Central California District Pushes for Public Power — Episode 181 of Local Energy Rules

Date: 12 Apr 2023 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Pacific Gas & Electric, even in bankruptcy, will not relinquish control over its poorly-maintained assets.

For this episode of the Local Energy Rules Podcast, host John Farrell is joined by Peter Rietkerk, General Manager of the South San Joaquin Irrigation District. They discuss how a public agency could do a better job than Pacific Gas & Electric and the District’s 18 year endeavor to provide retail electric service in California’s Central Valley.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

Peter Rietkerk: All of the wildfires that PG&E has caused over the last five to 10 years or so, in addition to San Bruno, which happened in 2010, I think are a symptom of a bigger problem with PG&E, and it’s a huge utility. I think there’s a real opportunity here for a smaller, more streamlined entity that has to be accountable to its local public, to do something better, to do something I wouldn’t say novel, but even provide it in a more innovative way, in a more customized way, and in a way that’s going to promise to its stakeholders, its customer owners, as a publicly owned utility, that it will be reliable, it will be safe, and it will be cost effective over the long term.
John Farrell: What is a reasonable waiting period to start a public power company? Is it 24 hours? a year? 18 years? The South San Joaquin Irrigation District already operates as a public agency providing irrigation and safe drinking water to customers in California’s Central Valley with roots dating back to 1909. Given the sordid history of the incumbent investor-owned utility Pacific Gas and Electric, the district might have expected a quick transition to a public electric utility. At 18 years after its initial legal filing to take over, however, the district’s day in court to take over the poles and wires won’t be for another year yet. While he waits, Peter Rietkerk, general manager of the South San Joaquin Irrigation District joined me in January, 2023 to talk about the process of pursuing public power. I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a bi-weekly podcast sharing powerful stories about local renewable energy. Peter, welcome to Local Energy Rules.
Peter Rietkerk: Thank you for having me.
John Farrell: I just have to start off, I mean, you’re in California and of all the places across the country that are having communities trying to have more self-determination over their energy future, California has this thing called Community Choice Energy, where folks can make that procurement decision about where their electricity comes from at the local level, and it generally is easier a lift than full-on public power, you know, municipal power. So I was hoping you could just start with by telling me why aren’t you going that way? Do you like just doing hard things?
Peter Rietkerk: We don’t like taking the easy path, John, that’s for sure. I could tell you that SSJID really looked at the option of community choice aggregation in addition to a number of other options, but it really boils down to, I think, the why for SSJID. So the district generates hydropower currently, and we were looking back in the eighties at the option of bringing zero carbon hydropower that we currently produce down the hill to our local constituents, and how can we provide value to all of our residents within our boundaries, really that sentiment, that idea, that concept stuck with us and we continued to pursue that into the early two thousands. By 2004, we looked at the option for providing bill credits potentially to local residents in conjunction with PG&E direct cash payments. We looked at duplicating facilities, actually creating a competition zone where we would develop our own lines and circuits for customers within our jurisdiction.
Peter Rietkerk: We also looked at community choice aggregation, and to be honest, at the time the board believed that the highest and best public benefit we could provide would be through the ownership and operation of the local electric grid. Community Choice aggregation is a great alternative. It has a very clear path for local agencies to procure their own power and control part of their energy destiny. But we understood that even with the ability to procure power locally, we would still be under the jurisdiction of our local investor owned utility Pacific Gas and Electric for operation distribution reliability of electric services. And we believed that local ownership, local control would allow for the communities to really shape and customize that service and assure the reliability for local customers. And in addition, we really believe that it would provide the maximum opportunity for cost savings for customers as well.
John Farrell: I feel like it’s hard for me, having followed the news in general about the energy system, but a specifically about PG&E and their struggle with wildfires and public safety power shutoffs, it’s hard for me not to be snide in asking, but why would you want to not be served by PG&E anymore? It seems like at least if people have heard of any utility in California, that’s the one they’ve heard of and probably it’s been bad news. Can you talk a little bit about the things that you think you’d be able to do better or improve upon from PG&E operating the distribution system?
Peter Rietkerk: Yeah, well, first and foremost, our commitment to our local region is that we’re going to be saving at least 15% off of PG&E’s standard rates, and we think that’s more than achievable. If you look at public power within the United States, American Public Power Association is a trade organization we’re a part of. The publicly owned utilities as compared to the investor owns can save well over 15% on average. If you look at some local examples here in California, Sacramento Municipal Utility District, Modesto Irrigation District, Roseville Electric, which is operated by the city of Roseville in California and even Turlock Irrigation District, all of those agencies are providing power to their customers here in California at between 46 and 54% less than what PG&E is currently providing their customers. So we do think that it’s more than feasible to provide at least the 15% savings and really, first and foremost, it, it comes down to local economic benefits.

We see those cost savings providing a huge economic engine for the local region. We understand that based on the economic study we performed in 2016, as part of the board’s consideration for condemning PG&E’s facilities, that those savings, well, first off, the 15% would result in savings of about 15 and a half million per year, year one of the project, and those savings would only grow over time. Second, there would be an additional 4.2 million of income of that 15 and half million and disposable income specific to low income families, so really would help low income residents within our jurisdiction. We would continue to provide rates for low income families that are already discounted off of PG&E service, but then we’d continue to do that with the 15% commitment as well. And then also the economic study showed that we would, in addition to the jobs we’re creating locally for the utility, also create an additional 56 new jobs within the communities just because of the economic savings provided to residents and businesses within the region.

So economics is clearly the number one driver for us, but there are a number of other reasons why the district is pursuing this. At the time we were considering this, the district was seeing less reliable service, more outages in the area. We’d like to think that our efforts have improved <laugh>, the reliability of the grid, because we, we don’t see as many outages as we were experiencing when we first started our project. We also think that local ownership’s going to provide a level of transparency and accountability that will, will really continue to foster and breed that reliability and that safety within the region will have an opportunity to engage directly with customers. Our customers and residents in the region can talk to their neighbors who are board members and staff and engage with them, give them their opinions, show up at public meetings as the district’s conducting, conducting business out in the open and even use their opinion at the ballot box in voting for their representation on the board. And we think all of those things will greatly improve the service that our local residents receive for wheelchair electric service as well.

John Farrell: Peter, I was hoping you could, for people who aren’t familiar with an irrigation district is maybe get a give a little bit more of like the history and the structure of the existing organization. Like how did it come into being, who is it serving now as you’re considering direct service through public power? And I’ll, I guess the other question I have too is you talked about this sort of journey that you’ve been making when we were talking about reliability, how it’s improved somewhat even since you’ve declared that you want to have a publicly owned utility. But it sounds like this has actually been going on for quite a while. You had a study back in 2016 that looked at the economic benefits of this, but you also mentioned going back to like the 1980s that there were talks about doing this. So maybe if you can give some history about the irrigation district, but then also maybe walk me through a little bit why has this been going on for so long, or what came of those early efforts back to the 1980s to provide electricity service?
Peter Rietkerk: So South San Joaquin Irrigation District provides agricultural irrigation water to 50,000 acres within Southern San Joaquin County. We also provide treated drinking water to about 200,000 residents within Southern San Joaquin County as well, both inside and outside of our jurisdiction. We are a wholesaler, a wholesale drinking water provider. In addition, the district co-owns hydropower generation facilities in the Stanislaus River Watershed now that produces zero carbon hydropower, and we put that power to market on the bulk electric grid. SSJID has been around since 1909, so we’re actually celebrating our 114th year this year. There’s a deep and rich history to irrigation districts in California, why they were formed, how they were organized, how they succeeded, and how some of them failed or even prior attempts to them coming on board. And that’s probably the subject for a whole other podcast in and of itself. But I can tell you that it is truly humbling and an honor to work for an organization that has such a long history and really a foundational history in developing local economies and providing resources that support and underpin the local economy and the local communities in the region.
John Farrell: Peter, could you talk a little bit about how you, I mean, how did you come to be the general manager? What was your background that led you to, it sounds like you have a, a strong affiliation with the mission of the organization where you’re always working in public power or working with public agencies. You know, what brought you here?
Peter Rietkerk: To be honest, what brought me here was I was a farm boy growing up. I grew up on a farm in California, central Valley, San Joaquin Valley, and I would work alongside my dad and my brothers every day. We grew crops in the valley. And the, I can tell you the part of farming that was most exciting to me was understanding how the water that was irrigating our field, understanding where that water came from, how it got from the watershed to the farm, or how it came from the groundwater to the farm, what were the physics that got the water there. And so I was always very interested in sort of understanding how those systems were built, engineered, developed, and that really spurred my interest in water in general. And so I studied agricultural engineering at Cal Poly San Luis Obispo, went to grad school at UC Davis in California, became a licensed civil engineer, and I was working on some water resource projects with the engineering consulting firm I was with at the time in Sacramento back in 2008, 2009.

And I received a phone call from an irrigation district not too far from here actually, and asked if I was interested in applying for the role of general manager. And I can tell you that what intrigued me most about that job was working directly with staff, working directly with operations, and working on projects that would help improve irrigation efficiency and water resource conservation and use across the district. And so I was blessed and, and lucky and humble enough to take that job in 2010, and then that increased my experience and gave me the opportunity to become affiliated with S SSJID in 2015.

John Farrell: That’s great. Is the farm that you grew up on in the S SSJID district, does it serve by a different water district? I’m curious if you’ve like, had this connection now where you’re managing the water or the watershed that served your farm.
Peter Rietkerk: Yeah, I, I’m not, it’s these, it’s much, uh, further north than where I grew up. I grew up between Fresno and Bakersfield in a small town called Corcoran, California, different watershed, different river system. I can tell you that is the one thing about California that it provides some uniqueness, but also a deep complexity about California water is that the source of water, the watershed, the water, right, the irrigation district or water agency that you are affiliated with that provides you the water. There are so many different factors that make water supply so unique depending on where you are located within California in general, but especially in the San Joaquin Valley. If you’re a farmer in the region.
John Farrell: When you say there are so many factors, you mean like, I could be right next door to another farm but be in a different irrigation district because I am at a boundary of a watershed or just that there are lots of different ways and places that the water can get to me from like snowpack to other sources?
Peter Rietkerk: Um, it largely has to do with the water that you’re entitled to receive for the local irrigation district and the boundaries of the district. Yes. So if you can be across the street from your neighbor and be an entirely different irrigation district with a different source of water supply.
John Farrell: We’re going to take a short break. When we come back, I ask Peter to provide the backstory on the South San Joaquin Irrigation District and its long interest in public power. We also discussed the lengthy recent history of litigation to take over and what’s coming next. You’re listening to a Local Energy Rules podcast with Peter Rietkerk, General Manager of the South San Joaquin Irrigation District in central California.

Hey, thanks for listening to Local Energy Rules. If you’ve made it this far, you’re obviously a fan and we could use your help for just two minutes. As you’ve probably noticed, we don’t have any corporate sponsors or ads for any of our podcasts. The reason is that our mission at ILSR is to reinvigorate democracy by decentralizing economic power. Instead, we rely on you, our listeners. Your donations not only underwrite this podcast, but also help us produce all of the research and resources that we make available on our website and all of the technical assistance we provide to grassroots organizations. Every year ILSR’s small staff helps hundreds of communities challenge monopoly power directly and rebuild their local economies. So please take a minute and go to ilsr.org and click on the donate button. And if making a donation isn’t something you can do, please consider helping us in other ways. You can help other folks find this podcast by telling them about it, or by giving it a review on iTunes, Stitcher, or wherever you get your podcasts. The more ratings from listeners like you, the more folks can find this podcast and ILSR’s other podcasts, Community Broadband Bits and Building Local Power. Thanks again for listening. Now, back to the program.

John Farrell: Your path took you through water management really to get to the previous irrigation district and now to South San Joaquin. It sounds like the district’s interest in public power, so in selling electricity and not just providing water, has predated your arrival. In the Public power podcast series that we recently did, we talked about some places like Boulder, Colorado that went through the municipalization process or Winter Park Florida where, you know, it was clearly took a decade in both of those cases or near a decade to go from kind of executing the decision to do it and to achieving public power. Can you talk about some of the things that happened before you got there in the conversations that were happening or actions that the district took? You mentioned earlier on about potentially partnering with PG&E and selling some credits or something like how that might have worked. And then ultimately there was a study in 2016, which it was, since you’ve been there, what has happened more recently and kind of where you are in that process.
Peter Rietkerk: If you’re willing to indulge me, I can try to walk you through in, in short fashion some of the history that this project’s undertaken. So really, the district’s initial interest in public power dates back to when we constructed hydropower generation. We have a partner agency. The partner agency is Oakdale Irrigation District, and we share water rights and we share ownership of the TRIAM project. That project was constructed between 1955 and 1957, and at the time the districts were primarily interested in water storage. We partnered with PG&E, the districts issued bonds and power sales to PG&E from the hydroelectric projects, covered the debt service for those bonds. Basically, the districts benefited from the water storage. PG&E benefited from the hydropower generation utilizing that in their system. And that was a 50 year partnership. The districts obtained ownership of the generation in 2004 and started taking that power to market.

Let me back up a little bit though. Back in 1998, triam, both Oakdale and South San Joaquin Irrigation district studied the feasibility of providing retail electric service to constituents within and just outside of their jurisdiction. And the test at that time was whether the districts could provide retail electric service more cost effectively than PG&E over a certain period of time. SSJID continued to remain interested in that endeavor even after the 1988 report and started pursuing it more so in 1997 ish through 2004. And again, we talked about some of the things that SSJID was pursuing SSJID’S mission. The district’s mission is to provide the utmost value for its agricultural, urban, and business communities by protecting and delivering vital resources with exceptional service.

And really the electric project and the options the district was considering in the electric project boiled down to one, providing vital resources. We provide water already. We were generating electricity, which is also vital for the economy and for residents and businesses, but it was also the value and the districts were starting to generate revenue from the TRIAM project. And SSJID at the time being purely an irrigation district, providing only irrigation water, was interested in exploring how we could take the economic benefit from the Triam project and broaden that to all of the constituents within its jurisdiction. So how can we, how can we benefit our local residents, our local businesses that are within the communities we serve? Because at the time, we were, again, only serving farmers in the region.

Now, that since changed because the district did bring on a project actually right behind me here in 2005, called the South County Water Supply Project. And that was a partnership with four local cities and SSJID to construct and operate a water treatment plant. So we actually operate a water treatment plant and provide treated drinking water for those cities now. So we have expanded our reach and our footprint and our ability to provide value to local residents, although indirectly through our wholesale relationship with the cities. But we’ve continued to look for the opportunity to take the economic benefit that we received from the Triad Project and again, confer some of those benefits upon the, the broader region. And after studying, as I mentioned, a number of those things before – Bill credits, duplications of facilities, looking at CCAs, the board ultimately decided that the way in which we could provide the most value and the most reliability and the most transparency and operation of, retail electricity locally was to, to in fact own and operate the grid. And so where CCAs may have a, a more tried and true path,  we decided to take the difficult one.

The way in which an irrigation district can start providing electric service in the region is to go to your local LAFCo. California has these agencies within each county of the state called the Local Agency Formation Commission, LAFCo for short. And what LAFCo do is they oversee the growth of local communities and the services that local communities and special districts provide to specific areas within each county. They’re responsible for providing municipal service reviews. So they’ll review the services that a local agency will provide. They’ll actually review the service area that that entity currently serves and where they may be growing in the future, you know, whether they may be annexing additional land and incorporating that into a city or whether a public agency may be doing the same and conferring upon those lands, the services that it provides. This could be for a irrigation district such as ours, a water district, a sewer district, a drainage district, a flood control district.

And so it’s really meant to help organize and coordinate the orderly delivery of services and expansion of agencies within each county and the district. Under the California Water Code, irrigation districts have the ability to provide multiple services. We can provide irrigation water, we can provide treated drinking water for cities, we can provide recreation, and the districts can also provide electric services, be it wholesale or retail electric service. Because we had not operated and provided retail electric service, we had to go to the Local Agency Formation Commission and apply to be the retail electric service provider in the local area. So after considering all those alternatives, the district submitted an application to LAFCo in 2005, requesting a change of organizations so that we could provide retail electric service. And the commission summarily denied us in part because they did not like the prospect of SSJID as a public agency using eminent domain to force a sale of PG&E’s assets.

The district did sue LAFCo on that decision. Unfortunately, the district was not successful in doing so, and the district did redouble its efforts and submitted a new application to LAFCo in 2009. And the evaluation of LAFCo really took, I think it was at least three feasibility studies, numerous meetings, hiring of consultants and attorneys, and every step of the way the local investor owned utility, PG&E was involved in participating in and refuting any of the results of the studies that were done to support the project. Ultimately, we asked the commission to call for the question, can the district provide retail electric service and will LAFCo consider the approval of SSJID’S application? Uh, there was a two-day hearing in December of 2014, and finally the district received approval from our local agency formation commission, our LAFCo, in December of 2014.

PG&E did ask for reconsideration in early 2015, and LAFCo affirmed our decision and shortly after that, PG&E sued LAFCo the district because we were, the applicant had to defend our honor and defend LAFCo in that lawsuit. So this is quite a saga. A couple things just, I, I think that are, are critical for this. The main argument for the lawsuit by PG&E was that SSJID is a public agency, could not meet one of the conditions that LAFCo had placed upon the application and the approval and the condition was that the district would provide two and a half percent of gross revenues from its retail electric service, its future retail electric service for franchise fees and loss of property tax revenue in the area.

Because SSJID is a public agency, when SSJID implements its project, it would be taking over private facilities from PG&E. PG&E is a private entity, pays property taxes to local jurisdictions, they’ll pay property taxes. The counties receive an allocation of those property taxes, those allocations get subdivided to other local agencies for various purposes. And the district’s application committed to keeping the county and other affected agencies whole by that municipalization of PG&E from a private entity into a public entity. PG&E was challenging that because as a public agency, as SSJID cannot pay property taxes, does not pay property taxes, and as a result believed that that was unconstitutional. So the district had received some favorable rulings through 2015 and early 2016 on that litigation and believed that we were at a juncture where we could make an offer to PG&E to purchase its facilities and start the negotiation process to, to do that. And if PG&E did not or was not willing to entertain the offer and negotiate, then SSJID would consider initiating an eminent domain lawsuit against PG&E.

So we made an offer in May of 2016 for 116 million in June. PG&E responded very quickly that its assets were not for sale. In June of 2016, we held an all day public hearing for the district to consider initiating the eminent domain lawsuit. The board heard testimony from expert witnesses from staff. We talked about financial feasibility, community benefits, and a whole host of factors to justify the staff recommendation that the board approved the resolution of necessity, that the district can provide a more necessary public use, and that the district initiated a litigation or an eminent domain lawsuit against PG&E. And the board did approve that resolution, and the district filed a lawsuit in 2016.

So now we have two lawsuits going in parallel. We had PG&E suing LAFCo in which we were defending, and then we had SSJID versus PG&E, which is the condemnation action. So both are moving in tandem. We have the same judge for both lawsuits in San Joaquin County. In late 2017, the judge ruled that the condition two, the payments in lieu of taxes, that two and a half percent of gross revenues was unconstitutional. And as a result, because it was unconstitutional, it would nullify the underlying approval from LAFCo for us to start the eminent domain lawsuit. And so that same judge then accepted a motion from PG&E to dismiss the eminent domain lawsuit in 2018. So now we have a bad decision – or a decision unfavorable to to SSJID in in late 2017. And both lawsuits…

John Farrell: You don’t have to be fair, this is just an interview with you. You can call it what you want.
Peter Rietkerk: <laugh> Well, we thought it was a bad decision, certainly, and unfortunately it put the breaks on both actions, both lawsuits. In the meantime, we appealed those decisions. We know that the appellate system is a slow process and we were awaiting the opportunity from the appellate court to hear in 2019, while we were awaiting, PG&E files bankruptcy. Well PG&E’s bankruptcy puts an automatic stay on litigation against PG&E until it can work through the bankruptcy process and understand its liabilities. And so we were put on hold, but we saw that as another opportunity for us to consider advancing our local municipalization effort. Part of PG&E’s bankruptcy was predicated on their liabilities due to wildfires in recent years, and we saw this as, as an opportunity to provide cash to PG&E that would help satisfy some of those wildfire obligations and to pay wildfire victims as well.

At the same time, there were several other agencies that tendered offers to PG&E. Valley Clean Energy, which is a community choice aggregator in Davis, really serving an area in Yellow County that had attempted to municipalize and become part of SMUD in Sacramento in the early two thousands, city and county of San Francisco made a two and a half billion offer to PG&E during that timeframe. Nevada Irrigation District also made an offer in that timeframe, and most of those agencies had participated in the bankruptcy proceedings to see if there was an opportunity to actually move forward and advance our projects. Unfortunately, the courts and the powers that we didn’t see it that way. And so those offers really fell flat and we continued to receive the same line from PG&E that the assets were not for sale. We, we continued to be denied by PG&E that they wanted to use municipalization as a means of assisting the entity in their shore shareholders from coming out of bankruptcy.

So in 2020 through the bankruptcy court, we were able to arrive at a stipulation that would allow SSJID to move forward with its litigation. And we finally had our appeal heard by the appellate court in 2021 in December. We received a very good decision in that it affirmed LAFCo’s approval, and it actually determined that the pilot was not considered unconstitutional. That SSJID could in fact pay the two and a half percent gross revenues that it committed to keep the local agencies whole when it became a retail electric provider. At the same time, it put us right back on track with our condemnation lawsuit. So we, we received a positive decision in defending ourselves against PG&E at LAFCo, and the court allowed us to restart and reinitiate our condemnation action. And so we’re right back on track, albeit four or five years later.

John Farrell: I just have to say as someone who has followed enough of municipalization proceedings, that it is amazing to me. You had a court in California describe as unconstitutional a practice payment in lieu of taxes that literally has its own acronym PILOT that is used throughout the municipal utility industry to describe exactly that action of providing payments as a non-taxable entity that would otherwise be provided by a taxable entity. Like it’s such a common practice. So I just have to say, it’s crazy to me that any judge anywhere, I mean, I get that each state legal framework is different, but it’s such a common practice across the industry. It’s amazing to me that your entire process was held up on essentially a junk lawsuit by PG&E arguing that the practice was unconstitutional when it’s, I mean, I don’t know how common it’s across California, but I imagine that it’s not novel.
Peter Rietkerk: No, it’s not. In fact, some of this was based on a recent lawsuit that involved the same with the City of Redding, some of the appellate court decision involved, that re lawsuit and, and the decision from that lawsuit, but it happens across California. It, it happens across the United States. Sometimes those are internal transactions with the utility. The uniqueness about us is that we’re a new entity, and I think in some ways it’s a, it’s a good thing. There are laws in California that prevent one utility enterprise from subsidizing another utility enterprise. That’s a great thing coming in as a new utility because our irrigation and municipal water customers would not be feeling any economic burden by bringing on a new utility and electric customers. And so you’re right, though it is a, it’s very common. It does have its own acronym. It’s not new. We’re just thankful that the appellate court saw that and ruled in our favor.
John Farrell: You said that was in December of 2021. So it’s now been a little over a year. Your condemnation action is back in court. Given the timelines I’ve seen elsewhere, I assume that you are in the thick of it, and this might still take a while, but where, where do you stand?
Peter Rietkerk: So shortly after the appellate court decision, PG&E actually appealed to the California Supreme Court. We think this was again, another attempt to delay and defer any legal action toward the eminent domain lawsuit. The Supreme Court in March of 2022 decided it would not hear the case. Basically affirming the appellate court decision and keeping us on track. We have a court date now for May of 2024 on the eminent domain lawsuit. And there are two components to an eminent domain lawsuit. One is the right to take – can S SSJID as a public agency provide a more necessary public use and more public benefits than PG&E can provide in its provision of retail electric service. And then the second component of that is the valuation. And so we’re first tracking on the right to take trial. If successful there, then the court will then continue proceedings on the value of PG&E’s assets.
John Farrell: Do you feel like PG&E’S second bankruptcy, the more recent one and its problems with wildfires and its admission and kind of court record of its poor performance on maintenance et cetera, will help you with phase one of that eminent domain case in May of 2024?
Peter Rietkerk: I think indirectly it will. One of the difficulties in trying to translate the chain of events there and the damage that occurred is that we don’t live in a wildfire prone area. And so it’s probably not an apples to apples comparison when you’re talking about public safety to suggest that we would be taking over the system in order to reduce wildfire risk in our area. But I do think all of the wildfires that PG&E has caused over the last five to 10 years or so, in addition to San Bruno, which happened in 2010, I think are a symptom of a bigger problem with PG&E and it’s a huge utility. I think there’s a real opportunity here for a smaller, more streamlined entity that has to be accountable to its local public to do something better, to do something, I wouldn’t say novel, but even provide it in a more innovative way, in a more customized way and in a way that’s going to promise to its stakeholders, its customer owners as a publicly owned utility, that it will be reliable, it will be safe, and it will be cost effective over the long term.
John Farrell: I was gonna say, it’s what was striking to me about one of the court cases PG&E went through, wasn’t necessarily as you say the wildfire thing particularly, but that their poor maintenance that led to the wildfire risk was essentially a sort of inherent tension in their business model, which is they could increase dividends and payments to shareholders if they cut their maintenance budget. It seems to me you have a strong argument there that there aren’t going to be shareholders in SSJID that are somehow independent from the customers that run it. So yeah, a softball question as I always have for people considering public powered, no doubt.
Peter Rietkerk: Absolutely. There will not be shareholders. We, I think public power generally likes to call them customer owners. Public agencies cannot include a profit margin. We can only charge cost of service and our customers can be assured that we’re going to be as cost effective and efficient as possible. And, and assuring also that we’re taking those rate revenues and reinvesting them in the region, reinvesting them for reliability, reinvesting them for priorities, if the local communities are looking for, you know, economic development, those are things that we can put into our public benefits programs. If there’s interest in advancing renewables, then those are things we can consider. If there’s interest in putting in more EV charging stations, as California’s pushing more towards electric vehicles, those are things that once we’re a utility, we, we can sort of think along with our residents and we can try to implement those things for the local region.
John Farrell: Let me ask you one last question cuz we’re reaching the end of our time here, which is the Public Utilities Commission in a fairly, well, dramatic for people like myself who follow the rooftop solar industry, made a decision about kind of the cost allocation or the compensation for rooftop solar owners. California is famously one of the leading states in terms of the deployment of local solar. How is SSJID thinking about, or not just customer owners, writ large, as in they would be the ones who own this public utility, but about this issue of individuals owning power generation and their relationship to the utility and to their fellow customers?
Peter Rietkerk: You know, I’ll be honest, we haven’t formed formal policy on that yet because we don’t have a real utility. It’s just yet we have a project we’re working towards. I can tell you, and you can see from my background behind me, SSJID does have a 1.4 megawatt solar farm that we’ve installed at our water treatment plant, and that helps to offset costs for the cities and provide renewable power to our water treatment plant. It’s been a huge asset for us. Certainly the NEM 3.0 as a customer potentially threatens our ability to implement more solar from that standpoint. But we will have to, you know, from the utility side, I think when we become a retail provider, we’re going to have to look at that closely and see what options are out there for us, whether we can continue to support rooftop solar or whether we look at other alternatives like community solar in the region where customers in the region could still see the same benefit but not necessarily have to put it on their rooftop, as well and maybe take advantage of some economies of scale at that point.
John Farrell: Ooh, there’s such a rich conversation in here of stuff that I spend a lot of time on around economies of scale and local solar, but we’ll have to save it for another podcast and maybe a little bit later down the line of your legal contest as you, as you mentioned, yet to be able to get to this point of being a utility. Peter, thank you so much for taking the time to share the story of the South San Joaquin Irrigation District’s long interest in public power and continuing fight to have public power.
Peter Rietkerk: Thank you, John for having me on. I really appreciate it.
John Farrell: Thank you so much for listening to this episode of Local Energy Rules about the public power journey of the South San Joaquin Irrigation District with its general manager Peter Rietkerk. On the show page, look for links to some of the feasibility studies supporting the district’s public power campaign, as well as ILSR’s Public Power Podcast series, a six episode exploration of the benefits, risks, and challenges of municipalization. On our interactive Community Power Map, you can also see a marker of every existing municipal electric utility in the country. Local Energy Rules is produced by myself and Maria McCoy with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear more powerful stories of communities taking on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.


Public Utilities Offer Better Service than PG&E

Electric customers in the San Joaquin Valley buy their electricity from Pacific Gas & Electric — a utility notoriously liable for causing wildfires and filing bankruptcy. Peter Rietkerk is sure that a public utility, specifically the South San Joaquin Irrigation District (SSJID), could do a better job than PG&E.

SSJID is committed to offering electricity at 15 percent lower rates than PG&E. Rietkerk also believes that customer savings, estimated to be $15.5 million in the first year of a public takeover, would spur economic growth in the region. Plus, a public utility offers a level of transparency and accountability that investor-owned utilities cannot match.

Local ownership is going to provide a level of transparency and accountability that will really continue to foster and breed that reliability and that safety within the region.

Rietkerk says that SSJID also investigated community choice energy, but decided that owning and operating the electric grid would provide the most benefits to the community.

18 Years Later, SSJID is Still Working at Municipalization

The South San Joaquin Irrigation District was founded in 1909 to manage irrigation in southern San Joaquin County, but Rietkerk explains how its mission has since expanded. The utility has taken on a hydroelectric generation facility and the treatment of drinking water.

The district’s mission is to provide the utmost value for its agricultural, urban, and business communities by protecting and delivering vital resources with exceptional service.

Irrigation districts are allowed to provide multiple services in California, so in 2005, SSJID applied to the Local Agency Formation Commission to become a retail electric provider. Their first attempt was denied, but after trying again in 2009, they finally got approval in 2014.

PG&E, however, was not willing to hand its assets to the public agency. The utility sued the Local Agency Formation Commission and SSJID’s eminent domain lawsuit was dismissed in 2018. Not willing to give up on the mission, SSJID filed a 2021 appeal and the court ruled in the Irrigation District’s favor.

18 years after initiating the process, the South San Joaquin Irrigation District may once again start its eminent domain lawsuit against Pacific Gas & Electric.

Episode Notes

See these resources for more behind the story:

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.

This is the 181st episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares stories of communities taking on concentrated power to transform the energy system.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach.

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.

Featured Photo Credit: Western Area Power via Flickr (CC BY 2.0)

Avatar photo
Follow Maria McCoy:
Maria McCoy

Maria McCoy is a Researcher with the Energy Democracy Initiative. In this role, she contributes to blog posts, podcasts, video content, and interactive features.