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Government gone wild! Another fun hidden tax

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POSTED March 25, 2009 4:32 a.m.
There’s a surefire way to lop $2,380 off the cost of building any single family home in Manteca – dump PG&E.

The $2,380 represents the average cost per home a developer has to pay to PG&E to cover the San Francisco-based for-profit’s taxes for accepting an average of $7,000 per home in electrical and natural gas lines put in place by the developer.

That’s right. PG&E gets $7,000 worth of infrastructure for free that they get to use to generate money from and – as an added bonus – the California Public Utilities Commission allows them to tack on another 34 percent surcharge so the developers can cover PG&E’s tax bill. This isn’t chump change. It is folded into the cost of a home and is almost one percent of what you’d pay for the lowest priced new home in Manteca today which is selling for $249,900.

If South San Joaquin Irrigation District succeeds in taking over the retail power system in Manteca after spending nearly 55 years flawlessly generating and delivering wholesale power, the tax surcharge goes away since government entities aren’t taxed.

Understand this isn’t a PG&E requirement – the tax that is. The CPUC wanted to make sure PG&E wasn’t burdened with paying taxes on what essentially is a gift that they can turn into a revenue producer. PG&E, when virtually every business on the planet was suffering, racked up $260 million in profit in the last quarter.

It is another case of government gone wild helping one sector of the economy – a quasi-public utility that they grant the ability to use eminent domain with impunity all is the name of minimizing expenses for power and gas liens and maximizing profits – while making the other sectors pay through the nose.

Assessing a tax on PG&E for improvements given to them by developers at the rate of 34 percent and then granting PG&E permission to pass the tax on as a surcharge even though they are the ones that end up owning the improvements  that generate revenue for them is icing on the cake.

The argument that PG&E is a private concern is a sham. It has been granted of government-like powers such as eminent domain to keep costs down and to assure its profitability

If our elected municipal leaders are serious about affordable housing, reducing the cost of government and pumping up the local economy they’ve got to stop being neutral on SSJID’s bid to take control of Manteca, Ripon, and Escalon retail power systems in an effort to lower everyone’s power bill by at least 15 percent across the board.

Here’s a multitude of ways that having SSJID and not PG&E supplying Manteca power can save money:

•The minimum 15 percent across the board reduction in retail power bills.

•It will make housing more affordable to the average tune of $2,380 in one-time taxes on new homes.

•Those that have solar systems could actually get checks for generating excess power and selling it to SSJID for distribution to other retail customers. Now, the so-called “green friendly” PG&E folks have succeeded in putting in rules that basically say the best you can do with a solar system on your home or business is to zero out your PG&E bill excluding, of course, the $12 a month meter reading charge they get to tack on. Such a move would increase the practicality of such residential systems by making them pencil out financially and therefore increase the prospect of more clean power replacing fossil fuel power.

•Delays for private and public construction work would in all probability be significantly reduced.

•Manteca would save a minimum each year of $176,800 in power to run wastewater treatment plant operations, and $111,950 to run the water system to push citywide electric savings to almost $400,000. That compares to the $495,000 that PG&E pays in utility taxes to Manteca that SSJID has promised to continue - even though they don’t have to – in order to keep the city whole.
•Manteca Unified would get a cut in their power bills.

•Manteca could pursue a solar project at the wastewater treatment plant – in conjunction with PG&E - that would be truly cost effective as SSJID would buy excess power, something PG&E has secured CPUC protection from having to do.

Perhaps most important of all based on annual power sales of $44.9 million within the city limits, Manteca’s residents and businesses would have $7.4 million a year more to pump into the local economy. Keep in mind that the 15 percent savings projection is on the lower end.

The Manteca City Council doesn’t have to turn to Washington or Sacramento for help. By stepping up to the plate and actively supporting SSJID’s quest in a decade’s time they can generate  $75 million in combined spending power for Manteca’s seniors on limited incomes, families, and small businesses. At the same time, they can save city taxpayers and ratepayers in excess of $4 million plus over the same 10-year period reduce housing costs by $8.3 million assuming an average of 300 new homes are built each year.

This City Council without spending a penny can help pump just under $90 million into Manteca’s economy over a 10-year period.
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