SMUD Wins Round One in Annexation Case

Pacific Gas & Electric lost an early round in its legal battle to derail the Sacramento Municipal Utility District's plan to expand westward into Yolo County. On January 13, Sacramento Superior Court judge Lloyd Connelly ruled that PG&E's suit against the muni was premature. "The judge's ruling validates our position that PG&E's suit was devoid of legal merit and SMUD and the [local area formation committee] have followed proper procedures," stated Arlen Orchard, the muni's general counsel. Jann Taber, PG&E spokesperson, refuted Orchard's assessment. She noted that the court's ruling was purely procedural. The ruling, she added, did not address the merits of the utility's complaint. PG&E sued SMUD last November for not carrying out a detailed environmental assessment before applying for a requisite review by the Sacramento LAFCO (Circuit, Nov. 18, 2005). PG&E will evaluate its next step "after seeing what LAFCO's final environmental impact assessment does," Taber added. Last week, the LAFCO released its draft assessment of the possible environmental impacts of SMUD extending service to the cities of West Sacramento, Davis, and Woodland and parts of Yolo County. It concluded that SMUD's plan to move into the designated areas would provide "lower rates, improved reliability and customer service and local control." Its general analysis also notes that SMUD's expansion requires it to implement best management practices and mitigation measures to minimize aesthetic, air-quality, noise, and growth impacts. The proposed alternatives rejected by the LAFCO included community aggregation by the affected cities and county, annexation of only one or two of the Yolo County cities, and SMUD annexation with the California Independent System operator providing transmission control. If the LAFCO approves the expansion, SMUD will be required to provide additional environmental analyses. The same day that PG&E's suit was dismissed, the SMUD board voted unanimously to allow Sacramento County voters to weigh in on the annexation issue this November. The muni's staff will present the board with proposed initiative language. If the LAFCO gives SMUD the green light, neighboring PG&E ratepayers will also cast their votes on the annexation issue in November. Meanwhile, California Public Utilities Commission president Mike Peevey has vowed to take a statewide look at muni and irrigation district annexation. Peevey is concerned that bit by bit, investor-owned utilities' bundled customers are being picked off and thus will be unavailable in the future to be used for statewide policy such as subsidizing the Million Solar plan (Circuit, Jan. 6, 2006).

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SMUD Wins Round One in Annexation Case

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