View Mobile Site

LAFCo forcing SSJID to spend $1.9M on effort to lower rates

Text Size: Small Large Medium
POSTED April 20, 2013 2:25 a.m.

It’s been 44 months since the South San Joaquin Irrigation District filed its current application before  the San Joaquin Local Agency Formation Commission for permission to sell retail electricity to customers in Manteca, Ripon, and Escalon at rates 15 percent below PG&E prices.

Three years ago,  an independent consulting firm issued a report that LAFCO required SSJID to pay for to answer challenges posed by PG&E. The study concluded that SSJID could indeed deliver power at 15 percent below PG&E and was capable of doing so logistically.

PG&E has spent the time since then challenging conclusions made by the consultant that they helped LAFCo hand-pick forcing SSJID to provide exhaustive responses so LAFCO would feel comfortable that all questions were covered. At the same time, SSJID has not only been picking up the tab for mandated consultant reports and its own staff time but also for LAFCo staff to analyze the documents plus covering the fees for LAFCo lawyers.

The SSJID is currently being billed $15,000 a month for LAFCO’s attorney fees.

The district has now invested over $1.4 million in LAFCO related studies and reimbursements of the county agency’s staff time and expenses related to the application. That includes, as of October 2012, $723,185 paid to LAFCo to cover their direct attorney fees plus some staff time. It also includes the cost of the independent PA Consulting study. The firm, which was recommended by PG&E with the study paid for by SSJID, concluded that the SSJID has the expertise and the financial means to operate and deliver retail power at the reduced rate that the public agency contends they can.

Now the original consulting study that has been studied by LAFCO lawyers and that PG&E has unsuccessfully tried to pick apart for the past three years is being deemed too out of date by LAFCo staff for their governing board to make a decision.

So LAFCo staff is now asking the SSJID to foot a new study that replicates the original PA Consulting report. The cost to the district by the time all costs are factored in will be almost an additional $500,000. That means if a decision is indeed made in a timely manner after a new report is commissioned, SSJID will have spent almost $1.9 million since submitting the current application to LAFCO in the late spring of 2009

To say it is frustrating SSJID staff and elected board members is a slight understatement.

“If they (LAFCo) had approved the  application a year ago we’d probably be wrapping up any issues in court with PG&E right about now,” Shields said.

But Shields isn’t being critical of LAFCo for being cautious.

“What they (LAFCo) want is to make sure that any decision they make is so ironclad that it would be difficult to challenge it legally,” Shields said. “It’s a Catch-22 situation for the district.”

The SSJID board will be asked Tuesday to authorize  paying for a third PA Consulting report. Shields said the board may consider asking LAFCo to provide a timetable this time and adhere to it.

“I don’t know whether our board will ask for (a timetable) or whether LAFCo would agree to it,” Shields said.

The consultant agreed SSJID had the wherewithal to put more than $12 million a year back into the pockets of residents, farmers, businessmen, and government agencies in Manteca, Ripon, and Escalon by purchasing the PG&E retail electrical system that now provides power within the boundaries of the district’s 72,000 acres.

Shields is confident that a new study would come to the same conclusion.

“Things have actually gotten better for us to make our case,” Shields said of power generation costs.

Ironically, at several points during the past several years PG&E spokesmen have made statements chiding SSJID for spending the money on the application process - a process that PG&E made more expensive by bringing up more and more challenges even after the initial period for comments had closed. LAFCo has allowed those challenges to be considered past comment deadlines.

The district is paying for the LAFCo review process from Tri-Dam receipts. It is the same income source that PA Consulting noted will make it easy for SSJID to deliver on their promise of 15 percent power rates.

The SSJID has banked more than $60 million in undistributed reserves from Tri-Dam waiting to be given the green light to proceed with their strategy to lower retail power rates.

The SSJID board meets at 9 a.m. Tuesday at the district office, 11011 E. Highway 120.

Commenting is not available.

Commenting not available.

Please wait ...