INTRODUCTION

The South San Joaquin Irrigation District (District) expects to acquire from PG&E Company the electric distribution assets necessary to provide electric utility services to approximately 38,000 end-use customers in or adjacent to the current District boundaries. For system planning purposes the District estimates peak energy use for these customers to be 133 MW. In assuming utility responsibility for these customers, the District will rely on a combination of its current utility staff and facilities as well as mutual assistance from other consumer owned utilities and private utility contractors and professional service providers. As well, the District anticipates creating 34 new electric utility positions.

Key to the Districts Plan Of Service (POS) is a significant financial investment in infrastructure necessary to increase reliability, improve customer service and bring down the long term cost of service. The District will also implement a 15 percent rate reduction immediately upon initiation of service.

The Plan Of Service (POS) anticipates that the District will assume utility responsibility on or before the 1st Quarter of 2008.

BACKGROUND

The District formed in 1909 for purposes of providing irrigation services to a 119 square mile portion of southern San Joaquin County. In the 1950’s the District joined with the Oakdale Irrigation District to develop a series of dams and hydro-electric generation plants on the Stanislaus River (Tri-Dam). Subsequently, the District developed other hydro-generation facilities and, by the mid-1980’s SSJID was at least 50 percent owner in approximately 130 MW of installed generation capacity. The District’s share of these projects is approximately 69.4 MW

In May 2005 the District completed construction of a major water treatment facility and began delivering wholesale domestic treated water to the cities of Escalon, Manteca, Lathrop and Tracy.

As of May 2005 the District has a permanent full time staff of approximately 74 employees. Additionally, Tri Dam employs 21 full time staff. In June of 2004, SSJID hired a full time Utility Systems Director. This individual has over 25 years experience in utility distribution system acquisition, organization and management, with 17 years experience managing consumer owned electric distribution utilities. SSJID employees, including those at Tri-Dam, enjoy representation by IBEW Local 1245.

The District maintains its utility operations, including corporation yard, warehouse, administrative and customer service functions at its headquarters building located on Highway 120 in Manteca, California. In addition, the District has extensive facilities to support the domestic water program at the new treatment plant on Dodds Road in the unincorporated Valley Home area of San Joaquin County. The Tri Dam operations occur in a third facility located in Strawberry, California.

Electric Utility Plan Of Service

Following are a series of steps necessary to facilitate transition from PG&E to SSJID. The District expects to put the existing distribution assets into service immediately up securing title (or a court order) to the assets. However, the transition from PG&E to SSJID will require cooperation from PG&E in transferring customer data, removing PG&E facilities, such as revenue meters, and accommodating the necessary construction activities to physically separate the two systems while preserving continuity of service to the consumer. Once the physical severance is completed, the District will operate and maintain the facilities totally independent of PG&E.

I. Pre-possession of assets

a.) Governance: Since 1909, SSJID has operated under an elected Board of Directors that assume “public trust” responsibilities. Established governance protocols, including implementation of deliberation processes, financial reporting and compliance with any and all respective statutory obligations are in place. The addition of an electric utility enterprise will not have a material effect on the governance process, any more than did the addition of the wholesale domestic water program. The Boards jurisdiction will expand to resemble that of the Modesto Irrigation District or Turlock Irrigation District, which also provide irrigation and electric utility services and, in MID’s case, domestic treated water.

b.) Data management: Having been a utility and operating an accounting and billing system for many years, the District more recently has reviewed a variety of utility Customer Information System (CIS) software products to assure compatibility with the Automated Metering Technology that we will employ as a function of improving the accuracy and timely accounting and invoicing of energy sales and services. The new CIS software will be put in place and training completed in the 2005-2006 timeframe. This project is necessary to enhance the current utility system accounting, mapping and management protocols and to integrate the water treatment program with the irrigation enterprise and, ultimately the retail power function.
Prior to securing title to the distribution assets the District will coordinate with PG&E to exchange customer specific billing and metering data and to transfer system maps.

c.) Power supply: In the effort to select a buyer, including negotiating terms and conditions for the off-take of the Tri Dam hydro-electric, the District relied on consulting services to quantify price and terms for selling this power. PG&E was the highest bid for this power. The District has worked with these same consultants and with various power marketing entities to project forward commodity energy prices. While PG&E owns 33% of the resources necessary to meet system loads, the District owns more than 50% of the resources needed to serve load. Initially the District will implement a balanced portfolio, including compliance with resource adequacy standards and renewable energy supplies through competitive wholesale markets. The TriDam contract has a termination option that can be exercised if there is an economic benefit to delivering power directly from District owned generation. More likely, the hydro operation will have a higher value in the marketplace and the District will rely on these facilities as a financial or physical hedge.

The District will contract for scheduling, shaping and other ancillary services. Because the District has never been bankrupt and has a substantial balance sheet and no debt they enjoy superior credit position. Credit is a driving factor in securing term power agreements.

Transmission service will come through both the California ISO and from the SMUD/WAPA Control Area. The District will participate in the WECC and NREC to assure coordinated system planning and compliance.

d.) Staffing: The District expects to hire 34 full time experienced electric utility staff to supplement the existing staff. Initially, the administrative functions that currently take place in San Francisco, (i.e.; accounting, human relations, etc.) will take place at the District’s Manteca office. The District will contract with MID for specific support service during the transition. For example, MID will administer the Public Benefits Program for SSJID during the initial start-up to assure that important efficiency and renewable investments are not compromised.

Several distribution engineering and construction companies have solicited business with the District to assist in implementing the severance plan and provide on going construction and maintenance needs. An Operations Manager, two full-time, four person line crews and three troublemen will be hired to assure operational integrity. The District will supplement these crews with Mutual Aid Agreements through MID, TID and SMUD.

Over the first full year of operations, the District will “right-size” the organization based on actual experience. The goal is to optimize economic and operational efficiency by maintaining as much in-house staff as required to improve response time, reduce the number and duration of outages and improve customer service.




II. Immediate possession:

It is expected that PG&E will remove their meters and SSJID will install new automated meters in a coordinated manner. The District will contract with qualified metering technicians for this task. At this same time the District will input customer data with our new CIS software and initiate new service agreements.

As described above, the District will secure a power portfolio through a competitive bid process with delivery scheduled to occur simultaneous with a pre-agreed transition date and hour. We expect to implement a netting agreement with PG&E, to the extent necessary, to assure accuracy in the first 30 day billing cycle

Physical separation, including project specific engineering and construction will be completed by private contractors.

III. Full operation:

As mentioned in Section II above, the District expects to evaluate the long-term staffing and facilities needs over the first full year of operations. During that first year there will be a mixed reliance on in-house and contract staff, including support service from MID. Similarly, the District will lease temporary space to the extent necessary to facilitate the administrative needs of the electric function.
The current irrigation operation includes a variety of heavy equipment common to both electric and water operations. However, some electrical equipment is has unique requirements, such as dielectric characteristics. The District will purchase all of the necessary equipment and associated tools to perform the work in a safe manner.

Because both MID and SSJID will have 17 kV equipment we will coordinate inventory to assure an adequate supply of materials is available while optimizing inventory quantities for both districts.
This is true for poles, cross arms, insulators, vaults, conductor and other material.