SMUD Vote to Annex Yolo County a Victory for Public Power

SMUD Vote to Annex Yolo County a Victory for Public Power

by Dan Bacher

The Sacramento Municipal Utility District (SMUD) Board on May 19 voted to start the annexation process of 70,000 residents of Yolo County, all current customers of PG&E. The vote for public power is very significant at a time when the national trend is the very opposite - towards privatization of electrical power, water and other utilities.

“This is not a hostile takeover, as PG&E claims,” said Susan Patterson, SMUD Board member, in arguing for annexation. “It’s a customer revolt."

The move was unanimously supported by 20 elected officials in four jurisdictions, including the cities of Davis, West Sacramento and Woodland and Yolo County. Many of these officials, along with community activists from Yolo and Sacramento counties, spoke in support of annexation.

“This is a very exciting and historic thing for us,” said Sue Greenwald, Mayor pro temp for the City of Davis. “When we began this process, we never dreamed we would have such a united front in which all 20 elected officials in Yolo County supported annexation.”

Peter Keat, SMUD board member, cited the advantages of public power before the 5-2 vote. “We operate more efficiently than PG&E, we respond to the needs of our ratepayers, and there is no conflict between the ratepayers and the shareholders like there is with PG&E. Our customers own us,” he explained.

Keat chided PG&E for neglecting the needs of its Yolo County ratepayers. “My advice is that PG&E should pay more attention to its customers and less to its shareholders,” he stated.

Board president Bill Slaton emphasized that the PG&E lost sight of the “cardinal rule of any business: You have to take care of your customers.”

SMUD Board members Larry Carr and Howard Posner voted against annexation, saying that the board needed more time to consider the consequences and costs of annexing Yolo County.

“This decision is not one of necessity, so we don’t have to make a decision in a hurry,” said Carr. “It’s a matter of choice. If annexation fails, why should the ratepayers have to pick up the costs?

Also, Carr questioned it was appropriate that “a public utility should take over the business of an ongoing commercial enterprise.”

Marie Jordan, PG&E spokesperson, also said she believed that SMUD was acting in haste – and argued that the actual cost of annexation would be much more than SMUD stated. She also contended that the SMUD staff missed a lot of equipment when surveyed PG&E’S facilities in Yolo County.

However, Patterson noted that the decision to annex wasn’t taken in haste, but as part of a carefully conceived process. “Every step we could take to get public input has been already been taken,” she explained. “We’ve held workshops, public meetings and focus groups on this issue. And it was a unanimous decision by Yolo County’s elected officials to support annexation.”

Board member Linda Davis pointed out that not only will Yolo County customers benefit from better service and lower power rates, but that SMUD will be in a better position to make regional investments.

An independent study by consultant R.W. Beck found that Yolo County ratepayers, under the most likely scenario, would see an 8.5 percent reduction in rates under SMUD. Annexation could result in savings to Sacramento and Yolo customers of more than $180 million over the next 20 years, according to SMUD.

Now that the board has voted for annexation, SMUD in July will make their formal application to the Sacramento County Local Agency Formation Commission (LAFCO). Then LAFCO, after reviewing the application for 9 to 12 months, will make a decision whether or not to approve the application. The annexation would then be submitted to a vote of Yolo County ratepayers in November 2006.

The SMUD annexation is a huge victory for public power in a time of rampant privatization. The SMUD Board definitely deserves the support of community activists for making the right decision on annexation of Yolo County, just like they did two years ago when they decided to withdraw from the lawsuit blocking Trinity River restoration.