Only one more roadblock remains before South San Joaquin Irrigation District can legally make an offer to buy PG&E retail electrical facilities in Manteca, Ripon, and Escalon.
The Local Agency Formation Commission Thursday rejected a bid by the PG&E to have the board reconsider its decision in December to allow SSJID to enter the retail power business.
The last LAFCo action is a protest hearing in March. The December decision will stand unless 25 percent of the property owners or voters in SSJID territory file protests.
Despite the pleas of the San Francisco-based power giant’s high-powered attorneys the commission refused to reconsider its previous decision or make concessions on any of the “hastily approved” conditions that were negotiated on the fly by that same team of lawyers, consultants and economists after back-to-back marathon sessions.
Now the real fun begins.
“We appreciate the continued support that we have received from the LAFCo commissioners,” Shields said. “Chairman Nilssen afforded PG&E extraordinary access to the original process and newly appointed Chairman Maciel continued that courtesy at today’s hearing that was requested by PG&E. We suggested after the original commission approval that PG&E have their lawyers stand down and allow their executives to enter into good faith negotiations. The fact that this frivolous request for reconsideration was filed would indicate PG&E’s consulting lawyers are running this process.
“Hopefully we will soon be able to meet with PG&E in a business environment and work on an approach that benefits the local community and both utilities.”
The main two issues that PG&E raised with the commission centered on four findings and conditions – only two of which were addressed.
The first, according to PG&E’s legal counsel, focused on the justification about whether SSJID should be the entity that can claim whether they’re going to be able to provide the 15 percent reduction in rates that served as the backbone of the district’s advertising campaign.
The second hinged on how the transition would affect customers in the “border area” – the strips of property around the sprawling boundary that could end up being served by either SSJID, a joint project between SSJID and Modesto Irrigation District, or PG&E.
A third point that was raised but not included on the list that was formally presented to LAFCo legal counsel countered that the district’s plan to backfill money to municipalities that would lose out on tax revenue if the district were to take over PG&E’s network claimed that the practice would be a violation of California’s constitution. It is the same practice that an appellate court just ruled against when Redding Electric Utility attempted to make payments in lieu of taxes and may have run afoul of a voter-initiative.
The city is appealing to the State Supreme Court.
Steve Herum, SSJID’s legal counsel, said that the district would go to voters if need be and had no problem making sure to make every government entity is made whole in order to ensure that the process runs smoothly.
But it’s probably not going to run smoothly.
George Soneff of Manatt, Phelps and Phillips – a powerful Southern California law firm specializing in complex litigation – worked with Herum on crafting the very conditions that the utility was fighting to have overturned on Thursday. PG&E’s Government Relations representative Dylan George said that they were “hastily approved” but failed to add that the complex team of the company’s own litigators came up with the language that was ultimately agreed upon.
And Soneff hinted that future litigation is likely, saying that if the findings and conditions are not changed, then “we will find out in court.”
The commission voted unanimously to deny PG&E’s request.