The biggest nightmare of California’s largest utility companies may be about to begin playing out, thanks to a small irrigation district in San Joaquin County and a bunch of disgruntled customers of Pacific Gas & Electric Co.
This trend also had help from the state’s voters, who in 2010 rejected a ballot proposition designed and written to prevent such a day from ever coming, a measure on which PG&E squandered about $35 million.
Here’s what’s happening: Following a 3-2 vote by the county’s Local Agency Formation Commission, the South San Joaquin Irrigation District will shortly begin taking over all PG&E’s local power poles and generating plants and begin providing electricity to 38,000 homes and businesses (about 116,000 persons) in the cities of Manteca, Ripon and Escalon, as well as some nearby unincorporated areas.
The non-profit district promises to provide reliable power at lower costs than the for-profit PG&E.
No, the district will not steal anything from the company: If it and PG&E can’t agree on prices for equipment and facilities – cost estimates vary wildly from about $60 million to as much as $600 million – a jury of county residents will decide the price.
Meanwhile, PG&E must continue providing any needed electricity that can’t be generated locally, essentially using its transmission lines and grid as a common carrier, in much the same way an airline must carry any passenger who pays the fare.
If there’s one thing this state’s big utilities don’t ever want to become, it’s common carriers, because that risks lowering their profit margins considerably. That’s why PG&E ran the 2010 Proposition 16, which lost by a 53-47 percent margin. The measure would have required a two-thirds majority vote in the affected area anytime a locality wants to break away from a big utility.
The Manteca area is not alone in wanting out from under the big-utility thumb. Movements are afoot in San Francisco and 40 other locales around California. These are called Community Choice Aggregations (CCAs), the choice being that customers in areas leaving big utility companies can opt to stay with them simply by making that request of the new power provider.
So far, this system has worked smoothly in both Marin and Sonoma Counties, where almost a dozen cities have separated from PG&E over the last few years, forming two new CCAs. Prices are consistently lower there than in surrounding PG&E territory, so much so that the Marin agency has lately spread its service area across the San Pablo Bay to Richmond.
Plainly, the peril to the monopolies of companies like PG&E, Southern California Edison and San Diego Gas & Electric is of their own doing.
All backed the disastrous deregulation of state electricity approved by the Legislature and then-Gov. Pete Wilson in the late 1990s. That plan saw the utilities sell off many of their most significant power plants to generating companies. Now, CCAs can buy from those companies at negotiated prices. As part of the selloff deals, the utilities agreed to continue transmitting power from the generating stations over their grid.
In the new Manteca-area CCA, the total savings will amount to $12 million per year if the irrigation district’s 15 percent price cut promise becomes reality. That could come to an average saving of about $200 per year for a typical family.
This may explain why the only persons speaking against the departure from PG&E at the local agency commission’s hearing were affiliated with the utility. Meanwhile, customers said things like this, from Manteca resident Roger Beauchamp, “PG&E doesn’t respond to our needs and puts profits in front of the well-being of their customers. Fire ‘em.”
The company’s image certainly hasn’t been helped by its highly equivocal response to the 2010 San Bruno gas pipeline explosion and its later criminal indictment for behavior afterward.
For sure, the movement away from giant utilities to small city- and district-owned power companies is not yet widespread and does not yet threaten the big companies’ survival or even dented their bottom lines. But it is a thorn in their sides, a reminder that given a choice, a lot of Californians would like to break away.