Memorandum
Date: August 4, 2026
To: The Honorable Lake County Board of Supervisors
From: Susan Parker, County Administrative Officer
Benjamin Rickelman, Deputy County Administrative Officer
Subject: Consideration of Direction on the FLASHES Microgrid Boundary: Option B4 or Option B5
Executive Summary:
On June 23, 2026, the Board of Supervisors approved the Microgrid Incentive Program (MIP) Grant Agreements with Pacific Gas and Electric Company (PG&E) and the Development Reimbursement Services Agreements with Trane for predevelopment of the Firemain Linked Auxiliary Supply/Hydraulic Energy Storage (FLASHES) Hartley and Lucerne projects. With those agreements in place, one threshold question remains before predevelopment engineering can advance: the boundary of the area to be served by the microgrid. Staff and Trane are seeking the Board’s direction on whether Trane should pursue the Option B4 or Option B5 boundary.
The microgrid boundary defines the area the FLASHES projects are designed to serve in island mode. It drives the infrastructure the project must build, determines which communities receive resilience benefits, and shapes the long-term economics of the project. Both options are technically viable; the choice between them is a policy decision for the Board of Supervisors.
Option B4 is an extended boundary. It runs east through Nice to include the community of Lucerne within the microgrid’s resilience footprint, serving a larger population than the alternative. Extending the boundary east also requires additional distribution and interconnection infrastructure. Trane projects that Option B4 would produce a 20 to 25 percent (20-25%) reduction in cash flow, net of operating and capital costs, compared to Option B5.
Option B5 is a compact boundary. It serves the Upper Lake-Nice corridor portion of the Lucerne substation’s territory, and stops short of Lucerne, itself. This is the baseline against which Trane’s projected 20 to 25 percent (20-25%) reduction is measured. Option B5 carries the stronger projected economics of the two options, but Lucerne would not be served by the microgrid, and the Board may wish to weigh that exclusion against County resilience priorities. Selecting Option B5 would not permanently foreclose Lucerne; the boundary could be expanded to include the community in the future.
Preliminary Trane modeling projects island mode duration under each boundary. Both options reach the 96-hour modeled maximum from April through October and diverge in the winter months, with Option B4 projected at 32 hours in January and 28 hours in December against 76 hours and 74 hours, respectively, under Option B5. On a twelve-month average, Option B4 projects 73.6 hours in island mode and Option B5 projects 92.5 hours. Both boundaries exceed the MIP program’s 24 consecutive hour island mode requirement in every month modeled.
On July 8, 2026, Michael Day of Trane briefed the Ad Hoc Energy Policy Committee on the two boundary options. The Committee’s preference was for Option B5. Because Trane projects a 20 to25 percent (20-25%) reduction in cash flow, net of operating and capital costs, for Option B4 compared to Option B5, the Committee was concerned about the financial viability of the extended boundary.
This item seeks Board direction only and carries no additional fiscal impact. Predevelopment costs under either boundary are covered by the MIP Grant Agreements with PG&E and the Development Reimbursement Services Agreements with Trane that the Board approved on June 23, 2026.
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Recommended Action:
Provide direction to staff on the boundary for the FLASHES microgrid, selecting either Option B4 (extended boundary, including Lucerne) or Option B5 (compact boundary, excluding Lucerne).