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Manteca buying PG&E street light system has saved taxpayers $1M so far

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POSTED January 2, 2013 10:37 p.m.

Back in the Dark Ages, Manteca was paying PG&E the proverbial arm and leg to power and maintain street lights in the city.

PG&E’s sweetheart deal required developers to pay for and install street lights. The developers then had to gift them to the San Francisco-based utility. PG&E also required developers to fork over funds equal to 34 percent off the value of the street light poles, fixtures and underground power equipment. The money went to cover potential state and federal taxes for accepting the forced gifts. It was allowed under a California Public Utilities Commission dictate that PG&E petitioned for and secured. The Income Tax Component of Contributions Provision fee was calculated based on the fact that utilities such as PG&E can pay up to a 35 percent federal income tax and an 8 percent state income tax.

PG&E, though, rarely pays much of the 34 percent surcharge collected from developers in the form of taxes. In fact, PG&E hasn’t paid federal income taxes for years thanks to the largess of the tax code that allows multi-billion dollar industries like PG&E and General Electric to pay no federal income tax. The CPUC does not require that PG&E return the 34 percent ITCC tax to developers. Instead, PG&E pockets it as profit.

Manteca used to pay a flat rate of $16 per light to PG&E, even if the light wasn’t operating. It often took PG&E a month plus to send a crew out to replace a burned out street light. All of this was made possible by rules laid down by PG&E’s buddies at the CPUC.

PG&E’s living large off Manteca taxpayers and home buyers when it came to street lights ended a decade ago.

That’s when the City of Manteca stopped playing PG&E’s game.

They did what the South San Joaquin Irrigation District wants to do. The City of Manteca got rid of the profiteers from San Francisco. They bought the street lights from PG&E.

This allowed three things to happen. First, the PG&E bill dropped immediately to about $3.50 a light, since the city was now simply paying for electricity used. Next they obtained a private sector firm to do all maintenance. Not only were burned out lights replaced within a few days, but it was being done at a lower cost. Manteca started saving $100,000 plus a year simply by getting rid of PG&E’s ownership of street lights.

The third result was a reduced housing cost. No longer would developers have to pay PG&E 34 percent of the cost of the street lights builders installed and then gave free to the utility.

Don’t shed tears for PG&E. The utility made money for years off street lights they never paid to have installed. In the end Manteca taxpayers - who as new home buyers had to pay for the street lights via the cost being collapsed into the house price by the developers - had to pay a second time for the lights.

The cost of the infrastructure that developers put in and passed along to home buyers for PG&E isn’t chump change. It comes to $7,000 for wires and pipes for the average new home valued at $250,000. Of that, $2,380 is for taxes that PG&E might have to pay but rarely does. Those taxes alone — which end up as PG&E profits — inflate the cost of a new home by almost a full percent. Developers and home buyers are still paying for all of that, just not street lights.

Manteca has avoided spending nearly $1 million for street light power and maintenance over the past decade simply because they got PG&E out of the picture.

Little wonder that Manteca - along with Ripon and Escalon - have gone on record in support of SSJID’s drive to take over the PG&E system in the three communities in its quest to lower power costs 15 percent across the board.

 

This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.

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