Is the epic struggle the South San Joaquin Irrigation District has undertaken to replace PG&E as the retail power supplier for Manteca, Ripon, and Escalon worth it?
The answer is on your street.
A move 17 years ago by the Manteca City Council has avoided municipal costs of at least $140,000 a year.
PG&E owned 1,674 of Manteca’s 2,685 street lights in 1999. The California Public Utilities Commission allowed PG&E to charge $65 a year for electricity and the maintenance for those 1,674 street lights. Research showed that if Manteca bought the street lights under PG&E control and then contracted the maintenance out it would cost $42 annually per light including electricity.
Manteca was required to pay the $65 even if the street lights PG&E was paid to maintain were out for weeks or months at a time.
PG&E initially put the cost of buying the street lights at $1.3 million. The CPUC ultimately said the fair market value was $483,180.
But here’s where it gets interesting. Manteca homeowners had already paid for the 1,674 street lights and infrastructure needed to power them. The cost was collapsed into the price of new homes.
That means PG&E — which claimed the street lights in question were worth three times their actual value — still got paid for something that they never paid for in the first place. That is how PG&E rolls under the lapdogs at the CPUC.
In the 1990s, the city started requiring developers to dedicate street lights to the city and not PG&E. In doing so the city started cutting their ongoing costs as well as reducing the cost to developers who in turn pass the cost onto home buyers.
That’s because the CPUC requires developers to cover potential PG&E taxes on improvements they make such as street lights and underground wiring, transformer boxes and such needed to serve the subdivisions they build. The charge is just under 35 percent of the cost of the improvements. The goal was to keep PG&E whole against corporate taxes. However, it has become a big profit center for PG&E.
Developers typically pay more than PG&E is required to pay in taxes. That excess money is never returned to developers as the CPUC allows the utility to pocket it. Such a requirement would not exist if a public agency was the retail power provider such as South San Joaquin Irrigation District in Manteca, Ripon, and Escalon.
It gets worse. Due to tax breaks granted by Congress, PG&E has earned billions without ever paying a cent in federal taxes during some years. In those years the 35 percent tax developers paid that were then collapsed into the sale price of a home was 100 percent profit for PG&E
Not only did Manteca residents end up spending less money on street lights in terms of electricity and maintenance but they also got better service.
It wasn’t uncommon for PG&E to take a month to replace a burned out street light. The current contractor typically responds within several days or less once they are contacted by the city.
So the city reduced ongoing costs 35.3 percent, obtained the infrastructure at a fair market price that was 62.8 percent lower than what PG&E wanted, and was able to modernize and drastically improve service at the same time.
It mirrors everything that SSJID contends it can do with the added caveat of $12 million in annual savings to households, businesses, government agencies, and farmers in Manteca, Ripon, and Escalon.
SSJID’s exhaustive studies — verified already by an independent consultant that has done work for PG&E — show that retail power costs will fall by at least 15 percent across the board. That, by the way, is for starters. They are likely to eventually drop farther.
Let’s go back to the street lights for a second. Manteca residents have now saved $2.4 million because city leaders did what SSJID is doing — analyzing costs, PG&E’s performance and price gouging. That represents a net savings in tax expenditures of $32 for each of Manteca’s current 75,000 residents over 17 years. Had the city not made the move it did in 1999, the equivalent funding of one police officer would have been lost on an annual basis simply so PG&E’s brass can buy corporate jets and pocket $1 million bonuses even when the utility has teetered on the edge of bankruptcy.
The current effort to enter the retail power business has been at least 19 years in the making. On Tuesday, the SSJID board after conducting a public hearing on a resolution of necessity 9 a.m. meeting at the Ripon City Council chambers may take what is essentially the next to the last step in achieving their goal of reducing power costs to residents, businesses, schools, city governments, and farmers across the board in the communities they serve.
So will the 19-year odyssey the SSJID undertaken to reduce this community’s power costs by at least 15 percent be worth it? During the next three years — the amount of time for legal proceedings for eminent domain and the court to determine a sale price is expected to take — PG&E intends to raise your rates another 16 percent.
SSJID has the legal authority, the capability, and the financial wherewithal to be retail power providers.
The SSJID plan to slash rates 15 percent translates into you and your neighbors as having a combined $12 million more left in their collective pockets each year.
The only people that think a community saving that kind of money isn’t good are those in the executive suites in San Francisco.