SMUD Initiates $500,000 Annexation Study

In an unusual Sacramento Municipal Utility District board meeting March 18, the potential for annexing its Yolo County neighbors now served by Pacific Gas & Electric made headway. The board chose a contractor, RW Beck, for a $500,000 joint study assessing the costs and benefits of annexing the cities of West Sacramento, Davis, and Woodland and the county of Yolo. The study is expected to be released at the end of November, and its cost split among the entities. ?If we decide to pursue annexing all or part of the area, we intend to work with PG&E to find an agreement? on the value of seized poles and lines, said SMUD general manager Jan Schori. If the municipalities and SMUD subsequently decide to replace PG&E, the district will initiate condemnation proceedings. The value of any of the investor-owned utility?s property that SMUD targets will surely be hotly contested, as are nearly all valuations in condemnation proceedings. How the litigation fee would be divvied up remains to be seen. This would be SMUD?s third annexation; it annexed the city of Folsom in the 1980s and before that a small residential area near Rancho Seco. PG&E reiterated that its property is not for sale and that ratepayers in Yolo County would not see lower rates if they switched utilities. The combination of PG&E?s recent lowering of its rates and exit fees that would follow any annexation will result in PG&E?s average rates being on par with or lower than SMUD?s, John Newman, PG&E director of governmental relations, told the SMUD board. Newman urged the cities and county to consider setting up power-purchase pools and use PG&E lines to distribute the supply?be it renewable energy or power from SMUD?in place of booting out the private utility. ?Community aggregation is a less risky alternative,? he said. City representatives and SMUD said that until the feasibility study is released, an informed choice about their energy future cannot be made. ?We are really trying to understand the big picture,? said Cal Toppenberg, West Sacramento director of redevelopment. The cost of annexation to West Sacramento businesses and residences needs to be fully understood, but that is not the sole criterion. ?Service and reliability are two key components,? he added. SMUD project manager Paul Lau said part of the reason RW Beck?s bid was selected was because its team knows PG&E?s system and its property appraisers have experience representing both investor-owned utilities and munis in condemnation litigation.

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SMUD Initiates $500,000 Annexation Study

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