South San Joaquin Irrigation District is projecting they will end 2020 banking a third of the revenue they will generate.
The SSJID board will consider adopting the 2020 budget when they meet Tuesday at 9 a.m. at the district office, 11001 East Highway 120, Manteca.
Operating expenses for next 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.
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 made in September, SSJID is light years financially better positioned than PG&E.
SSJID Assistant General Manager Bere Lindley used the accounting concept of cash on hand. Bond rating firms place the optimum amount of cash on hand at enough money to cover operating expenses for 200 days.
The comparison 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.
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