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Power Battle Costs Mounting
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Sometime in early 2013 a decision is expected that could save residents, schools, businesses and farmers in Escalon, Manteca and Ripon collectively in excess of $12 million annually.

That decision essentially is a "yea" or "nay" to the South San Joaquin Irrigation District's fiscal fitness and capability to deliver retail electricity to users within the agency's 72,000-acre jurisdiction at costs 15 percent below what PG&E charges.

The decision will be made by the five-member San Joaquin County Local Agency Formation Commission. It includes one county supervisor who has been advised he must sell his longtime PG&E stock holdings before casting a vote. Another member - Ripon Mayor Red Nutt - is removing himself from any vote believing he has a conflict because he was part of the Ripon City Council that unanimously backed the SSJID bid to become the retail power provider. Counsel for both LAFCo and the City of Ripon, though, have said Nutt has no conflict but the mayor wants to make sure that there are no challengers. In that event, an alternate will take Nutt's seat for the vote.

That won't be an issue, though, if Nutt ‑ who serves as the LAFCo chairman ‑ is not reelected. That's because LAFCo Executive Director James Glaser expects it to "be a few months into next year" before all analysis of studies the commission ordered and public comment are completed.

"It's an extremely complicated issue," Glaser said.

That is a $1,377,188 understatement.

SSJID has spent that much just on the LAFCo review process alone that started 37 months ago on the current application. That includes $723,185 paid to LAFCo to cover their direct attorney fees plus some staff time. It also includes the cost of the independent PA Consulting study. The firm, which was recommended by PG&E with the study paid for by SSJID, concluded that the SSJID has the expertise and the financial means to operate and deliver retail power at the reduced rate that the public agency contends they can.

But it is not as simple as that. Besides addressing various challenges posed by PG&E, the addressing of greenhouse gas issues is complicated since unlike a regular government entity request to annex territory or services involves addressing just "local" air quality issues, LAFCo must consider greenhouse gases tied to the generation of electricity for SSJID's use outside its boundaries.

SSJID has also paid $515,800 for required LAFCo environmental studies and another $138,200 for a municipal services review.

The costs of the negative process are actually higher. Since SSJID started its quest nearly a decade ago, it has spent well in excess of $2 million on exhaustive studies by firms with expertise in electrical distribution systems to make sure they can accomplish 15 percent reductions even after buying the PG&E system, separating it from PG&E's distribution lines, and making major upgrades.

SSJID has been able to do it without impacting district taxes that went 22 years without being raised except for this past year when a conservation charge was mandated by the state. The cost for the studies have been a fraction of the money that the district gets each year from the Tri-Dam project from wholesale power sales after their 50-year contract selling power to PG&E at a set cost expired.

The district is now sitting on reserves in excess of $70 million and growing that will allow it to secure financing to purchase the system as well as to pay upgrades. Yearly net revenue from Tri-Dam that has pushed $15 million a year will be used to make sure power costs are 15 percent lower while paying for ongoing efforts to reduce water conservation by putting in place state-of-the-art systems to allow farmers to use drip irrigation.

And while the process had required the patience of Job, a lot of current PG&E customers are getting antsy.

The SSJID had more than 600 people visit their booth at the recent Pumpkin Fair in downtown Manteca. The number one question asked was when SSJID would be taking over the PG&E system.

"SSJID has never questioned the legitimacy of these charges and we understand the Commission's policy to impose direct costs in light of most local governments' financial condition at this time," said SSJID Executive Director Jeff Shields. "Our only hope is that LAFCo can expedite this application and bring it to a decision by the Commission in the very near future."

Shields said LAFCo has accommodated every single request for information by PG&E and accepted every unsolicited study PG&E has provided "to create issues, delays and obfuscation of the process." But Shields contends it is a matter of LAFCo simply being cautious.

"I believe LAFCo is doing their best to 'bullet proof' the document trail and process and they should be applauded for that thoroughness," Shields added. "But, we have provided every document LAFCo has sought and further delay will not inform the process but rather simply give PG&E additional time for their political manipulation."

PG&E's expenditures for its lawyer and staff in fighting the SSJID application are not a matter of public record.