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A ‘dumb’ assertion about public power from Victor Mow

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POSTED August 7, 2010 3:41 a.m.

Victor Mow - who did little to improve the financial integrity of San Joaquin County while serving on the Board of Supervisors - penned an opinion piece about South San Joaquin Irrigation District essentially being reckless with public money.

Mow said it was “a dumb idea” for the SSJID to try and enter the retail power business by taking over the PG&E system in Manteca, Ripon, and Escalon. Mow tried to make his case by essentially inferring an independent study conducted by the San Joaquin Local Agency Formation Commission and paid for by SSJID proved beyond a shadow of a doubt that SSJID was wrong.

He zeroed in on one aspect - the contested book value of the PG&E system. The SSJID consultant had pegged it at $65 million while the LAFCO consultant estimated it at four times that amount.

There is a difference in expert opinion. No doubt about it. But Mow made a one-dimensional argument. The entire SSJID plan was based on them injecting $10 million up front and using bonds to execute the purchase of the system, upstart costs, and need improvements to modernize South County service.

The independent analysis calls SSJID’s current plan, “fiscally infeasible without raising assumed rates or infusing more equity.”

The SSJID can - and will use - as much of its undistributed reserves (or equity) as needed. By the end of this year they will have $70 million on hand. (That amount, by the way, is growing by roughly $12 million a year thanks to Tri-Dam proceeds.) That is seven times the $10 million needed to make the plan work assuming a book value of $65 million. Mow, as a former supervisor, should be aware of bond costs and how they are secured plus long-term calculations.

Mow should also let the public see his true credentials as an elected guardian of the public trust compared to the SSJID board. San Joaquin County isn’t exactly in great financial health. It has a large debt burden and budget deficits. It struggles to provide basic services such as assuring there is jail space to keep criminals off the street.

Like PG&E, Mow uses a broad argument that says government agencies should worry about schools and public safety. The only problem is that SSJID can’t legally worry about those things.

What they do have is no debt, infrastructure that is owned free and clear, a spotless 55-year history of generating and delivering wholesale electricity, and they haven’t raised water rates since 1990 nor have they increased taxes since then either. In fact, two years the district suspended water charges because they were so flush with money. And they did all this while making significant improvements to the irrigation system and launching a new closed system southwest of Manteca that is state-of-the-art when it comes to water conservation.

Mow certainly can’t even come close to the track record that the elected SSJID board has compiled over the last 101 years. They also built major dams and such without ever taking a cent of federal or state money. Few, if any, irrigation districts in this state can make that claim which mean they really aren’t leeching off taxpayers by any stretch of the imagination. Too bad Mow can’t make the same claim about San Joaquin County under his leadership.

Of course, it is comparing apples and oranges but that is exactly what Mow did.

The study also conveniently says SSJID had not forecasted extremely high power costs more than five years into the future. If that is true, the same applies to PG&E which is subject to the same market conditions which PG&E hasn’t projected such higher future costs based on their rate applications.

PG&E already has a $1.1 billion rate hike in the works for Jan. 1, 2011 - the biggest in its history - coming on the heels of two to three rate hikes a year for the past several years.

There are a lot of dots that can be connected to tie California’s high power costs back to PG&E and their for-profit buddies who were inspired by Enron. Perhaps Mow, who eagerly signed on as a backer of PG&E, can explain how rate payers benefitted from PG&E selling their generating assets to an unregulated sister company which then charged higher rates for spot market power.

PG&E enjoys a government protected monopoly that assures them of an 11.45 percent return which, thanks to PGE&’s spending patterns, doesn’t make it down to the stockholders.

Mow lent his name and quotes to the Common Sense San Joaquin Coalition - a nice shell organization set up by PG&E to attack SSJID - and then told only part of the story.

To put it politely, his statements make him a bit of a hypocrite.

Mow has served for years on the Port of Stockton board that happens to have its own public power operation because they know they would be at a severe disadvantage to attract economic development if businesses had to pay PG&E’s rates that are among the highest in the nation.

It is amazing how “dumb” of an idea that Mow claims having government agencies in the retail power business is given his voting record on the subject as a Port of Stockton board member.

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