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SSJID being told by LAFCo to study less effective way to reduce power costs
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PG&E wants the South San Joaquin Irrigation District to consider going to Community Choice Aggregation (CCA) instead of taking over the retail power system in Manteca, Ripon and Escalon in a straightforward bid to lower power rates 15 percent across the board.

The San Joaquin Local Agency Formation (LAFCo) has granted PG&E’s request and required the SSJID to study employing a CCA despite just seven months ago concluding such an option would be less effective and would be illegal unless state law is changed.

The additional study will further delay final action by the LAFCo board until perhaps this October on SSJID’s request to enter the retail power business. It is the latest request by PG&E that LAFCo is honoring that has pushed back a decision from the original target date of December 2011.

The additional environmental impact report study will cost SSJID over $100,000. Creating a CCA would allow the district to aggregate the buying power of individual consumers within its boundaries in order to secure better rates from alternative energy contracts with other generators of electricity that in turn would be delivered over PG&E lines with a surcharge attached.

SSJID hired experts to study the CCA option more than four years ago. They determined it was not the most effective way to reduce costs for everyone as it would not save individuals, businesses, farmers, and government agencies as much as if the SSJID took over the retail distribution system.

In addition, PG&E has vigorously fought efforts in San Francisco and Marin County by communities to implement CCAs.

General Manager Jeff Shields said the SSJID board is addressing the CAA option to avoid a possible lawsuit afterwards by PG&E that all options weren’t addressed if LAFCo makes a decision favorable to allowing the 103-year-old irrigation district to enter the retail power business.

Requiring the CCA study also appears to go against a LAFCo position adopted when their board approved the municipal services report (MSR) for SSJID in November of 2011.

The exhaustive document is one of several that the agency has produced to give the commission the information it needs to rule whether SSJID is in a position to exercise its “latent power” under the state constitution to offer retail power service within it boundaries.

The 184-page document looked at the financial viability of the district, its ability to provide services, population and growth projections within the district boundaries and its accountability. The district passed muster in all areas.

The executive summary states, “SSJID’s budget shows that the district has the financial ability to acquire the retail distribution system and provide retail electric service at more affordable rates compared to existing rates charged by PG&E. It also shows that SSJID will have sufficient revenues to cover the anticipated expense of providing electric service, including: operations and maintenance, power purchase and debt service, and planned capital expenses. Even considering unknown future fluctuations in revenues and expenses, it is anticipated that SSJID would have sufficient revenue to continue providing its existing services (i.e., irrigation, water, and drainage) and retail electric service.”

At the same time the document addressed an alternative that PG&E representatives repeatedly suggested SSJID pursue instead - community choice aggregation for electric service. The LAFCo report noted that without changing state law, SSJID could not register as a CCA. It also would have to be implemented by San Joaquin County and the three cities within SSJID’s boundaries - Manteca, Ripon and Escalon.

The MSR’s executive summary stated “changing CCA rules would be a time-consuming, costly, and controversial process. SSJID could not offer the same economic benefit that customers would receive under SSJID’s plan to provide retail electric service.”

However, seven months later LAFCo staff now wants SSJID to fund yet another CCA study after they determined it essentially wasn’t a practical alternative.

One of the previous delays in the review process involved PG&E wanting an independent consulting firm with expertise in public agencies taking over retail power systems to evaluate SSJID’s ability to do so.

The firm that LAFCo picked was recommended by PG&E with SSJID picking up the cost of the study. That study in a nutshell determined SSJID is capable of running a retail system and has the financial resources needed to deliver electricity at 15 percent less than PG&E by investing annual Tri-Dam Project receipts into the retail operations.