The moment of truth is about to arrive.
South San Joaquin Irrigation District’s 15-year journey toward entering retail power sales is nearing the final thumbs up or thumbs down.
The fate of the SSJID’s quest to convert the payback from visionary thinking that built the Tri-Dam Project and its multiple hydroelectric plants back into the 1950s is expected to be decided by the San Joaquin County Local Agency Formation Commission by the start of summer.
An independent analysis by an industry specialist recommended by PG&E concludes it is realistic for SSJID to deliver on its promise of 15 percent lower rates and improved redelivery service thanks to the $15 million annually that SSJID can infuse into the retail system from Tri-Dam proceeds.
PG&E obviously doesn’t want to let go of the Manteca, Ripon, and Escalon service areas.
An economic argument against the SSJID proposal doesn’t wash. There is confirmation upon confirmation of SSJID-financed studies, plus the pivotal PA Consulting report the LAFCO board will use in making its decision that SSJID can deliver.
The California Public Utilities Commission earlier this year analyzed the impacts the loss of 72,000 acres in the PG&E territory would do to PG&E’s viability and rates of electrical consumers elsewhere. The CPUC - which has a very checkered history of being friendly to for-profit utilities - concluded the impacts were virtually nil.
Last time around, PG&E beat the eminent domain argument to death, contending that a government agency could ultimately force the sale of part of private business.
It was a hypocritical argument, to say the least. PG&E ,as a quasi-public agency, utilizes eminent domain to take private property to maximize its efficiencies and profits for its system virtually weekly. It is rare for SSJID to do so.
One South Manteca farmer told of an offer to pay the cost of PG&E jogging a power line they decided had to go across his property to avoid bringing it close to his house. He wasn’t fighting the line, just the location. He was willing to pick up the tab. PG&E refused to consider the offer.
A Delta sod farmer lost a chunk of his land for a natural gas line that PG&E used eminent domain to put in place. PG&E then turned around and donated the sod on the land they used government powers to seize to Ethan Allen School in Lathrop. You can bet the farm that PG&E got a tax deduction for that as well as milking it for all the goodwill publicity they could get.
PG&E can’t argue that taking the system with the SSJID’s territory off the tax roll will hurt government budgets. The SSJID plan locks in higher franchise rates for the cities of Manteca, Ripon, and Escalon than PG&E is currently paying. PG&E is also one of the leaders in California corporations when it comes to avoiding paying corporate income taxes. As for what property tax they do pay – and like to brag about annually in press releases – the CPUC authorized them to incorporate that from ratepayers, so not only are you paying higher rates for electricity, you are also paying PG&E’s corporate taxes directly. As for other taxes, CPUC allows PG&E to collapse that into their rates on top of the 11.45 percent guaranteed return. But PG&E rarely spends the money they are allowed to collect from ratepayers to cover taxes. What is left in the tax accounts filled with ratepayer dollars at the end of several years, PG&E is allowed to keep as profit.
On the positive side for PG&E, should SSJID prevail, it is highly unlikely to start a stampede of other government agencies starting from scratch and taking over segments of their system,
That’s because of the unique situation that SSJID is in, thanks to an investment almost 60 years ago that generates the revenue that the district can use to lower power rates and help stimulate the local economy.
This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209-249-3519.