by Imperial County residents. In the Coachella Valley, where rooftop solar has been commonplace for years, many residents were furious over the IID board's decision to end net metering. But board members saw net metering as an unfair subsidy from lower-income Imperial Valley residents, many of whom can't afford solar, to wealthier Coachella Valley residents who can.

At an energy advisory committee meeting in 2016, Mark Weber, who represented La Quinta at the time, slammed IID for its handling of the net metering issue. He got into a heated argument with Kelley, IID's general manager, after asking why the agency hadn't returned phone calls from customers who had been waiting for months for permission to turn on their solar panels. Weber called the utility's customer service "atrocious."

When Kelley interrupted and tried to talk over him, Weber shot back: "I am a appointed person representing the community of La Quinta, and it's irresponsible of you as the general manager to speak over me."

Later in the meeting, Kelley apologized for the lack of communication with customers, saying, "It concerns me that these people can't get a call back."

June 5: Imperial County voters go to the polls

Without any pre-election polling, it's hard to know what will happen in IID's June 5 primary. But all three incumbents up for re-election are facing aggressive challengers.

IID president Jim Hanks, who has served on the agency's board since 2006, is squaring off against Raul Navarro, a member of Calipatria Unified School District's board of trustees. Juanita Salas, who won a seat on the IID board in a special election in 2017, is being challenged by Alex Cardenas, a city councilmember in El Centro. Norma Sierra Galindo, who was first elected in 2012, has four challenges for her seat, although only one of them, property tax consultant Carlos Zaragoza, showed up for a recent debate.

Whoever is elected June 5 could play a role in determining the future of electricity provision in the eastern Coachella Valley. Deliberations could last years, with IID, CVWD, city governments and other agencies engaging in high-stakes negotiations.

Shorty Hickingbottom, the longtime Imperial Valley resident and member of IID's energy advisory committee, thinks it shouldn't be a hard decision for the Coachella Valley.

"Coachella would be foolish not to agree to another 90 years," Hickingbottom said. "All they have to do is walk across the street and compare to Edison."

Sanchez, the La Quinta city councilmember, isn't convinced.

"Cheap power — great, outstanding, I don't deny that. But you still need oversight," Sanchez said. "We all have a right to representative government. Right now in the east valley, we're being denied our representative government."

Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.