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PG&E can’t afford a SSJID success story

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POSTED June 10, 2010 2:26 a.m.
PG&E’s long-range ability to survive as a monopoly protected by what are essentially government price controls now may very well depend upon stopping the South San Joaquin Irrigation District from entering the retail power business.

The massive bonuses and plump salaries of Peter Darbee and his 12 disciples – corporate level PG&E senior vice presidents – depend on keeping SSJID from harnessing its resources for the public good.

Imagine how fed up communities throughout its territory that suffer from power rates that are among the highest in the nation and service quality that the California Public Utilities Commission rates as the worst in the state would react when SSJID is able to lower power rates by at least 15 percent across the board out of the gate while at the same time improving a woefully neglected distribution system.

PG&E could have avoided setting themselves up for a great fall by not trying to be so arrogant and treat their attempt to amend the California Constitution as a cost of doing business. And in the case of SSJID, if they had conceded the SSJID has a unique set of circumstances and had opted for a strategy of setting Manteca, Ripon, and Escalon free they may not face the day when other jurisdictions start thinking, “if SSJID can do it, so can we.”

What makes the SSJID different is the bottomless gold mine known as the Tri-Dam project. The hydro-electric dollars flowing from the system each year can – and will – underwrite low-cost bonds that will serve as collateral to pay for the PG&E system – even if it is at a substantially higher price than SSJID originally estimated. It also will cover setting up electrical service and improving the distribution center plus pay for severance and intertie costs.

How can this be done? Simple. SSJID has a sterling bond rating unlike PG&E that at one time slithered toward junk bond status. Some $70 million in the bank from wholesale power sales and anywhere from $9 million to $15 million rolling into its coffers can go each year toward paying off long-range debt if needed.

The model, of course, builds bond retirement and system upgrades as well as delivery costs into the rate charges for Manteca, Ripon, and Escalon residents while at the same time cutting power charges below PG&E levels. It is the same type of model that a well-run business uses to operate prudently and without heavy debt load. The big difference for SSJID is they have a set customer base. Everyone needs electricity just like they need water. They can make reasonable and sound projections and control costs.

PG&E, you think, would have the same advantages as you can’t just switch power companies like you can supermarkets. PG&E’s top brass years ago started abandoning their customers, shareholders, and workers in a bid to sweeten their personal bottom line.

Darbee by himself is compensated more than all of the SSJID employees combined.

Even while you might argue a multi-million dollar compensation package might be reasonable, Darbee and the rest of the top brass have a huge chunk of their pay in stock options just like other corporate brass are. They have a huge personal stake in driving stock prices up. You might say that is to the benefit of all stockholders but the problem here is what PG&E sells which is electricity. There is a reason the state regulates PG&E and other private for-profit companies. They provide an essential commodity that you are basically forced to take from one source.

Combine Wall Street banker mentality that almost collapsed our financial system in the name of personal excess and greed with a captive audience and you’ve got the makings of a handful of people running a company as a personal cash cow.

SSJID – unlike PG&E – owns all its power generation sources and it is all renewable and all green.

Although SSJID could use Tri-Dam power in district, it is much more sensible to sell it into peak power contracts to financially guarantee long-term energy contracts with other power sources.

As quaint as it may sound, SSJID really is about providing power to the people.

Few – if any – irrigation districts in this state have built the massive water stage and distribution system with an accompanying hydroelectric system without taking even a penny in state or federal dollars. They haven’t raised the property tax for two decades nor have water charges been increased in the time frame. The SSJID actually has suspended them several times for a year due to how well managed the district is financially.

SSJID has no debt load. PG&E is far from debt free.

You can understand why PG&E can’t allow SSJID to succeed. An SSJID success story will start people thinking. And the one thing PG&E can ill afford – if it hasn’t learned from its $48 million smoke and mirror Proposition 16 campaign – is having people think.
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