Yolo County has joined the South San Joaquin Irrigation District along with the City of San Francisco in submitting a bid in federal bankruptcy court to purchase PG&E retail electric distribution assets.
The $300 million bid to acquire PG&E’s lines, pools, and other electricity distribution assets throughout Yolo County located immediate west of Sacramento was made on Friday.
The offer comes less than a week after PG&E cut power to 2 million people — an eighth of the 16 million people they serve — to avoid creating liability during severe wildfire conditions that would occur if their aging and poorly maintained equipment starts a wildfire.
PG&E — by its own admission — has likely created conditions that have now killed 93 people and destroyed more than 20,000 homes and structures between the 2010 San Bruno pipeline explosion and the November 2018 Camp Fire. PG&E as a corporation is a convicted felon on federal probation for misleading documents and other issues related to the San Bruno disaster nine years ago that basically was the result of deliberately pushing more natural gas through aging pipelines than could safely be done in a bid to maximize profits. The Camp Fire last year that killed 85 people created $30 billion in liabilities that forced PG&E into their second bankruptcy in less than 20 years.
The deliberate power outage earlier this month likely won’t be the last for this year. The National Weather Service is warning that dangerous wildfire conditions will, exist next week, mostly in the northern part of the state.
The Valley Clean Energy board formed by Yolo County has commissioned studies over the past year that came to the same conclusion SSJID and San Francisco have — local non-profit agencies can provide more successful, efficient and safe electricity systems than PGUE and do so at a lower cost to ratepayers.
Valley Clean Energy is a public agency that currently purchases electricity under a joint powers agreement for the cities of Woodland and Davis and unincorporated Yolo County, but relies on PG&E’s distribution system to bring that power to its customers. Purchase of the local PG&E power poles and lines would allow for the creation of a Yolo County based public utility similar in nature to those found in Lodi, Roseville, Sacramento (SMUD), and other communities across the state.
Yolo County leaders say they are responding to statements by Gov. Gavin Newsom to encourage more local agencies to step up with offers such as San Francisco has made to have the bankruptcy court consider the sale of PG&E assets.
“We have taken an important step toward local energy independence by submitting an official non-binding offer letter to PG&E of $300 million for the acquisition of PG&E’s power delivery infrastructure in Yolo County,” said Valley Clean Energy Board Chair and City of Woodland Council member Tom Stallard. “Our analysis was conducted by seasoned professionals and we believe the offer is competitive, fair and equitable.”
Yolo County’s $300 million offer comes on the heels of the $2.5 billion San Francisco offer that followed SSJID’s $116 million proposal to buy for the PG&E retail system serving Manteca, Ripon, and Escalon along with surrounding farmland.
The last time SSJID made a buyout offer to PG&E in 2016 it was rejected outright. The SSJID move to also make the formal request in bankruptcy court has changed the dynamics as the decision ultimately rests with a judge whether to accept or reject the offer as part of a plan that ultimately will be put in place to get PG&E out of its second bankruptcy in 15 years. That is the same position Yolo County and San Francisco have taken.
Critics of efforts to peel of segments of the PG&E retail system and essentially municipalizing them — including PG&E itself — argue that it would place a burden on customers that remain with PG&E such as in Fresno.
That is not a given based on a California Public Utilities Commission analysis of SSJID’s bid to break away from PG&E that was conducted in 2009 to determine whether the move would hurt the remaining PG&E electric customers.
Loss of SSJID customers would
mean a 0.0032 cents per
kilowatt impact on
PG&E’s remaining customers
The CPUC determined it was essentially negligible and that the impact on remaining customers would be 0.0032 cents per kilowatt hours. SSJID accounts for less than half a percent of PG&E’s 5.4 million electric customers. San Francisco with 452,000 electric customers represents about 7 percent of PG&E’s non-natural gas customers. SSJID’s service territory covers 113 square miles while San Francisco consists of 46.89 square miles. Once natural gas service is included, PG&E serves 16 million customers.
PG&E has long argued that rural areas would be left with more expensive power bills if they were forced to allow sections of the retail side of their electrical business municipalize. That flies in the face of the reality of several public utilities that were able break away from PG&E years ago including Trinity Public Utility District that serves the greater Weaverville area in Northern California that has some of the state’s rugged and sparsely populated terrain. Trinity rates are significantly lower than PG&E’s plus they have a much better record when it comes to avoiding wildfires and equipment issues.
Lathrop Irrigation District
power rates are already 5%
lower than PG&E rates
An example of how quickly an upstart retail provider can start creating a gap between PG&E rates and what they charge can be found at River Islands at Lathrop. The Lathrop Irrigation District — that SSJID helped with the establishment of that agency’s retail electrical system — is already selling electricity to its customers that are almost all residential at 5 percent below PG&E rates. The LID plan is to increase the difference between their rates and PG&E as its customer base grows. There are just over 1,000 customers now in the LID system with almost all of them being residential, ultimately there will be 11,500 residential customers as well as business parks and commercial users.
Part of the reason that can happen is the state guaranteed profit of 10.5 percent goes away
The latest SSJID offer to PG&E — which ironically is part of a 15-year process SSJID launched while PG&E was still in bankruptcy the first time around in 2003 — is part of a new phase of the 110-year-old irrigation district’s efforts to enter the retail power business. The effort is designed to reduce rates 15 percent across the board in Manteca, Ripon, and Escalon just as PG&E is pushing for a 12.8 percent rate hike to replace equipment that is aging and has maintenance issues such as the equipment that the utility concedes likely started the November wildfire in Butte County that killed 85 people, destroyed 14,000 homes, and burned 5,000 other buildings.
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