Paul Lau, the CEO of the Sacramento Municipal Utility District, is piloting the electric utility’s course to get to 100% zero-carbon power by 2030.
SMUD also plans to get to its goal “without breaking the bank” and without impacting reliability or rates, Lau said.
The utility was the first in the state to get to 20% renewables. It adopted the goal of 33% renewables long before the state mandated it in 2015 as a goal for 2020. SMUD is currently using over 50% carbon-free sources to generate electricity.
“We think we can get to 90% renewables with existing technology,” Lau said.
The last 10% will take some technological advances over the next nine years, Lau said, but he expressed confidence that the technology is going to emerge. “The whole world is moving toward a zero-carbon future,” he said.
The effort to get to 100% at SMUD has a budget of $4.7 billion in upgrades over the next nine years. The utility has an annual operating budget of $1.8 billion.
Lau is the third consecutive CEO of SMUD who has spent his career at the utility. Arlen Orchard, the previous CEO who retired last September, worked at SMUD for 31 years after finishing law school. The CEO before Orchard, John DiStasio, worked at SMUD for 30 years — and 15 years as CEO.
Lau started working for SMUD as an intern. He’s now in his 39th year at the nation’s sixth-largest public utility.
“We’ve got a great culture that encourages employees to learn and grow on the job,” Lau said.
“Lau is definitely an inside guy at SMUD. It’s all been insiders at SMUD for a long time,” said Gary Simon, chairman of CleanStart, a nonprofit that connects and supports clean technology companies in Northern California.
“At most utilities in the country, you wouldn’t find nearly the creativity you find at SMUD," Simon said. "They have kept being creative and innovative for a long time.”
In its efforts to decarbonize its power, for example, SMUD is encouraging and subsidizing businesses and homeowners to install their own solar panels. That means SMUD is actively lowering its own revenue, Simon said. That shows a far different mindset from investor-owned utilities, which exist to make a profit for shareholders, he said.
The SMUD board is elected independent of any other government in the city or Sacramento County, the area it serves, and that board has consistently set a standard of community involvement and improvement, Lau said.
The 100% zero-carbon power goal is part of an effort to improve air quality to make the air healthier to breathe in the Sacramento region, which still ranks as one of the dirtiest air basins in the country, Lau said. Part of SMUD’s plan to get to zero carbon also includes closing or repurposing all of its natural gas generating plants. And SMUD has been committed for years to improving equity in the region’s diverse communities.
SMUD is the lead investor and the original organizer of the California Mobility Center, which seeks to support the growth of zero-carbon transportation for the future. The mobility center may help SMUD build its revenue in the future as electricity becomes a dominant transportation fuel.
Lau was born in Hong Kong. His family emigrated to Nigeria just before he turned 10 and lived there for three years. His family then moved to Truckee and to Sacramento.
Lau is active in the community, serving on the boards of organizations including the Greater Sacramento Economic Council, Valley Vision, the Los Rios Community College District, the University Foundation at Sac State and the California Mobility Center.
“Being on these boards does give you a different perspective,” he said.
SMUD rates are 35% less than PG&E Corp.’s electric rates, which means every year $800 million in rate savings stays in the community and the local economy. And SMUD also has an economic impact of employing about 2,200 people. Its spending also trickles into the local economy through its business operations, community investments and donations, Lau said.
“It is great to work for a company that makes going to work every day better,” he said.
Calling 100% renewables an “aggressive” and “admirable” goal in today’s energy market, Michelle Bertolino, general manager of municipal utility Roseville Electric, said “a lot can happen in 8 1/2 years.”
These kind of “stretch goals” force innovation and ingenuity, she said.
Despite California’s tough environmental laws and regulations, SMUD is able to innovate and advance, Lau said, adding that if SMUD can achieve 100% carbon-free electricity in California, “it can work anywhere in the world.”
The Essentials
Name: Paul Lau
Title: CEO and general manager of the Sacramento Municipal Utility District
Age: 59
Education: B.S. in engineering, California State University Sacramento
Career: CEO of SMUD since October 2020; chief grid strategy and operations officer at SMUD, 2015-2020; assistant general manager at SMUD, 2008-2015; director of customer service at SMUD, 2007-2008; manager of customer strategies at SMUD, 2002-2007; engineering and management positions at SMUD, 1982-2002.
Personal/family: Wife Rosaline, also an engineer, and three adult children. Lau and his wife live in the Pocket neighborhood.
Something people would be surprised to know about you: Plays competitive table tennis.
Hobbies: Is a serious foodie who likes to travel to exotic food destinations.
Fantasy job: To be a singer like Elton John, with the ability to move people emotionally with song.
First job: McDonald's at 15 1/2.
