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Remember, it was PG&E’s idea that SSJID go into retail power sales

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POSTED September 3, 2009 2:14 a.m.
PG&E – whether you like the San Francisco-based utility or not – has no one else to blame for South San Joaquin Irrigation District moving toward entering the retail power business but PG&E itself.

It has nothing to do with the fact PG&E has some of the highest rates in the nation, is now proposing rate increases at the clip of two to three a year, has the worst service records in terms of reliability among California’s big power providers, and takes their sweet time on construction projects because they whacked back the ranks of their highly trained workers so they could squeeze out more corporate profit.

SSJID started looking seriously at providing retail power only after PG&E teamed with the other big state-protected monopolistic utilities that control most of California’s retail electric market and dangled the carrot in front of them. More precisely, the Big Three – Southern California Edison, PG&E, and San Diego Power & Electric – were able to sway key legislatures to deregulate the California power industry by offering to help irrigation districts by providing exemptions from competitive transmission charges for a set number of years to help them enter the retail power business.

It was a critical piece of the legislation that steered more than a few lawmakers in agricultural areas to sponsor the deregulation since ag power costs are a killer. Deregulation, as pursued by PG&E et al, opened the door for the collapse of the energy markets, skyrocketing rates, and swept Arnold Schwarzenegger into office in an unprecedented modern-day recall election.

PG&E used deregulation to set up a holding company to sell its assets to itself so they could again write down depreciation on existing assets to reduce the money they owed in taxes and pump up their profits.

Meanwhile, several irrigation districts looked at taking advantage of the legislation that PG&E insisted upon. Consultants who knew the business that the various districts hired quickly came to the conclusion they’d lose their shirts if they did so except for one district – SSJID.

The reason SSJID is different has everything to do with the way its assets have been managed over the past century plus their big ace in the hole – 50 percent ownership of the Tri-Dam System they own with Oakdale Irrigation District. After expenses and set aside reserves, SSJID is banking more than $10 million a year from Tri-Dam wholesale power needs. SSJID has the financial where-with-all and the experience thanks to key staff members who helped other parts of California successfully break away from PG&E and who actually have worked for PG&E and managed other public utility districts that provide retail power.

In the ensuing years, it became apparent PG&E had no intention of honoring its commitment that they insisted be placed in legislation to gain deregulation of California utility companies. They blocked SSJID every step of the way including two efforts to set up an inter-tie – essential for someone to start a competing power service by building a parallel system from the ground up. When the heat was turned up about their continued efforts to undermine SSJID, PG&E offered to sell SSJID an aging segment of the South County power grid between Manteca and the Stanislaus River with many components dating back to the 1920s. It also lacked enough users to make anything fly which probably explains why PG&E basically neglected the area over the years.

It is disingenuous at best that PG&E is now acting like a victim. They are the ones that got the ball rolling for SSJID to enter the retail power business.

Of course, it is now painfully apparent PG&E never had any intention of honoring its commitment made in the language of the deregulation law they helped craft.  It is a law which ultimately cost Californians hundreds of millions of dollars so PG&E and friends could squeeze out a little bit more profit all the while operating under the protection conferred upon them by the government that guarantees them a profit of more than 11 percent regardless of how bad the economy gets.
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