The South San Joaquin Valley Irrigation District offered Pacific Gas & Electric $80 million to buy out its electric facilities although the district has not yet determined whether it can legally sell electricity in its competitor's region. The district is also exploring the use of eminent domain to take over PG&E's distribution system. "We're in the position to make a significant investment in the future," Jeff Shields, district utility systems director, said August 24. The system in question now serves 35,000 customers. "Our facilities are not for sale," responded Emily Barnett, PG&E spokesperson. The irrigation district made its offer two days after suing the San Joaquin County Local Agency Formation Commission in superior court for refusing to allow it to provide electric service because PG&E was not a willing seller, according to Shields. LAFCO staff, however, had supported the district's plan to sell electricity. He said that going to the LAFCO in the first place and then asking the courts to clarify the commission's legal position met the due diligence requirement for pursuing eminent domain litigation. He added that the district's board has not yet determined whether to initiate eminent domain. If PG&E takes the offer, the district will drop the lawsuit. The offer "is an obvious attempt to circumvent the law" as determined by the LAFCO on a 4-1 vote, Barnett said. South San Joaquin decided to pursue a takeover rather than attempting to build distribution facilities parallel to those of PG&E as its neighbor, the Modesto Irrigation District, has. The California Public Utilities Commission approved a settlement between the Modesto district and PG&E that allows for some duplicative distribution facilities. Barnett said that the two districts are far different because San Joaquin has no legal basis to sell electricity as determined by the LAFCO. The district claims that it "has statutory authority to provide retail electric service" in an August 24 letter to PG&E president Tom King. South San Joaquin owns 70 MW of hydroelectric power from its dams. The power had been under a 50-year contract to PG&E. That contract expired in 2004, and the power is now under a 5-year contract, again with the utility. The district's $80 million offer includes $49 million for the electric system itself and $25 million to be split between ratepayers and shareholders for the loss of potential income from the facilities. The district maintains that it has "a substantial credit position backed by significant reserves."
