The direct financial impact of South San Joaquin Irrigation District taking over PG&E retail service in the Manteca, Ripon and Escalon areas will free up $15 million annually by keeping that money in the pocketbooks of residents and businesses.
But that isn’t the only reason the Manteca City Council is re-affirming SSJID is the way to go as opposed to joining forces with San Jose, Stockton, Elk Grove and 19 other jurisdictions representing more than 5 million people that are pushing to convert PG&E in its entirety into a customer-owned non-profit.
The SSJID model of local control means that power customers can not only contact the people that make the decisions that impact their electricity supply directly but they can elect who they want to govern the operation. And in the case of Manteca due to 85,000 of the district’s 115,000 residents living within the city limits, Manteca would have a direct say in the district elections of all five SSJID board members.
The San Jose led plan would create a massive agency with directors appointed by the California Legislature to run the energy systems that would not be answerable directly to the public and not subject to open meeting laws.
There are also economic benefits that the University of Pacific analysis did not touch on.
The City of Manteca this past year sustained more than $500,000 in additional costs in construction project delays because PG&E didn’t honor commitments secured with 50 percent deposits months in advance. PG&E under state law can’t be held liable for such construction delays
PG&E’s foot dragging on utility pole relocation added $500,000 to the cost of the Union Road diverging diamond interchange now under construction along the 120 Bypass.
The most high profile snafu was work on Yosemite Avenue that was delayed for over a week due to PG&E not honoring its commitment.
Such delays also have impacted businessmen trying to open new commercial projects that have been built as well as farmers needing agricultural hookups for things such as expanded almond hulling operations. The biggest project that suffered delays due to PG&E not doing work on a timetable they established and promised to adhere to so subcontractors could be coordinated is the $180 million Great Wolf Lodge Resort that is now aiming for an Aug. 1 opening date.
The SSJID also has one of the highest bond ratings possible that translates into lower interest rates when they go to borrow money. PG&E is now in its second bankruptcy in 10 years.
Having SSJID as the retail electrical provider will help reduce upfront costs to build new housing. While developers would continue to pay for and install street lights and underground electrical infrastructure when new subdivisions are built, they would no longer have to pay PG&E 30 percent of the value of improvements to help cover the PG&E tax bill for the “gift” of assets that they will then turn around and make money by selling electricity to customers.
The requirement was established by the California Public Utilities Commission so that PG&E and other for-profit power providers would not be out money due to growth. PG&E, though, thanks to how they have used federal tax credits designed to encourage investment in infrastructure instead as a way to maximize their profits has not paid any federal taxes for the past 11 years.
CPUC rules allow PG&E to pocket what money they are paid by developers to pay taxes on growth-related infrastructure but isn’t needed to cover their tax bill.
Mayor Ben Cantu also noted that SSJID, unlike the cities in the San Jose led coalition, generates its own electricity through the Tri-Dam Project in partnership with the Oakdale Irrigation District.
On Tuesday, the council opted not to join San Jose and the other jurisdictions but instead instructed staff to monitor the situation.
The SSJD has done several extensive studies using firms that have national expertise in retail power systems that determined that starting on Day One as the local electrical power rates will end up being 15 percent below those charged by PG&E.
SSJID is pursing three ways to make that happen. They have a pending case in the San Joaquin County Superior Court to force the sale of the local distribution as allowed under California law after PG&E rejected their initial offer. SSJID has submitted a request to the federal court handling PG&E’s bankruptcy — along with the City of San Francisco, Nevada Irrigation District, and a Yolo County agency — to have assets they are interested in sold to them to help make creditors whole. The third option is State Senator Scott Weiner’s legislation that would have the state issue bonds to buy PG&E. That process, while the governing power agency is being formed to take over the PG&E system, would allow for local agencies to buy segments.
South San Joaquin Irrigation District General Manager Peter Rietkerk told the council the district is now exploring doing its own direct inter-tie with the western power grid with the closest connection point being near Tracy. That would allow SSJID not to be subject to PG&E decisions to reduce its wildfire liability exposure cutting off power to customers for three to five days at a time.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
