Retail Electric – another SSJID investment in the community’s future

By Peter Rietkirk - Published in the manteca bulletin 3/10/18

The South San Joaquin Irrigation District is committed to continuing its efforts to provide retail electric power within its service area, including the Cities of Escalon, Manteca, and Ripon, despite obstacles placed in its path by PG&E.
Why the steadfast commitment?  Quite simply, the projected benefits to the community are substantial:  Retail electric service at rates at least 15-percent below those currently charged by PG&E; and the transparency and local control of electric service by a public agency governed by an elected board held accountable to local voters.
SSJID received approval from the San Joaquin Local Agency Formation Commission (LAFCo) to provide retail electric power in December 2014.  This approval was challenged by PG&E in the form of a lawsuit, in which LAFCo and SSJID must prevail in order for SSJID to be able to be a retail electric service provider.   In addition, PG&E rejected the negotiated purchase of the electrical system within SSJID’s boundaries, which required SSJID to file a lawsuit to acquire the necessary facilities.  If these actions are decided in favor of SSJID, SSJID will begin the transition to assume the duty of delivering electric service to its customers.
From the outset, one of PG&E’s prime objectives has been to cause delay and artificially increase the total costs incurred by SSJID in its acquisition efforts in an attempt to influence public support of a locally-controlled electric utility.
What PG&E does not disclose, however, is that SSJID’s retail electric project expenditures have been funded in full by revenues from hydropower generation and periodic transfer of surplus water, not from customer water charges.  SSJID has not—and will not—raise customer water rates to fund the electrical project.
SSJID remains transparent and fully accountable to its customers and constituents regarding the costs of the retail electric project:
  • The annual projected expenditures for the retail electric project are included in the District’s budget, which is approved at an open and public meeting, then published on the District’s website.
  • Since 2008, SSJID has budgeted approximately $28.2 million for retail electric efforts. Actual expenditures total nearly $27.7 million, or about $500,000 under budget to date. Of this $27.7 million, $4.2 million is attributable to consultant fees and approximately $18.5 million for legal costs including expert and other litigation expenses.
  • The cost of this project has not affected SSJID’s financial stability, which is arguably the strongest it has ever been. While supporting this project, SSJID also invested an average of $6.6 Million annually in its agricultural and treated water systems, including installation of state of the art measurement, automation, and modernization technology.  Despite these expenditures, SSJID’s financial reserves remain strong.
Given the hurdles encountered during this project, it’s important that our community continues to understand why SSJID remains committed to stay the course:
  • Savings by local ratepayers will exceed the current project expenditures after only two years of operation. According to the most recent financial projections, the project will save customers at least $15.5 million the first year of operation, and over $47.5 million after three years.
  • Fifteen percent rate reduction is achievable. According to the American Public Power Association’s annual study, California publicly-owned and operated power agencies provide their customers electricity at rates approximately 15.4% below those of California based investor-owned utilities like PG&E, and some do much better than that. The rates of investor-owned utilities include costs of executive compensation packages, corporate income taxes, and profit distributions to shareholders.  For example, PG&E’s executive team made over $28.5 million dollars in salaries and compensation in 2016 alone.  Public agencies like SSJID are tax-exempt, and are not charged with maximizing profits to benefit investors.
  • SSJID is directly accountable to its customers. SSJID’s office is located in Manteca and its Board of Directors is elected by residents within the District’s boundaries.  Residents have the opportunity to communicate directly with the Board to voice their concerns, express their opinions, and indicate their preferences for SSJID’s programs, services, and rates at the monthly District meetings. Our books are open and our expenditures have been made public.  Let’s see the same transparency from PG&E.  What profit does PG&E make from our territory?  How much has PG&E spent in consultants and attorneys both within its organization and through outside engagement?
  • SSJID has proven its ability to accomplish complex, large-scale projects. District projects such as the Tri-Dam Project on the Stanislaus River, the Nick DeGroot Water Treatment Plant, the pressurized irrigation pilot project, and the solar farm each came with unique challenges, obstacles, and substantial investment before successful completion, and  each of these projects serve as a testament of what benefits can be returned to our customers and our community when the District remains committed in the face of adversity. We believe the electric project will result in similar benefits, and will stay the course so long as the plan is feasible, has a reasonable likelihood of success, and remains in the best interest of the public. 
In short, SSJID believes pursuit of the right to provide its customers with retail electric service is worth every penny.