The lawsuits have started.
Less than one day after the South San Joaquin Irrigation District survived a challenge at the Local Agency Formation Commission over its right to enter the retail electrical busness, the next hurdle already emerged – a PG&E lawsuit that claims the landmark decision delivered in December was invalid.
And while the claims in the lawsuit, which was filed in San Joaquin County Superior Court, were almost identical to those that were made by the utility in an appeal to LAFCo on Thursday, the need to mount a further legal challenge wasn’t something that was unexpected.
“It’s not surprising that PG&E, one of the most litigious businesses in California, would have their ratepayers pay more for lawyers,” General Manager Jeff Shields said. “Remember that their lawyers blamed the San Bruno gas explosion on the customers which they said was nothing personal, just a litigation strategy. Fortunately this won’t slow the process down.”
According to the text of the lawsuit, which was filed by Los Angeles attorney power attorneys George Soneff and Dinesh Badkar and PG&E in-house counsel Mark Penskar, LAFCo overstepped its bounds by determining that SSJID had the financial resources to be able to offer the 15 percent rate reduction that was a pillar of its early campaign to enter the retail electric business.
By not mandating the SSJID promise the rate reduction that was advertised as part of the approval, according to the lawsuit, wasn’t justified. By default neither was the district’s application, which took several years to process and work through the system after being previously denied. To date SSJID has spent millions on the venture, most of which has been doled out on studies and reports that were mandated as part of the process.
But the suit is much more precise and focuses on fine aspects of the matter that were argued for on Tuesday by Soneff and Penskar to no avail.
The suit alleges that it was prior legal action by SSJID against the San Joaquin County LAFCo, stemming from the previous denial, that ultimately paved the way for the December decision that validated the district’s attempt to add retail electricity to its list of available services. That litigation, according to PG&E’s lawyers, eventually led to an amendment of the “LAFCo Act” that ultimately gave the entity the authority to approve applications like the one submitted by SSJID if and only if the commission determines that the applicant will have “sufficient revenues” to implement the proposal.
The other key issue, which also was identified when PG&E lawyers made their petition for reversal last week, was that the district’s plan to backfill payments that would lost by municipalities and government agencies would constitute a violation of California’s Proposition 26 – classifying payment in lieu of taxes would require a claim by SSJID and possibly a vote by those in the district that would classify as ratepayers. An appeals board in Redding ruled 2-1 last week in a similar case that a program that essentially did the same thing was unconstitutional.
PG&E is also challenging that SSJID’s application should be invalidated because the environmental impact report, which was completed on two separate occasions over the nearly decade-long fight with LAFCo, violates the California Environmental Quality Act. They also believe that SSJID violated the “change of organization” process required of the LAFCo Act.
The entire lawsuit spans 30 pages, and has been assigned to Judge Roger Ross. According to the San Joaquin Superior Court website, the first court proceedings have not yet been posted.
Both LAFCo, which is a San Joaquin County entity comprised of representatives from rotating city council members and the board of supervisors, and SSJID are named in the suit.