The epic struggle for South San Joaquin Irrigation District to enter the retail power business as allowed under California law to lower electricity rates 15 percent across the board in Manteca, Ripon, and Escalon is nearing its next phase.
PG&E has rejected a fair market offer determined by an independent appraisal as state law requires. That offer of $116 million for the distribution system in the 72,000-acre irrigation district included $92.7 million for facilities and $25.3 million for costs PG&E will incur during the conversion to SSJID.
The rejection letter PG&E sent to SSJID on June 2 came after PG&E lost two back-to-back court decisions. The first was in March when the San Joaquin County Superior Court upheld the Local Area Formation Commission decision allowing SSJID to enter retail power sales. The other was an appeals court denial of PG&E request for a writ of mandate to stop the process based on the court’s view that there wasn’t anything to consider currently for them to review.
Now that PG&E has rejected SSJID’s offer, the irrigation board has scheduled a resolution of necessity hearing on June 28 that is the precursor to starting eminent domain proceedings.
If the board votes to proceed, the matter will then head to court where two findings must be made: first, whether there is public good at stake and second, the price SSJID will be required to pay for the distribution system.
SSJID General Manager Peter Rietkerk said that it could take three to five years from now before SSJID actually replaces PG&E as the local electricity provider.
“We are now in the legal phase,” Rietkerk said.
The SSJID board’s most recent financial analysis not only determined the move is still do-able and that 15 percent savings can be obtained but that the power market has improved even more in the district’s favor.
The general manger emphasized that the board has made it clear that the district will meet all LAFCO requirements and do another financial assessment once a price is reached before making a final decision whether to proceed into retail power.
During the next three years as the case winds through the courts and – if the endeavor moves forward – SSJID starts physically gearing up to take over and enhancing the PG&E distribution system, PG&E is seeking rate increases of 16 percent.
“We are confident we will be able to secure the promised 15 percent savings,” Rietkerk noted.
That is keeping in line with many other public power agencies in the PG&E territory. Some after years of operating independently of PG&E, are charging their customers rates 35 percent below what PG&E charges.
As of Jan. 1 an average customer using 750 kilowatts a month will pay:
*$176.50 if they are a PG&E customer.
*$132.40 if they are a Modesto Irrigation District customer.
*$114.14 if they are a City of Roseville customer.
*$110.61 if they are a Los Angeles Water and Power Department customer.
*$103.21 if they are a Sacramento Municipal Utility District customer.
SSJID Assistant General Manager Bere Lindley noted that there are more than 2,000 public agencies nationwide providing electricity to communities “with many of them started by citizens who first gathered in living rooms.”
He noted there have been very few failures over the years.
“They can’t all be geniuses,” Lindley said to emphasis that the process isn’t fraught with risk noting SSJID is not venturing down a path that hasn’t been taken before.
Lindley argued it’s a well-traveled path that has given communities lower rates, improved reliability, more transparency and more local control.
Lindley pointed out this isn’t SSJID’s first rodeo when it comes to tackling what many believed were daunting endeavors at the time that strengthened the economic vitality of Manteca, Ripon, Escalon, and the surrounding farming community.
*In 1909 the SSJID floated a $1.9 million bond to secure adjudicated water rights on the Stanislaus River basin and build Goodwin Dam and the initial canal and delivery system. That was followed up with Woodward Reservoir in 1916 and Old Melones Reservoir in 1925.
*In the 1950s SSJID in partnership with Oakdale Irrigation District built the Tri-Dan Project. Three major power generating reservoirs were built with two years – Beardsley, Donnells, and Tulloch.
*A little over 10 years ago the SSJID built a state-of-the-art surface water treatment plant and what was then the largest tracking solar farm in the West to help power the plant.
*Five years ago SSJID put in place a cutting edge pressurized delivery system serving Division 9 south of Manteca and west of Ripon that is saving 10,000 acre feet of water a year and has drawn international acclaim for its numerous green advantages as well as for reducing costs and increasing crop production.
SSJID first started serious exploration of entering the retail power business in 1988 when they decided they needed to harness the Tri-Dam system to benefit the greater community once the 50-year bonds were paid off.
In the 1990s PG&E proposed three different avenues for SSJID to enter retail power but pulled the plug at the last minute.
The initial LAFCO application was made in 2006 and denied in 2009. A second application was made in 2009 and approved in 2014.