PG&E rips into SSJID plan; critical vote looms
A crucial report addresses South San Joaquin Irrigation District’s financial ability to take over PG&E system and lower rates by 15 percent.
By Dennis Wyatt, Managing Editor
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An independent analysis by a highly respected consulting firm that PG&E helped select has determined that South San Joaquin Irrigation District would have to pump in $15 million a year to purchase the retail power system in Manteca Ripon, and Escalon and deliver on its promise to reduce electrical rates 15 percent across the board.
The short response from SSJID? No problem.
It is a response backed up by data in a report released this week by PA Consulting. The firm hired by the San Joaquin Local Agency Formation Commission to determine if that SSJID was capable of running a power system and had the financial capability to pull it off. The consultants determined SSJID could deliver on its promise and still accumulate $5.1 million a year from its share of Tri-Dam profits. That means the district could continue to convert irrigation district farmland to pressurized drip system to reduce water by using Tri-Dam proceeds while at the same time lowering power rates.
The LAFCo board will determine later this year whether to give SSJID permission to provide retail power service. The study will be used by the board to help make their decision.
The report released this week indicated that the SSJID underestimated the amount of revenue it should expect to see from its share of Tri-Dam Project profits that is being used to fund the retail power system. PA Consulting determined the SSJID projection of $18 million a year was too low. Instead they estimated the Tri-Dam revenue would reach $20.1 million a year. That would effectively allow SSJID to set aside $5.1 million a year from Tri-Dam after delivering on its promise to lower the electrical rates of everyone in the district from farmers and businesses to schools and residential users by 15 percent across the board when compared to PG&E’s rates.
From SSJID General Manager Jeff Shields’ perspective the numbers verify what the SSJID board had already spent five years determining to be correct.
That, however, isn’t how PG&E feels about it.
PG&E spokesperson Nicole Leibelt said the report backs her employer’s position that SSJID is simply going to put hundreds of millions of dollars of “tax dollars at risk” when the money could be better spent for police and fire protection in the three cities SSJID serves.
The Tri-Dam money - while it is public money - is not tax dollars. Also under California law it can’t be used or gifted to the three cities for the purpose PG&E thinks it should be spent for instead. Instead, it must be spent on the public’s business within the perimeters the district is allowed by law to operate within. It has provided water for over 101 years and generated wholesale power for over 52 years. The LAFCo board will decide if the district can take the next step from being a wholesale provider to being a retail provider for electricity.
Shields noted SSJID’s undistributed reserve from Tri-Dam proceeds will hit $90 million by year’s end even after undertaking ambitious water conservation projects costing in excess of $12 million.
Victor Mow, who doesn’t live in SSJID territory and is a former county supervisor, said in a release funneled through Common Sense San Joaquin said “once again SSJID’s numbers just don’t add up.”
Mow said the acquisition would create millions of dollars in debt. It is debt that SSJID plans to retire, though, using a portion of what they charge for power - even at 15 percent less than PG&E’s going rate - plus cover the difference with Tri-Dam proceeds.
Dale Fritchen, another non-SSJID resident and Stockton councilman who is associated with Common Sense San Joaquin, also sided with PG&E’s interpretation of the report.
“Let’s be clear about what this is - a proposed hostile takeover of local electric service by SSJID through eminent domain,” Fritchen said.
SSJID could end up using eminent domain. It is something PG&E is empowered to use - and does so often - under state law to take private property that they need in order to operate their business as they see fit . Eminent domain would only be used if the matter ends up in court if SSJID and PG&E can’t agree on a fair market price.
Shields noted that the PA Consulting concluded the PG&E system is worth $200 million more than SSJID believes the system is worth. Even so, he noted the PA Consulting numbers that indicate $15 million a year is needed to make the 15 percent rate cut work reflect the higher price. Shields believes the price will be lower but even if it isn’t, he noted the report essentially says they have the wherewithal to cover the costs.
The report analyzes the Tri-Dam revenue but doesn’t link the two together noting it wasn’t determining where SSJID would get the money from to make their plan work just what was needed to make it possible to achieve the 15 percent reduction they contend they could reach.
Shields also said the district board could elect to put more than $39 million upfront given the fact they have $90 million in undistributed reserves on top of other reserves.
He also added concerns that PG&E has that farmers could face higher water rates if SSJID commits Tri-Dam money to subsidize cheaper power for people doesn’t wash out. Shields noted the consulting firm concluded essentially the district would have $5.1 million in excess Tri-Dam receipts after helping lower electrical rates 15 percent.
Shields said that money is on top of what the district receives for out-of-district water sales that generated $11 million for the SSJID over the past two years.
The SSJID has not raised property taxes or water rates for over 20 years.
They have one of lowest water rates for irrigation in the state. They also built the Tri-Dam system in partnership with Oakdale Irrigation District as well as their own system without taking a penny in state or federal tax dollars. They also are debt free. See this article.