San Francisco is joining South San Joaquin Irrigation District in a bid to convince a federal bankruptcy court that selling them PG&E retail distribution assets within their jurisdiction will give the financially shaky for-profit utility cash to help cover $30 billion in liabilities.
The $2.5 billion San Francisco offer followed SSJID’s $116 million proposal to buy for the PG&E retail system serving Manteca, Ripon, and Escalon along with surrounding farmland.
SSJID General Manager Peter Rietkerks on Monday indicated PG&E acknowledged receiving the offer. The last time SSJID made a buyout offer to PG&E in 2016 it was rejected outright. The SSJID move to also make the formal request in bankruptcy court has changed the dynamics as the decision ultimately rests with a judge whether to accept or reject the offer as part of a plan that ultimately will be put in place to get PG&E out of its second bankruptcy in 15 years.
Critics of efforts to peel of segments of the PG&E retail system and essentially municipalizing them — including PG&E itself — argue that it would place a burden on customers that remain with PG&E such as in Fresno.
Rietkerks argues that is not a given.
He pointed to a California Public Utilities Commission analysis of SSJID’s bid to break away from PG&E that was conducted in 2009 to determine whether the move would hurt the remaining PG&E electric customers.
Loss of SSJID customers would mean a 0.0032 cents per kilowatt impact on PG&E’s remaining customers
The CPUC determined it was essentially negligible and that the impact on remaining customers would be 0.0032 cents per kilowatt hours. SSJID accounts for less than half a percent of PG&E’s 5.4 million electric customers. San Francisco with 452,000 electric customers represents about 7 percent of PG&E’s non-natural gas customers. SSJID’s service territory covers 113 square miles while San Francisco consists of 46.89 square miles. Once natural gas service is included, PG&E serves 16 million customers.
PG&E has long argued that rural areas would be left with more expensive power bills if they were forced to allow sections of the retail side of their electrical business municipalize. That flies in the face of the reality of several public utilities that were able break away from PG&E years ago including Trinity Public Utility District that serves the greater Weaverville area in Northern California that has some of the state’s rugged and sparsely populated terrain. Trinity rates are significantly lower than PG&E’s plus they have a much better record when it comes to avoiding wildfires and equipment issues.
Rietkerks said there are several other rural agencies on the order of Trinity that are considering making an offer in federal bankruptcy court to buy the PG&E retail system. That flies in the face of conventional wisdom that taking away chunks of PG&E and municipalizing them is not do-able in rural areas and would not result in cost savings.
Lathrop Irrigation District power rates are already 5% lower than PG&E rates
An example of how quickly an upstart retail provider can start creating a gap between PG&E rates and what they charge can be found at River Islands at Lathrop. The Lathrop Irrigation District — that SSJID helped with the establishment of that agency’s retail electrical system — is already selling electricity to its customers that are almost all residential at 5 percent below PG&E rates. The LID plan is to increase the difference between their rates and PG&E as its customer base grows. There are just over 1,000 customers now in the LID system with almost all of them being residentially, ultimately there will be 11,500 residential customers as well as business parks and commercial users.
Part of the reason that can happen is the state guaranteed profit of 10.5 percent goes away.
The latest SSJID offer to PG&E — which ironically is part of a 15-year process SSJID launched while PG&E was still in bankruptcy the first time around in 2003 — is part of a new phase of the 110-year-old irrigation district’s efforts to enter the retail power business. The effort is designed to reduce rates 15 percent across the board in Manteca, Ripon, and Escalon just as PG&E is pushing for a 12.8 percent rate hike to replace equipment that is aging and has maintenance issues such as the equipment that the utility concedes likely started the November wildfire in Butte County that killed 86 people, destroyed 14,000 homes, and burned 5,000 other buildings.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
