Proposition 16 – a statewide ballot measure with major implications on the future of retail electricity costs in Manteca, Ripon, and Escalon – appears headed for defeat in Tuesday’s voting.
PG&E’s heavily financed measure to amend the state constitution to require a two thirds vote any time a local jurisdiction tries to enter the retail power business was failing by a 52.3 % to 47.7% margin as of 2 this morning.
PG&E spent close to $50 million while opponents spent virtually nothing on the measure that PG&E Chief Executive Officer Peter Darbee was caught admitting on tape at a stockholders gathering in March was essentially designed to reduce his company’s costs in fighting local initiatives to protect their power monopoly in much of Northern California.
One of the jurisdictions Darbee had his sights on making it more difficult to enter the retail power business is the South San Joaquin Irrigation District. The SSJID is working to parlay the net receipts from its share of the Tri-Dam Project profits - generating a minimum of $9 million annually on top of a starting nest egg of $70 million - to lower retail rates at least 15 percent across the board in Manteca, Ripon, and Escalon.
“It’s a pretty sad day when a corporation tries to amend the state constitution to protect its own interests,” noted SSJID General Manager Jeff Shields.
Should Proposition 16 ultimately pass - which it looked unlikely with 52.3 percent to the vote counted statewide - the SSJID has several fall back positions.
“We are confident that enough people have a strong enough trust and faith in the district that we could secure two thirds approval if it came down to that,” Shields said.
At the same time, Shields said the district had already started looking at their legal options due to the wording crafted by PG&E attorneys in writing the initiative.
Shields said it isn’t clear if the initiative applied to irrigation districts that already are authorized by the state constitution to enter the retail power business as opposed to cities and other jurisdictions. He noted SSJID must operate under the California Water Code which provides such authority.
The wording of the initiative also was being interpreted by agencies such as Modesto Irrigation District and the Sacramento Municipal Utility District that they would have to obtain a two-thirds vote to add new customers or even additional power load.
Shields said the district didn’t spend much energy or commit money to exploring a legal challenge as they wanted to wait until the outcome of Tuesday’s election.
The SSJID plan still has to obtain approval from the San Joaquin Local Agency Formation Commission. That body is preparing to determine whether SSJID is capable of entering the retail power business and doing what they contend they can do.
If SSJID gets the stamp of approval from LAFCo, the next step would be negotiations between PG&E and SSJID for a price for the distribution system serving Manteca, Ripon, and Escalon.
Should that fails a judge would determine the sale price.
The last time around PG&E based its opposition at LAFCO on the possibility SSJID ultimately would use eminent domain to purchase the system.
SSJID countered that the state constitution gives them power to do just that. The LAFCO executive director indicated that the hearing wasn’t legally designed as a referendum on eminent domain but that is what it became the first time.
Now LAFCO has commissioned an independent analysis of the SSJID plan. The irrigation district has agreed to pick up the tab for the cost of that study.
The consultant concurs that SSJID has the knowledge and the ability to enter the retail power business but questioned some of its power cost projections.
Shields noted that if the LAFCO consultant’s premises are correct, it would result in significantly higher PG&E rates as well but would give SSJID a big advantage - a large jump in annual revenue from Tri-Dam since it produces renewable hydro-electric power.
The result would give SSJID significantly more money to reduce retail power costs.
The study also indicated $10 million wouldn’t be enough to leverage the purchase and improvement of the PG&E system. The SSJID, though actually has $70 million in undistributed reserve it could put toward securing financing. It’s business model calls for using the $10 million to secure the financing and make needed improvements that could be collapsed into rates that cover those costs as well as improvements and delivering power that would still bring cost at least 15 percent below PG&E rates.
PG&E has already asked for the biggest rate increase in its history - over $1.01 billion - effective Jan. 1, 2011.
PG&E’s heavily financed measure to amend the state constitution to require a two thirds vote any time a local jurisdiction tries to enter the retail power business was failing by a 52.3 % to 47.7% margin as of 2 this morning.
PG&E spent close to $50 million while opponents spent virtually nothing on the measure that PG&E Chief Executive Officer Peter Darbee was caught admitting on tape at a stockholders gathering in March was essentially designed to reduce his company’s costs in fighting local initiatives to protect their power monopoly in much of Northern California.
One of the jurisdictions Darbee had his sights on making it more difficult to enter the retail power business is the South San Joaquin Irrigation District. The SSJID is working to parlay the net receipts from its share of the Tri-Dam Project profits - generating a minimum of $9 million annually on top of a starting nest egg of $70 million - to lower retail rates at least 15 percent across the board in Manteca, Ripon, and Escalon.
“It’s a pretty sad day when a corporation tries to amend the state constitution to protect its own interests,” noted SSJID General Manager Jeff Shields.
Should Proposition 16 ultimately pass - which it looked unlikely with 52.3 percent to the vote counted statewide - the SSJID has several fall back positions.
“We are confident that enough people have a strong enough trust and faith in the district that we could secure two thirds approval if it came down to that,” Shields said.
At the same time, Shields said the district had already started looking at their legal options due to the wording crafted by PG&E attorneys in writing the initiative.
Shields said it isn’t clear if the initiative applied to irrigation districts that already are authorized by the state constitution to enter the retail power business as opposed to cities and other jurisdictions. He noted SSJID must operate under the California Water Code which provides such authority.
The wording of the initiative also was being interpreted by agencies such as Modesto Irrigation District and the Sacramento Municipal Utility District that they would have to obtain a two-thirds vote to add new customers or even additional power load.
Shields said the district didn’t spend much energy or commit money to exploring a legal challenge as they wanted to wait until the outcome of Tuesday’s election.
The SSJID plan still has to obtain approval from the San Joaquin Local Agency Formation Commission. That body is preparing to determine whether SSJID is capable of entering the retail power business and doing what they contend they can do.
If SSJID gets the stamp of approval from LAFCo, the next step would be negotiations between PG&E and SSJID for a price for the distribution system serving Manteca, Ripon, and Escalon.
Should that fails a judge would determine the sale price.
The last time around PG&E based its opposition at LAFCO on the possibility SSJID ultimately would use eminent domain to purchase the system.
SSJID countered that the state constitution gives them power to do just that. The LAFCO executive director indicated that the hearing wasn’t legally designed as a referendum on eminent domain but that is what it became the first time.
Now LAFCO has commissioned an independent analysis of the SSJID plan. The irrigation district has agreed to pick up the tab for the cost of that study.
The consultant concurs that SSJID has the knowledge and the ability to enter the retail power business but questioned some of its power cost projections.
Shields noted that if the LAFCO consultant’s premises are correct, it would result in significantly higher PG&E rates as well but would give SSJID a big advantage - a large jump in annual revenue from Tri-Dam since it produces renewable hydro-electric power.
The result would give SSJID significantly more money to reduce retail power costs.
The study also indicated $10 million wouldn’t be enough to leverage the purchase and improvement of the PG&E system. The SSJID, though actually has $70 million in undistributed reserve it could put toward securing financing. It’s business model calls for using the $10 million to secure the financing and make needed improvements that could be collapsed into rates that cover those costs as well as improvements and delivering power that would still bring cost at least 15 percent below PG&E rates.
PG&E has already asked for the biggest rate increase in its history - over $1.01 billion - effective Jan. 1, 2011.
