The No Good-No Bid Contract for Pottsville Solar Panels
Lots of reasons were given for ignoring the public bid process in Pottsville Area School District’s decision to finance then purchase more than 4,500 solar panels.
None of them justify the shady move.
The issue likely will be in focus once again this week as school board members expect to face increasing public criticism of a deal they think is irresponsible, at best. Pottsville’s school board meets again on Tuesday evening, Feb. 11, at the Fernsler Academic Center.
Pottsville Area’s No-Bid Solar Contract
Here’s how it went down in early December. It’s what we’re calling the Pottsville Green New Deal:
- Right after re-organizing following the 2019 General Election, Pottsville Area school board members hastily entered into an arrangement with Greenworks Development LLC. This company will field a group of solar energy investors who will purchase and a company called Solar Renewable Energy LLC will install an array of solar panels all over Pottsville’s school grounds, mostly on the roofs of all the district buildings.
- After 5 years, Pottsville will float a bond to buy the solar panels outright. It’s a 40-year loan that will cost the district more than $4 million.
The promise is that the school will save money on its electricity bill over the purported 40-year life span of the solar panels.
Pottsville’s solar panel plan has a lot of couldas and shouldas and maybes in it. The school says it’s “thinking outside the box” to reduce costs and raise revenues. They’re saying this because last year, the state came down hard on them for mismanaging millions of dollars over a 5-year span, putting the district in the red.
So, a plan to spend millions of dollars — without looking for a better deal anywhere else — on what could be a gamble is going to raise a lot of questions. First among those questions is:
Were they thinking outside the box or outside the rules?
No one got a chance to ask serious questions about this project. A few school board members are deciding what’s best for taxpayers and the school and forcing us to trust them.
One way to avoid answering a lot of questions is to ram this piece of legislation through the process without putting it out for bid.
Public bidding is the process every local government body is supposed to take before agreeing to spend any large sums of money. This Pottsville solar panel project certainly qualifies.
In fact, the lack of a bidding process for this project could qualify as a violation of the Public School Code. Pottsville got warned last year about violating the Public School Code in not doing its fiduciary duties by the state Auditor General.
To avoid getting put on a Financial Watch list, Pottsville school board members were supposed to adhere to that Public School Code.
School board members thought they were being clever avoiding the bidding process because they weren’t technically buying this solar panel system back in December. No matter what loophole the school may have found to subvert the bidding process, it’s certainly nothing that could be consider a best practice.
Pottsville Tries to Justify the No Good-No Bid Solar Panel Deal
The main reason we were told that this solar panel deal had to be rushed was due to a decline in the Investment Tax Credit or Federal Solar Tax Credit.
In 2019, this tax credit allowed solar panel system purchasers to earn a 30% tax credit on the price of the system. This year, the tax credit dropped to 26%.
Check out this chart showing the drop in federal solar tax credits available:
But here’s the thing … that tax credit only applies to the people or groups buying the solar panel system. Under the no good-no bid deal Pottsville school board members signed last year, we don’t own the solar panels for another 5 years.
So, basically, our rush to judgement got some relatively unknown investors a 4% bigger tax credit than they would have received had we waited until 2020.
At best, this gets us a discount on the price of the solar panels when we have to buy them in 5 years.
Was this rush to approve this deal worth it to Pottsville taxpayers? Or does it only benefit the people buying the solar panels at the onset?
If the people selling us the solar panels would have backed out of the deal had we waited, shouldn’t that set off more alarm bells? Essentially, we allowed some unknown solar panel salesmen back us into a corner for their own gain, mostly.
Pottsville Taxpayers Left Holding the Bag
In 5 years, and for the next 35 (or more) after that, Pottsville taxpayers will be left holding the bag on this solar panel project. There are a lot of unknowns once that happens. We’ll be on the hook for maintenance and disposal. We’ll have to pay back a massive loan.
And this is all based on a promise (more like a fingers-crossed hope) that nothing changes in the solar energy industry over the next 35-40 years.
What did we get?
We get a discount on some used solar panels we didn’t need. And we hold an unknown amount of Solar Renewable Energy Certificates (SRECs) that can be sold on a government-controlled marketplace at varying costs. We don’t know how many certificates we get because it’s based on the amount of energy our panels create. And we don’t know how much these certificates are worth because their value changes.
In fact, there’s a good chance the idea of SRECs is obsolete by the end (or some time in the middle) of this obligation. In 2017, faced with a tanking of the value of these SREC’s the state government restricted the marketplace for SRECs from Pennsylvania-based solar projects. This was designed to keep the solar generation investments close to home.
All it did was create a marketplace controlled by the state government. This doesn’t make Pottsville Area any more financially stable now or into the future.
In the end, what did we get for this no-bid solar panel contract? Seems like we guaranteed some solar panel company they’ll have something to pitch to investors and got them healthy tax credits on the solar panels they’re going to sell us after we’ve used them for 5 years.
Other than that, it feels like we got screwed.
- Pottsville Schools – No Confidence in Any of Them
- State Audit: Pottsville Schools Finance Management “Especially Alarming”
- Pottsville Solar Panels – The Practice Field Red Herring
- Pottsville’s Solar Panels Will Create E-Waste Crisis
- More Than 500 Join Petition Against Pottsville School District’s Recent Boondoggle
- Blinded By the Light – The Pottsville Solar Panel Disarray