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SSJID getting 15% more powerful
Tri-Dam adding more financial muscle to water district
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South San Joaquin Irrigation District is about to generate even more wholesale electricity that will in turn help financially power its efforts to reduce retail power costs 15 percent across the board in Manteca, Ripon, and Escalon.

It also will further the district’s efforts to bring cutting edge irrigation systems to 55,000 acres that will reduce water waste and increase crop production by as much as 30 percent.

It is all because of a prudent move by the Tri-Dam Project – consisting of all 10 elected members of the partnership that encompasses SSJID and Oakdale Irrigation District – to buy business interruption insurance that provided for state-of-the-art replacement if equipment fails.

One of the power turbines at Donnells unexpectedly stopped working earlier this year. Not only was the loss of business – money the Tri-Dam Project received from power sales – made whole but the insurance firm also is paying for the replacement costs using the most efficient turbines on the market.

As a result, the Tri-Dam Project power output will increase 15 percent in 2011 to 150 megawatts.

That will have the effect of putting SSJID on even more firmer financial grounds in its bid to take over the PG&E system within its boundaries, pay severance costs, upgrade the delivery system, and reduce rates across by the board by at least 15 percent initially.

The SSJID splits the Tri-Dam proceeds 50-50 with OID after system expenses are covered.

The SSJID’s cut hasn’t dipped below $10 million since Jan. 1, 2005 when the 50-year contract signed with PG&E to buy wholesale power expired. The Tri-Dam agreed to sell PG&E power at a relatively low amount per kilowatt hour in return for PG&E paying them a fixed amount each year that was large enough to retire the bond debt and cover maintenance and operations even if it didn’t generate enough electricity each year to cover PG&E’s cost.

Tri-Dam did that and more for PG&E. In the early1990s, the SSJID’s share of the bonds were retired which freed up money to help finance capital improvements for the operations as well as hold the line on water rates. The district has now gone 22 years without raising water rates including two years when they were actually suspended due to the large amount of cash SSJID had coming in from the Tri-Dam Project.

Since the contract expired, SSJID’s revenues from Tri-Dam has escalated sharply pushing their undistributed reserve to $60 million despite spending well over $5 million on various studies to make sure it makes sense to enter the retail power business plus doing six years of capital improvement projects in two years. It is also getting ready to undertake the $13 million irrigation efficiency project to pressurize lines to eliminate open canals in Division 9 southwest of Manteca.

The district plans to use $10 million of its reserves to start up the retail power operations should the San Joaquin County Local Formation Commission bless the move in early 2011. Potential bond buyers are enticed by the financial security of the SJID given its $10 million plus annual cash flow from Tri-Dam that the SSJID board said they will tap into if need be to make the retail system work and to deliver power at 15 percent less than PG&E does.

An independent analysis by a LAFCO consultant determined the $10 million figure was too low based on their perceived value of the PG&E system. Even so, double the start-up money to $20 million would be more than ample to cover the consultants’’ concerns. The plan as in place does not require additional dipping into the Tri-Dam funds but the board has made clear that it is a back-up to provide additional assurances the retail proposal will work.

If the additional power added increases the minimum SSJID receives each year from Tri-Dam by an equal amount, the cash flowing into the district coffers will hit at least $11.5 million a year.