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SSJID site outlines its struggle that mirrors 23-year SMUD effort to secure rates now 35% lower than PG&E
power lines
The sun sets behind PG&E transmission towers that cut across Manteca.

South San Joaquin Irrigation District is not backing off on its 16-year bid to replace PG&E as the provider of electrical service to Manteca, Ripon, and Escalon.

To keep the public informed of its ongoing efforts, SSJID has launched the website. It capsulizes its efforts to date including two lawsuits now on appeal and its current offer to purchase the PG&E retail delivery system within the SSJID territory for $116 million from the firm that is now in its second bankruptcy in 20 years. SSJID in its 111 years has never filed bankruptcy and has the equivalent of almost four years in cash on hand to cover annual operating costs.

If 16 years seems like a futile effort keep in mind it took 23 years after the people of Sacramento first moved to exercise their right to acquire their local retail system from PG&E and to start delivering electricity in 1946 through the Sacramento Municipal Utility District.

What PG&E is doing to stop SSJID is almost a replay of their efforts in courts for almost a quarter of a century to stop SMUD.

Today SMUD’s average rates are 35 percent lower than what PG&E charges. Only a handful if utilities have lower rates than SMUD in California — Roseville Electric and Turlock irrigation District. That difference is slight.

The gap between SMUD and other local, publically owned utilities compared to PG&E continues to grow as PG&E’s annual rate increases are significantly higher.

Based on a California Public Utilities Commission (CPUC) analysis between 2002 and 2019 PG&E rates rose an average of 37 percent compared to the 19 percent the consumer price index rate rose. The data available for average local utilities for the 10-year period between 2008 and 2017 shows a 3.33 percent increase. While 20-year data was not available for all local utilities, based on SMUD only the increase in rates was less than 10 percent for the corresponding 20 year period or roughly a quarter of PG&E’s.

That is why SSJID going forward expects the initial 15 percent savings retail customers will see when power is provided by SSJID will grow even bigger as the years go by. PG&E, as an example, has a pending power rate increase of almost 12 percent as part of its plan to get it out of bankruptcy.

The financial soundness that SJIUD brings to the table that in turn helps keep costs down is reflected in their current budget. Operating expenses for this year are pegged at $24 million. Revenues are projected to come in at $35.8 million. That will create net revenues of $11.7 million behind operating expenses for 2020. It translates into SSJID banking a third of their revenue this year.

The $35.8 million in revenue includes $15.6 million as SSJID’s share of Tri-Dam Project revenue for the sale of wholesale power a series of three reservoirs on the Stanislaus River that SSJID has been operating in conjunction with Oakdale Irrigation District since the 1950s. The OID share is also $15.6 million.

The Tri-Dam Project was built without a penny of state or federal funds. Instead it was leveraged with district property values with bonds retired from a 50-year contract of selling power to PG&E.

SSJID plans to use the Tri-Dam receipts to leverage its plan to assume control of the PG&E retail distribution system in Manteca, Ripon, and Escalon to lower electrical costs 15 percent across the board.

Based on a comparison using the accounting concept of cash on hand SSJID is on the other end of the financial spectrum compared to PG&E. Bond rating firms place the optimum amount of cash on hand at enough money to cover operating expenses for 200 days.

The point in time comparison nine months ago showed PG&E had enough cash on hand to operate for 12 days. SSJID, meanwhile, had enough cash on hand to operate for 1,400 days or almost four years.

That was in September. Since then PG&E has gone into bankruptcy for the second time in 20 years, burned through all of its cash, and is facing at least $30 billion in liabilities. Meanwhile PG&E’s bond rating is virtually junk status meaning any financing they secure short of a hedge fund bailout will come with exorbitant interest rates. SSJID has one of the highest ratings falling in the “A” category for bonds which means lower interest rates. That is sweetened by the fact a public agency running a utility can sell tax-exempt bonds that carry lower interest rates.

The cost of financing is a big factor in keeping power rates down. SSJID estimates it will cost $200-$300 million for needed upgrades to the power distribution PG&E currently operates within its boundaries after it acquires the system.

The financing for needed improvements to the local PG&E system, put in place infrastructure that separates SSJID retail from PG&E and for the purchase of the system is part of the financing plan that allows for a minimum 15 percent rate cut.

 The Powered by SSJID website makes the following points:

*ACCOUNTABILITY: As a publicly-owned utility, SSJID’s customers will have local control and a voice in how their electric service is provided and priced. SSJID is governed by a board of directors who must reside in the district, and who are elected by district residents. As members of the community, directors are accessible by, and directly accountable to, the public they serve.SSJID has provided water service in a safe, honest, customer-focused and cost-efficient manner for more than 110 years, and if given the opportunity, will do the same with electric service.

*AFFORDABILITY: As a public nonprofit agency, SSJID is also committed to providing electric service at substantially lower rates lower than PG&E’s. Studies have shown SSJID will be able to serve its customers at rates at least 15% lower than currently charged by PG&E on average. We estimate these lower rates will save customers more than $14 million in the first year alone, including nearly $2,400,000 in disposable income annually for communities. Additionally, new jobs with competitive compensation, benefits and a fulfilling, service-based purpose will further enhance our local economy. SSJID is committed to investing in public benefit programs and providing California Alternate Rates for Energy (CARE) rates in the same manner as PG&E, with the added discount commitment. That’s a significant economic benefit for local businesses and the whole region that will continue year after year.

*RELIABILITY: SSJID is committed to improving long-term reliability. At home or at work, you need to be able to trust who’s delivering your power. And when something happens, you need to have confidence that the problem will be addressed right, the first time, as soon as possible. SSJID has been providing water distribution services to our communities for more than 110 years in a safe, reliable and affordable manner. We believe our history and commitment to exceptional service to our customers makes us uniquely qualified to also provide local electrical power in a reliable manner. As a local public agency, we are “locally owned”— meaning we are owned and directly accountable to our customers. Local ownership also means operations are carried out by people who live in and around the same communities they serve. It is this local commitment that differentiates SSJID from PG&E, a large, state-wide investor-owned utility.

SSJID is committed to shaping its energy procurement to meet our State’s renewable energy goals, and its service to match local priorities for safety, accountability, reliability, and value. SSJID currently owns and operates a 1.5 MW solar project used to offset power used to provide treated drinking water to Manteca, Lathrop, and Tracy. The district also generates zero-carbon hydroelectric power for Californians through its Tri-Dam Project.