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Sunday, November 19, 2006

Souza's shot in the dark on PG&E

At Tuesday's City Council Meeting, Councilmember Stephen Souza got up before council to talk about the recent SMUD-PG&E election. Souza was a strong supporter of the SMUD annexation attempt in Yolo County.

One of the key parts of the election was the dispute between SMUD and PG&E over how much it would cost for SMUD to purchase PG&Es infrastructure. SMUD believed it was worth between $86 and $133 million while PG&E focused on the number $520 million.

Souza never really understood this point, he got burned by it at a Measure H & I debate by the PG&E spokes man. Here's my best understanding of the rule. For electricity infrastructure, fair market value is not determined by current worth. Rather it is determined by replacement value. Hence PG&E is claiming that the fair market value for their infrastructure is $520 million. SMUD was disputing that figure and placed it much lower at between $86 million and $133 million. I do not know enough to know which figure was accurate.

However, regardless of PG&E claims, they are not being assessed at replacement value but rather at actual value. The Board of Equalization is the one that assesses their value and the amount that they are paying taxes. The Board of Equalization is certainly going to be far better aware of the assessment laws than Councilmember Stephen Souza and it is unlikely that they have been assessing PG&E's current taxable value incorrectly.

Of course, Souza could have discovered most of this if he had asked questions in private about how taxes are assessed versus fair market value issues that arose during the campaign. Instead he has suggested that council agendize this. We see no purpose for this and believe it a waste of staff time and resources and that council should put its energies into other areas.

---Doug Paul Davis reporting