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Thanks PG&E for proving SSJID can lower rates 15%
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Manteca, Ripon, and Escalon should be eternally grateful to PG&E.

Thanks to PG&E’s aggressive campaign to try and stop South San Joaquin Irrigation District from exercising power granted it in the California constitution to all irrigation districts and to essentially lower power costs for their constituents, we now know SSJID’s claim of 15 percent lower electrical rates is the real deal.

PG&E insisted - actually demanded - an independent analysis be done of the SSJID plan even though the district had devoted years to two exhaustive studies by two different firms before the San Joaquin County Local Agency Formation Commission considered the request to allow the Manteca-based SSJID to enter retail power sales.

The LAFCo board had both PG&E and SSJID submit a list of recommended consultants. The LAFCo board went with PA Consulting - a preferred consultant of PG&E’s. The initial report issued by PA Consulting said SSJID was more than competent to run a retail power operation but it doubted they could deliver on the 15 percent promise

SSJID noted a flaw in that PA Consulting had neglected to adjust PG&E’s rates upwards inadvertently assuming they’d be stagnant for the next 10 to 20 years. PA Consulting went back and re-crunched the numbers.

In a nutshell the final report released this past week shows a number of things:

•$39 million upfront is needed to buy a system that PA Consulting contends is worth close to $300 million. No problem. SSJID will have $90 million in the bank in undistributed Tri-Dam receipts by year’s end.

•SSJID can expect conservatively to receive $20.1 million a year from Tri-Dam receipts that they can spend if they wish to subsidize less expensive power. That’s great news considering SSJID’s much more conservative projection put it at $18 million a year.

•It would take a $15 million annual subsidy as long as the bonds used to purchase the system from PG&E are still in place in order for SSJID to deliver on their 15 percent discount promise. No problem there. Based on PA Consulting numbers, SSJID would have a $5.1 million surplus a year after diverting $15 million annually to cover bond repayments.

And things could get better.

Assuming LAFCo gives SSJID the green light and PG&E and SSJID negotiate a price lower than $300 million for the local system - or a court determines a lesser value -  that would make it possible to pass on additional savings to ratepayers if SSJID so chooses.

They could also put down $78 million instead of $39 million with the possibility they could pass along additional savings to future electrical customers.

Or if they chose to still use the same investment numbers - $39 million upfront and $15 million in an annual subsidy - they would assure ratepayers for power as well as irrigation and municipal water that they would have ample reserves to not just address emergencies but to continue to enhance both systems.

Then there is the ace in the hole. Once the bonds are paid off, it frees $15 million a year in Tri-Dam receipts. That money could be funneled back into the retail electrical system to save Manteca, Ripon, and Escalon power users even more. It could take the form of subsiding capital improvement projects or even building state -of-the-art solar farms that would generate more green electricity and lower power purchase costs.

PG&E can’t win on numbers.

So their next step is to either replay the eminent domain card or rant about how “tax dollars” could be better used for something else.

First of all, if PG&E thinks eminent domain is so evil then they should stop using it.

Second, it is always nice to hear PG&E tell SSJID what they can do with what is essentially $20 million a year of extra money generated on the public’s behalf that isn’t tax dollars and can only be used for purposes that the district is empowered to spend it on - water and electricity.

They can’t legally give it to cities within the district to pay for police and fire services or even schools as PG&E suggests but by lowering power rates 15 percent they will save the City of Manteca alone over $200,000 a year. That translates into the equivalent of two police officers. Similar savings for schools will have a big impact.

Let’s not forget if you’re paying $100 a month for electricity that’s $15 back in your pocket every month that would have gone to PG&E.

Rest assured there are people in SSJID territory that don’t want to see the switch for whatever reason. Having said that it is rather odd that the only high profile opposition that Common Sense San Joaquin - an organization bankrolled by PG&E itself - can drum up are non-district residents who reside in Stockton and who are more concerned about protecting corporate profits.

They can say all they want about eminent domain but electricity - just like water - is an essential service which is why power companies are quasi-public entities with the ability to use eminent domain. If they were a “pure” private sector concern they wouldn’t have those powers.

Again, thanks to PG&E everyone can rest a bit easier knowing that SSJID is on solid ground.