Memorandum
Date: June 23, 2026
To: The Honorable Brad Rasmussen, Chair, Lake County Board of Supervisors
From: Benjamin Rickelman, Deputy County Administrative Officer
Subject: Consideration of the Microgrid Incentive Program Agreements and FLASHES Reimbursement Agreements
Executive Summary:
The Microgrid Incentive Program (MIP) is a PG&E ratepayer-funded program, originating from Senate Bill 1339, designed to support projects that deliver enhanced resilience to targeted populations. Funds are disbursed on a milestone-based reimbursement schedule against eligible project costs, and the project must be capable of operating in island mode for a minimum of 24 consecutive hours. Lake County's MIP projects would fund the predevelopment of Trane’s Firemain Linked Auxiliary Supply/Hydraulic Energy Storage (FLASHES) Hartley and Lucerne projects, multi-use renewable energy, pumped storage hydro, microgrid, and firefighting assets that would be developed adjacent to the Northwest Regional Wastewater System and located primarily on County land. The MIP projects are scoped by Trane, aimed at "de-risking" the project for a potential investor/project developer.
FLASHES comprises two co-located projects: the 10 MW Hartley facility and the 20 MW Lucerne facility. The system would use surplus or off-peak generation to pump water into elevated storage and then release it through turbines to generate electricity during periods of peak demand, with the stored water simultaneously serving as a dedicated firemain supply for wildfire response. To advance FLASHES through predevelopment and validation, the County has negotiated Development Reimbursement Services Agreements with Trane for approximately two years. Under that agreement, Trane will perform nine categories of services across both sites, including real estate options, civil, mechanical and electrical engineering feasibility, hydrologic studies, and the FERC Notice of Intent process. Trane would work with the County on CEQA-compliant environmental review and California Independent System Operator (CAISO) interconnection applications.
The total reimbursement agreement budget for the two projects combined is $3,753,142, comprising $3,498,741 in contractor compensation (Trane) and $254,401 in County compensation covering CAISO application fees, County augmentation for CEQA, and County staff time. Both the contractor and County costs will be reimbursed through the MIP Grant Agreements, with Trane's monthly invoices structured to support County progress billing to PG&E. The costs the County would be obligated to reimburse Trane for pursuant to the Agreements are expected to be fully covered by the MIP funds.
Due to the reimbursement structure of the MIP program, in which PG&E can only approve payments once the next 10% project milestone is reached, RCRC is offering a $200,000, 0% loan for the County to stay ahead of the reimbursements for the project. Execution of the MIP Grant Agreements is the prerequisite step that enables the County to execute the reimbursement agreements with Trane to finance the predevelopment.
If not budgeted, fill in the blanks below only:
Estimated Cost: $3,884,742 Amount Budgeted: ________ Additional Requested: ________ Future Annual Cost: ________
Purchasing Considerations (check all that apply): ☐ Not applicable
☐ Fully Article X. <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI>- and/or Consultant Selection Policy <http://lcnet.co.lake.ca.us/Assets/Intranet/Policy/Policies+$!26+Procedures+Manual/Ch4_2021v2.pdf>-Compliant (describe process undertaken in “Executive Summary”)
☐ Section 2-38 <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI> Exemption from Competitive Bidding (rationale in “Executive Summary,” attach documentation, as needed)
☐ For Technology Purchases: Vetted and Supported by the Technology Governance Committee <http://lcnet.co.lake.ca.us/Assets/Intranet/Intranet+Forms/Information+Technology/AdvPlan.pdf> (“Yes,” if checked)
☐ Other (Please describe in Executive Summary)
Consistency with Vision 2028 <http://www.lakecountyca.gov/Government/Directory/Administration/Visioning/Vision2028.htm> (check all that apply): ☐ Not applicable
☐ Well-being of Residents ☐ Public Safety ☐ Disaster Prevention, Preparedness, Recovery
☒ Economic Development ☐ Infrastructure ☐ County Workforce
☐ Community Collaboration ☐ Business Process Efficiency ☐ Clear Lake
Recommended Action: Approve the Microgrid Incentive Program Agreements between Pacific Gas and Electric Company and the County. Then Approve the Development Reimbursement Services Agreements Between Trane and the County.