Two months after the Sacramento Municipal Utility District board approved annexing utility territory in neighboring cities, it filed an application with the Sacramento Local Area Formation Committee seeking approval of the move. The local government's okay is a prerequisite to SMUD?s service territory expansion into West Sacramento, Davis, Woodland, and unincorporated areas of Yolo County - - now served by Pacific Gas & Electric. In its July 29 application, SMUD estimates the net present value of annexation benefits over 20 years to be $262 million or more. Earlier, savings were estimated to be between $180 million and $254 million (Circuit, May 20, 2005). Variables include the cost of condemning PG&E substations, wires, and poles, as well as litigation and power supply expenses. The municipal power agency currently serves a population of 1.2 million and its record peak demand is 2,959 MW. A successful annexation is estimated to add an additional 250 MW to SMUD's load. In the annexed territory, the peak demand is projected to be 370 MW, according to SMUD spokesperson Dace Udris. The city councils in the jurisdictions involved voted to be annexed and share in the cost of the $500,000 analysis of the costs and benefits of becoming SMUD customers. New Yolo County ratepayers would pay SMUD a surcharge for 4 to 10 years to cover the cost of extending its electric service, according to the muni. The independent study estimated a 10-15 percent rate savings for the current PG&E ratepayers after a muni surcharge is paid off. PG&E disputed SMUD's estimates of benefits and vowed to fight a takeover of its facilities and customers. "We look forward to working with the Sacramento LAFCO and hope there will be a thorough review of the application and its risks," said Jann Taber, PG&E spokesperson. A LAFCO review, expected to take up to a year, will include an environmental impact analysis and public input. If LAFCO approves an expansion of SMUD?s service territory west across the Sacramento River, Yolo County citizens will be able to vote in November 2006 on whether they want the muni to provide them power.