SMUD Annexation Advances to LAFCO

The Sacramento Municipal Utility District board of directors voted 5-2 this week to move ahead with annexing neighboring cities in Yolo County currently served by Pacific Gas & Electric. The board specifically authorized SMUD?s general manager to file an application with the Sacramento Local Agency Formation Commission seeking approval to annex the cities of West Sacramento, Davis, and Woodland and the unincorporated areas of Yolo County to provide them with power. ?This is not a hostile takeover, it is a citizen revolt,? said SMUD board member Susan Patterson during the May 19 meeting. She and four fellow board members noted that the push for annexation came from public power proponents across the Sacramento River to the west and was unanimously approved by 20 local officials ( Circuit , March 18, 2005). If the LAFCO approves the move, SMUD will add 85,000 new customers?but only if the voters of Yolo County vote in favor of having it take over PG&E?s wires and poles. The dissenting board members worried about the cost of annexation and difficulties in predicting a future energy market. ?I can?t in good conscience vote on numbers based on projections that stretch out over 20 years,? said Howard Posner. Larry Carr, who also voted against annexation, said he would reconsider the matter when the numbers were ?rock solid.? He also wanted SMUD ratepayers to be able to vote on the potential expansion. From the get-go, PG&E has insisted that its infrastructure is not for sale. It continues to take issue with the 20-year projected $180-$254 million in savings R.W. Beck estimated in its $500,000 study paid for by the Yolo County cities and SMUD, released in January. ?The board is acting in haste and relying on a study that is seriously flawed,? said Marie Jordan, PG&E director of Yolo County operations. She said SMUD staff failed to account for key components of the investor-owned utility?s infrastructure, including easements, which it would have to pay for if the muni successfully condemns PG&E property. PG&E contends that the R.W. Beck study, which Jordan referred to, seriously underestimates the value of its facilities. SMUD staff contend that PG&E refuses to open its books, which PG&E refutes. Many believe that the estimate of savings associated with a takeover fall between the opposing parties? numbers. Dave Butler, vice-president of the Sacramento Chamber of Commerce, said his organization did not take a position on the annexation but urged that there be ?a transparent process so we can test the true costs and benefits prior to a vote taking place.? Among the supposed hidden expenses, according to PG&E, are the remaining costs of decommissioning the shuttered Rancho Seco nuclear plant that would be foisted on Yolo County customers. This week, PG&E took out a two-page advertisement in the Sacramento Bee warning about the risks of the plan. City of Davis mayor pro tem Sue Greenwald said she and SMUD staff members have been subject to ?outrageous attacks by PG&E.? She said her calendar was subpoenaed this week, adding wistfully, ?I wish it was more exciting.? Supporters of annexation say it would bring lower rates, in part because of greater economies of scale and elimination of shareholders and high executive compensation. It would also bring local control and create a unified greater Sacramento region. ?We are in this all the way,? said Yolo County supervisor Mike McGowan.

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SMUD Annexation Advances to LAFCO

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