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 20 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 it 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 was 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 the $12 million in annual savings will go 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 $2.8 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 more than $25 for each of Manteca’s current 83,750 residents over 20 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 15 years in the making.
PG&E’s bankruptcy filing earlier this year prevented two court cases underway for SSJID to take control of the retail system within its jurisdiction. That’s the way it works under bankruptcy laws — all litigation against the firm filing is suspended. On Tuesday, the Manteca City Council joined their counterparts in Ripon and Escalon urging the governor to meet with SSJID to join their efforts to present the sale of the local retail system to SSJID as a partial solution for the mess PG&E has used as well as using it as global solution to eventually break up the entire PG&E retail power operations and place it under the control of municipal power agencies. The end goal is more reliable service, lower power costs, and more accountability to ratepayers. That would benefit residents, businesses, schools, city governments, and farmers across the board in the communities SSJID serves.
So will the 15-year odyssey the SSJID undertaken to reduce this community’s power costs by at least 15 percent be worth the effort even though it is now stalled in the court system that is essentially the last hurdle? If the court clears the lawsuits in SSJID’s favor during the following three years — the amount of time legal proceedings for eminent domain and the court determine a sale price is expected to take — PG&E based on rate increases already is asking for just for 2020 could easily raise your rates over 20 percent if not higher.
SSJID has the legal authority, the capability, and the financial wherewithal to be retail power providers.
The SSJID plan to slash rates 15 percent means you and your neighbors will see 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.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209.249.3519.