The fight between South San Joaquin Irrigation District and PG&E over control of South County retail power delivery may rest on legal research being conducted by the San Joaquin County Local Agency Formation Commission.
The study – a crucial component of the LAFCO staff report that is expected to go before the commission sometime in the spring of 2010 for a decision on whether SSJID can enter the retail power business – is now underway. It is also proving to be costly especially since PG&E has stepped up its legal presence in the proceedings.
As a result, LAFCO is incurring significantly more costs in reviewing the district’s application to provide retail electric servcie as well as the prerequisite municipal services review.
LAFCO originally anticipated it would cost the district $2,000 to cover its staff studies. That amount though was almost consumed in August prompting a LAFCO request for another $15,000 for its legal costs connected with the retail electric servcie study and $5,000 for the municipal services review.
The SSJID board when they meet Tuesday at 9 a.m. at the district office, 1001 E. Highway 120, is expected to approve the additional funds.
The last time around, PG&E’s strategy for blocking SSJID centered on convincing commissioners that it was wrong for a public agency such as SSJID to use constitutionally invested eminent domain to ultimately take over a part of their business. They spent little challenging the legality of SSJID’s application. Several LAFCO commissioners who cast their votes against the SSJID at the time pointed out their concerns were with the use of eminent domain.
LAFCO staff had indicated at the time that the SSJID application met all of the legal requirements and as such should be approved.
After the SSJID lost, they appealed to the Superior Court arguing that LAFCO had no jurisdiction. The court – as well as a higher court – disagreed noting that SSJID recognized the jurisdiction of LAFCO when they applied to them in the first place. At the time, the SSJID contended it was only a courtesy to go before LAFCO since they were already in the wholesale power business.
This time around, SSJID isn’t leaving anything to chance nor is PG&E.
Should PG&E clear LAFCO, it is all but a done deal that SSJID will enter the retail power business. How SSJID acquires the PG&E system in that case will either be through negotiations or eminent domain settled by a court.
PG&E is still pushing the eminent domain issue hard although LAFCO has no jurisdiction on that issue.
PG&E representatives at public meetings have argued SSJID is low balling the value of the system. Those speakers have put the value of the PG&E system in excess of $300 million
SSJID has offered to pay PG&E $79.5 million for its poles, power lines, and other infrastructure within the district. Based on California Public Utilities Commission filings, the SSJID offer reflects what PG&E valued their system on in order to pay taxes.
It is not clear whether that means that is the actual value or if PG&E is deliberately undervaluing their assets to avoid paying taxes.
The SSJID has said if eminent domain does become an issue it will only be between the district and PG&E. The SSJID also notes PG&E uses eminent domain to take property it wants for everything from power lines to substations when people do not want to sell.
The SSJID goal is ultimately to lower power costs across the board n Manteca, Ripon, and Escalon by 15 percent.
They have secured the backing of the city councils in both Manteca and Ripon in their effort to secure the PG&E system.
To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com
