OAKLEY -- Ironhouse Sanitary District officials have unanimously approved a solar energy project they say not only will reduce the agency's electricity bill but also will benefit rate payers.

Following a public hearing on the proposal Tuesday, directors agreed to approve a 25-year solar power purchase agreement with a company that installs, operates and maintains solar panels.

The venture would involve setting up 4,044 solar panels directly west of the wastewater treatment plant as well as on the roof of a carport adjoining the administrative and maintenance buildings.

Mounted on poles above the flood plain, the moving panels will follow the sun as it travels across the sky, converting that energy into electricity and enabling the district to save an estimated $6.5 million over the length of the contract.

Those kind of economies will enable Ironhouse Sanitary to forestall rate increases, said General Manager Tom Williams.

The sewage treatment plant currently uses about 5.5 megawatts of electricity at a cost of about $600,000 annually; the solar panels would generate about 1.1 megawatts, which Ironhouse Sanitary would buy for less than what it's paying Pacific Gas & Electric Co., Williams said.

"I don't see any (drawbacks) -- it's really all upside," he said.

Installing the panels will require the district to reclaim about 4.5 acres that it has used to grow hay for local ranchers until now, Williams said.

But what it makes from selling the bales is minute compared with the money it will save, he said: $6.1 million on the treatment plant and $548,000 to power the two buildings.

The board has been considering using solar energy since it first held some informal meetings on the idea in March 2012.

However, it nixed the original idea of building its own system because it couldn't afford the millions in upfront costs to install the panels. Directors instead decided last year to find a vendor that would retain ownership of the technology and absorb those costs.

The idea is not to replace PG&E but to reduce the district's utilities bill during those daytime and seasonal periods of peak demand when electricity is most expensive, Williams said.

Solar panels are costly, so it doesn't make sense to install so many that there's a risk of generating more electricity than Ironhouse Sanitary needs, a surplus that it might only be able to sell for a pittance, Williams said.

Although the agreement calls for the district's bills to go up by 2.8 percent per year to cover the cost of inflation, Williams says it's still a better deal: Based on the rates that California utilities companies have charged their commercial customers for electricity over the past three decades, Ironhouse Sanitary projects that PG&E charges will increase by 4.5 percent annually over the next 25 years.

If approved, the solar panels would be up and working by this fall, Williams said.

Contact Rowena Coetsee at 925-779-7141. Follow her on Twitter.com/RowenaCoetsee.