South San Joaquin Valley Irrigation District Makes $80-Million Bid for PG&E's Area Electric System

MANTECA, Calif., Aug. 24 /PRNewswire/ -- In a move that would cut electric rates to 35,000 area residents by at least 15 percent, the South San Joaquin Irrigation District (SSJID) today formally offered an estimated $80-million to Pacific Gas & Electric Company for its electric facilities in the area.

The offer was made today in a letter to the company's major shareholders and Thomas B. King, PG&E Company's President and Chief Operating Officer.

District officials termed the bid as a win-win proposition for all stakeholders -- one that seeks to avoid costly litigation and the acquisition of PG&E's local infrastructure through the eminent domain process.

"This is a serious good-faith bid that would bring lower rates and financial relief to our entire community -- from working families to local businesses," said Jeff Shields, the Utility Systems Director for the SSJID. "It also provides a substantial windfall to PG&E shareholders and ratepayers."

Specifically, the irrigation district is offering to pay PG&E: -- $48.92 million for the appraised value of the electric system -- $1.44 million to compensate PG&E for its costs associated with separating from the system (SSJID would pay for all its own reconnection and construction costs) -- $1.59 million to pay PG&E for a substation impairment fee -- $2.66 million for PG&E property, rights-of-way and easements -- $25 million to be divided equally between PG&E ratepayers and shareholders

District officials also said the offer was intended to address concerns among local government officials about what PG&E alleged was SSJID's initial plan to engage in a legal process to acquire PG&E's systems through eminent domain.

"The ball is now in PG&E's court," said Shields. "According to PG&E representatives, it is their shareholders that are paying for the costs of litigation and the Company's current campaign to stop SSJID. This offer gives a significant profit to these shareholders and heads off an exhaustive fight between the Company and it's shareholders."

As a general rule, consumers being served by irrigation districts and local utilities enjoy substantially better rates and often more reliable service. For example, San Joaquin County residents being served by the Modesto Irrigation District pay as much as 50 percent less than PG&E customers.

Today's offer comes just two days after SSJID filed a lawsuit against the San Joaquin County Local Agency Formation Commission (LAFCO) over action it took to reject SSJID's application to provide retail electric service to residents of Escalon, Ripon, Manteca and parts of unincorporated San Joaquin County.

That complaint, filed in San Joaquin Superior Court Tuesday, challenges both LAFCO's authority and the evidence upon which it based its decision.

District officials expressed hope that a protracted legal challenge to LAFCO -- made up of cash-strapped local governments -- could be avoided.

"PG&E's acceptance of our offer would essentially take this lawsuit against LAFCO off the table," said Shields, who added that SSJID was committed to ensuring that any acquisition of PG&E's system would not have any detrimental impact on the local government property tax revenue.

For a copy of the PG&E offer or the district's lawsuit, please contact Stevan Allen at (916) 448-1336 / stevan@allenstrategic.com or Jami Warner at (916) 761-7699 /jami@jwarnergroup.com .

In 1909, the South San Joaquin Irrigation District was established to provide a reliable and economical source of irrigation water for the agricultural areas surrounding Escalon, Ripon, and Manteca. Since then, the district has expanded into providing domestic water service to Tracy, Lathrop, Escalon, Manteca and parts of San Joaquin Count. The district has for several years been towards providing electric service as well.