San Francisco and Turlock Continue to Battle over Power Deal

San Francisco and the Turlock Irrigation District continue to lock horns over the price and terms of power deliveries from the county?s Hetch Hetchy system. San Francisco ceased power deliveries to Turlock in mid-February, and the two entities have been trying without success to reach a negotiated settlement similar to an existing pact between San Francisco and the Modesto Irrigation District. ?We are in a state of suspended animation,? said Tony Walker, TID spokesperson. San Francisco?s low-cost power has provided nearly 17 percent of Turlock?s total average need, he said. During the energy crisis, ongoing tensions flared over the power delivery contracts, which are well below market costs, because San Francisco had to buy power on the market to cover its supply needs. The county canceled the power contracts signed in 1987 with Turlock and Modesto, and the latter has continued to challenge the legality of the contract termination. San Francisco?s attorney, Don Ferman, declined to comment on the matter. In January 2003, Modesto agreed to cut the length of its power contract with San Francisco in half and buy power for nonessential needs at capped prices and only if the power was available. The former contract required San Francisco to supply electricity for municipal and agricultural needs whether or not Hetch Hetchy could produce it. Under the Raker Act, which governs the deals, San Francisco must power the municipalities? lights and buildings as well as the district?s agricultural water pumps. Those deliveries have not been affected by the new or proposed contracts. Hetch Hetchy supplies 19 percent of Modesto?s resource portfolio, said district spokesperson Kate Hora. Under the latest power-purchase agreement, which runs through 2007 instead of 2015, San Francisco will charge Modesto up to $24/MWh for peak power for noncritical needs and $21/MWh for off-peak power beginning in 2005, if supplies are available. Turlock is considering breaking off the talks and is mulling the prospect of nonbinding arbitration, according to Walker. The parties now ?are holding their cards pretty close to their vest,? he said.

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San Francisco and Turlock Continue to Battle over Power Deal

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