Fail: 129,552 / 38.57% Yes votes ...... 206,345 / 61.43% No votes

See Also: Index of all Measures

Measure L includes provisions directed at holding existing SMUD customers harmless from any adverse financial consequences resulting from the proposed annexation of the Yolo Territory. These provisions would require SMUD customers in the Yolo Territory (Yolo Customers) to pay, through their rates and a surcharge, an amount sufficient to recover specified costs of annexation and electric service to Yolo Customers. These rates and charges would be in the form of a base charge to recover the first $90 million of the acquisition costs of PG&E's facilities and then a surcharge to recover specified energy costs in excess of a prescribed amount and those acquisition costs in excess of the first $90 million (Surcharge Amount). This surcharge would be in place until specified acquisition and energy costs are fully paid by the Yolo Customers (Surcharge Period).

Measure L requires the SMUD Board of Directors to establish rates and charges for electric service in the Yolo Territory prior to commencing such electric service and in a manner consistent with Public Utilities Code Sections 14401-14403.5 and SMUD Ordinance 91-1. While Measure L requires the initial tariff rates for the Yolo Customers to be 2 percent or more below the then effective PG&E tariff rates, it also requires the tariff rates charged to Yolo Customers to be sufficient to recover specified costs of providing electric service to the Yolo Customers, the Surcharge Amount, non-bypassable charges (to the extent collected by SMUD), and any other charges required to be collected by the State of California. Upon the end of the Surcharge Period, Yolo Customers would be placed on the then applicable SMUD tariff rates for similarly situated customers. To the extent that SMUD derives any net income from the Yolo Territory, Measure L requires SMUD to use any such net income for the following purposes: (i) to reduce existing debt or to reduce net debt required to fund capital improvement projects; or (ii) to invest in energy efficiency and clean energy resources in the Sacramento region. Measure L requires approval by a majority vote of the qualified voters voting in the election on the issue.

The Sacramento Bee

• Takeover bid heads to voters - Sunday, November 5, 2006
• Senator asks PUC to look at PG&E campaign tactics - Saturday, November 4, 2006
• Probe of PG&E tactics is urged - Wednesday, November 1, 2006
• Utility-fight rhetoric is highly charged - Tuesday, October 31, 2006
• SMUD gets a boost in fight - Saturday, October 28, 2006
• SMUD tempts Yolo voters - Sunday, October 22, 2006
• PG&E shatters spending records in turf battle with SMUD - Tuesday, October 10, 2006

Over the last 60 years, the people of Sacramento and Counties have turned SMUD into the finest not-for-profit utility in America. SMUD's electric rates are among the lowest California -- 30% lower than PG&E's which are among the highest. J.D. Power rates SMUD #1 in both residential and commercial service. PG&E ranks second-to-last.

After the 2001 energy crisis, we had to bail PG&E out of bankruptcy by paying higher rates while PG&E executives paid themselves $83 million in bonuses. PG&E's top executive comes from They spend our money on corporate salaries, perks, and

Not-for-profit SMUD returns value to customers with lower cleaner air and better service. These facts led to our unanimous decision: The City Councils of West Sacramento, Davis Woodland joined with the Yolo County Board of Supervisors you to bring SMUD service to our communities.

We will pay the costs. You will not. And we'll all save Then Folsom residents asked SMUD to serve their community, you did. Folsom residents saved $238 million on their electric and SMUD's customers earned $125 million... money would have added to their profits. SMUD used it to keep low.

We hope you will consider our request when you vote on Measure L. "L" means Lower Rates for everyone. By adding our homes SMUD will have more customers sharing in the development of solar, wind, and renewable power bringing cleaner the Sacramento Valley.

PG&E is spending millions (of our money) to mislead you force us to keep their service and pay their higher rates. asking you to let us bring SMUD service into our homes, and businesses. SMUD YES!

Sincerely,
s/David M. Flory Mayor, City of Woodland

s/Christopher Cabaldon Mayor, City of West Sacramento

s/Sue Greenwald Mayor, City of Davis

s/Mariko Yamada Supervisor, Yolo County Board of Supervisors

s/Mike McGowan Supervisor, Yolo County Board of Supervisors

That's because current SMUD customers face the greatest risk from SMUD's reckless expansion into Yolo County. Those Yolo politicians won't bear the burden of SMUD's mistake. You will.

As Sacramento County Supervisor Susan Peters said of her vote against SMUD's expansion: "If there's a big surprise, Sacramento County ratepayers will pay for it in some way."

SMUD's lawyers conceded they won't know what the final cost will be until after an eminent domain condemnation lawsuit + long after this election. Legal experts say the cost of taking PG&E's electrical system and customers could be more than $390 million
-- more than four times SMUD's estimate. SMUD should put their Yolo expansion plans on hold until they know the total costs to customers.

Vote No on Measure L. Current ratepayers get nothing in return for this risk.

Your rates won't be lower, and could rise.

Your service won't be better, it could worsen.

Your electric reliability won't improve, supplies will be stretched.

SMUD will never be the same if Measure L passes, because 70,000 new customers and 211 square miles of new territory will strain SMUD's resources and cheap power. In the next energy crisis, current SMUD customers could see their rates rise.

Those Yolo politicians want to change SMUD forever. If you like SMUD the way it is, you should Vote No on Yolo expansion, No on Measure L.

s/Paul W. Carr, Former SMUD Director

s/GrantS. Green, Immediate Past President Lake Natoma Heights Homeowners Association

s/Perry Zimmerman, Former Business Manager of International Brotherhood of Electrical Workers (I. B. E. W.) Local # 1245

s/Ken Payne, President, Sacramento County Taxpayers' League

s/Alice Huffman, President, California State Conference of the National Association for the Advancement of Colored People (N.A.A.C.P.)

What's in it for you? Does it lower your SMUD rates? No. Does it improve service for SMUD's current customers? No. Does it help conserve resources and improve the environment? No. Does it change the character of SMUD forever? Absolutely.

SMUD doesn't generate enough power to serve existing customers during some peak periods as it is. When SMUD faces storms and power outages affecting 70,000 new customers spread over 211 square miles, they'll be stretched too thin to maintain reliable service.

This takeover will force SMUD to become a large power purchaser, buying much more electricity on the open market or building new power plants.

Vote No on Measure L. The cost of annexation won't be known for years - long after this election - when a court sets the price of PG&E's poles, wires, land and equipment after an eminent domain trial. Yet SMUD wants you to approve the takeover now. Would you buy a house before knowing the final price?

SMUD must pay fair market value for PG&E's system. That's the law. PG&E says it's worth about $520 million. SMUD says it's worth about $85 million. Legal experts predict the courts will decide SMUD's takeover could cost over $390 million -- four times more than SMUD's prediction. Are you willing to pay higher rates to cover SMUD's miscalculation?

SMUD, our local utility, wants to change overnight through this takeover. Does that really help you keep low rates and good service? Without knowing the cost, SMUD can't be certain how it will affect you.

If you're happy with SMUD today, ask yourself: if it's not broken, why fix it? Get all the facts at http://www.smudrisk.com, then Vote No on Measure L.

s/Paul W. Carr, Former SMUD Director

s/Grant S. Green, Immediate Past President Lake Natoma Heights Homeowners Association

s/Perry Zimmerman, Former Business Manager of International Brotherhood of Electrical Workers (I.B.E.W.) Local # 1245

s/Ken Payne, President, Sacramento County Taxpayers' League

s/Betty Dean Elston, Coalition For Reliable & Affordable Electricity

In fact, PG&E's service is unreliable. "Outages identify PG&E's limits - 1.2 million customers lose power, experts assess utility's vulnerabilities" - Contra Costa Times, July 30, 2006.

And this occurs despite the 30% higher rates that PG&E charges. Why? PG&E has a long history of using ratepayer money for the wrong things: $83 million in executive bonuses after the company filed bankruptcy, a 2006 rate increase request to the Public Utilities Commission to pay for an $18 million corporate jet, and $3 million in salary & stock options to a former Enron executive now running the PG&E Company.

And now PG&E is spending millions on a false campaign attacking SMUD. They paid $200,000 to Stan Atkinson to appear in television ads saying it cost SMUD $16 million to bring service in Folsom. What PG&E didn't tell Stan was that Folsom's ratepayers saved $238 million and SMUD ratepayers have earned an additional $125 million from service in Folsom.

As leaders of Folsom we thank you for bringing SMUD to our community. We support the request from West Sacramento, Davis and Woodland for SMUD service. It's good for our neighbors in Yolo County, good for Sacramento and Placer Counties and good for the Valley's air quality.

s/Andy Morin, Mayor, City of Folsom

s/Kerri Howell, Vice-Mayor, City of Folsom

s/Steve Miklos, Councilman and Former Mayor, City of Folsom

s/Jeff Starsky, Councilman and Former Mayor, City of Folsom

s/Bob Holderness, Former Mayor, City of Folsom

Section 1: Purpose. The purpose of this ordinance is to establish the conditions under which the Sacramento Municipal Utility District (SMUD) shall provide electric service to and annexation the Cities of West Sacramento, Davis and Woodland and contiguous unincorporated portions of Yolo County (Yolo Territory). SMUD shall not proceed with the provision of electric service and annexation of the Yolo Territory, unless this ordinance approved by a majority of the voters in SMUD's existing service territory voting at the November 7, 2006 election.

Section 2: Findings. a. Currently, SMUD's electric service rates are approximately 29% below Pacific Gas and Electric Company's (PG&E) rates. SMUD's rates are expected to remain significantly below PG&E's for foreseeable future.

b. According to publicly reported electric service reliability indices, SMUD provides a higher level of electric service reliability than PG&E.

c. Citing lower rates and better reliability, the City Councils of Cities of West Sacramento, Davis and Woodland, and the Board of Supervisors of Yolo County unanimously voted to request SMUD replace PG&E as the electric service provider for the Territory.

d. The Sacramento Local Agency Formation Commission (LAFCo) is the independent local agency charged with reviewing and approving the proposal to provide electric service to annexation of the Yolo Territory. LAFCo retained an independent expert to review the SMUD proposal. The independent expert reviewed documentation provided by SMUD and PG&E and made the following findings:

(i) Annexation should result in up to $380 million of economic benefits for SMUD's existing customers and the new Territory customers over the first 20 years.

(ii) As part of the annexation, SMUD will acquire at fair market value certain PG&E owned electric infrastructure facilities in the Yolo Territory. The fair market value of the PG&E facilities is estimated at $110 million and is within the range estimated by SMUD ($86 million to $133 million). PG&E's market value claim of $517 million was not supported by information provided by PG&E.

e. Positive economic benefits for SMUD's existing customers new customers in the Yolo Territory are expected to continue beyond the 20-year study period considered by LAFCo SMUD.

f. The LAFCo Executive Officer's Report concluded that annexation of the Yolo Territory will likely create positive economic benefits for SMUD's existing customers and the new Yolo Territory customers. The Report also found that SMUD can provide reliable and cost-effective service to the Yolo Territory without negatively impacting SMUD's existing customers.

g. LAFCo and the SMUD Board of Directors have adopted requirements to ensure that the Yolo Customers shall pay the costs of annexation of and electric service to the Yolo Territory and SMUD's existing customers shall be held harmless. These requirements are included in Section 3 of this ordinance.

h. Any net income from the Yolo Territory shall be used to maintain low rates through debt reduction and to invest in energy efficiency and clean energy resources for use in the Sacramento region. This requirement is included in Section 3 of this ordinance.

Section 3: Conditions.

a. Existing SMUD Customers Held Harmless. Existing SMUD customers shall be held harmless as a result of the annexation of the Yolo Territory into SMUD's existing service territory. This condition shall be implemented as follows:

(i) Annexation and provision of electric service to the Yolo Territory shall not adversely affect the quality or level of service and reliability to existing SMUD customers. During the Surcharge Period, SMUD shall continue to monitor indices of customer satisfaction and reliability and publicly report these findings on an annual basis.

(ii) SMUD customers in the Yolo Territory (Yolo Customers) shall pay, through their rates and a surcharge, an amount sufficient to recover the costs of annexation and electric service, including costs associated with the acquisition of the PG&E facilities, increased power supply costs and non-bypassable charges assessed to departing load by the California Public Utilities Commission or California law. The recovery of annexation costs shall be consistent with the following principles:

(a) SMUD shall recover the first $90 million of acquisition costs of PG&E's facilities over the long-term through SMUD rates charged to the Yolo Customers. This amount constitutes the Base Amount.

(b) Acquisition costs in excess of the Base Amount shall be included in the Surcharge Amount. Payment of this portion of the Surcharge Amount shall represent the Yolo Customers' equity contribution to the SMUD system.

(c) SMUD shall acquire energy resources to serve the Yolo Customers and, to the extent reasonable and prudent, shall fix the cost of all or a portion of the energy resources as necessary to protect the level of economic benefits available to SMUD customers. In fixing the cost of the energy resources, the forward price of natural gas is more than $1 per MMBtu above the natural gas price assumed in the April 2005 SMUD Staff Assessment and Recommendation (SMUD Staff Assessment), the Surcharge Amount shall be increased to include the impact of natural gas prices (in excess of the assumed price plus $1 per MMBtu) on the estimated economic benefits of the annexation.

(d) The Surcharge Amount shall be collected from the Yolo Customers during the Surcharge Period. The Surcharge Period shall continue until the Surcharge Amount is fully paid. While the term of the Surcharge Period is not fixed, it is expected to last between 5 and 10 years (based upon the assumptions in the SMUD Staff Assessment).

(e) During the Surcharge Period, the Surcharge Amount shall be reduced each year by the revenue collected from the Yolo Customers, which is in excess of the sum of the revenues that would have been generated by SMUD tariffs plus any nonbypassable nonbypassable charges owed to PG&E or any other charges required to be collected by the State of California.

(f) "Surcharge Amount" means the sum of the acquisition costs in excess of the Base Amount (described in Section
3.a.(ii)(b)) and the energy supply costs in excess of the price (plus $1 per MMBtu) assumed in the SMUD Staff Assessment (described in Section 3.a.(ii)(c)) and payable by the Yolo Customers.

(g) "Surcharge Period" means the length of time commencing when SMUD begins electric service to the Yolo Territory and continuing until the Surcharge Amount is fully paid by the Yolo Customers.

b. Setting Electric Service Rates for the Yolo Territory. (i) Prior to commencing electric service in the Yolo Territory, the SMUD Board of Directors shall establish the rates and charges for electric service in the Yolo Territory in accordance with Public Utilities Code Section 14401-14403.5 and SMUD Ordinance 91-1. During the Surcharge Period, the initial tariff rates for the Yolo Customers shall be 2 percent or more below the then effective PG&E tariff rates and shall recover the costs of providing electric service to the Yolo Customers, the Surcharge Amount (over the Surcharge Period), non-bypassable charges (to the extent collected by SMUD) and any other charges required to be collected by the State of California.

(ii) At the end of the Surcharge Period, the Yolo Customers shall be placed on the then-applicable SMUD tariff rates for similarly situated customers. In addition to the SMUD tariff rates, the Yolo Customers shall continue to pay any ongoing nonbypassable charges owed to PG&E or required to be collected by the State of California.

c. Accounting for Annexation Costs. During the Surcharge Period, SMUD shall separately track and account for the following annexation and electric service costs for the Yolo Territory: (i) the acquisition costs for the PG&E facilities; (ii) power supply costs; and (iii) other variable operations and maintenance costs incurred to annex and provide electric service to the Yolo Territory. During the Surcharge Period, SMUD shall also separately track and account for electric service revenues from the Yolo Territory. The accounting of the Yolo Territory costs and revenues shall be reviewed annually by SMUD's outside independent auditor and shall be reported at a publicly noticed meeting of the SMUD Board of Directors.

d. Certification of Collection of the Surcharge Amount from the Yolo Customers. When the Surcharge Amount has been recovered from the Yolo Customers and verified by SMUD's outside independent auditor, the SMUD Board of Directors, at a publicly noticed meeting, shall certify that the Surcharge Amount has been fully recovered, shall end the Surcharge Period and shall set the rates for the Yolo Customers in accordance with Section
3.b.(ii).

e. Beneficial Use of Net Income from the Yolo Territory. SMUD shall use any net income from the Yolo Territory to maintain low rates through debt reduction and invest in energy efficiency and clean energy resources for use in the Sacramento region.

(i) "Net Income" means electric service tariff revenues collected from the Yolo Customers less the following: (i) debt service on debt for acquisition of PG&E's electric infrastructure facilities; (ii) the Yolo Customers' allocated share of debt service for future SMUD debt issuances; (iii) power supply costs and other variable operations and maintenance costs incurred to annex and provide electric service to the Yolo Territory; (iv) nonbypassable charges (to the extent collected by SMUD); (v) any other charges required to be collected by the State of California; and (vi) additional amounts collected as part of the electric service tariff and used to pay down the Surcharge Amount.

(ii) "Maintain low rates" means the use of net income (as defined in Section 3.e(i)) to reduce existing debt or reduce new debt required to fund capital improvement projects. Reduction of existing or new debt will reduce the amount required to be collected through customer rates for debt service.

(iii) "Invest in energy efficiency and clean energy resources for use in the Sacramento region" means the investment of net income (as defined in Section 3.e.(i)) in: (a) commercial or emerging renewable energy technologies or projects that will supply electricity for SMUD customers and reduce the emission of air pollutants and green house gases; and (b) cost-effective energy efficiency measures that will reduce SMUD's reliance on fossil fuel generation.

f. SMUD Board of Directors' Authority. Except as otherwise expressly provided in this ordinance, the SMUD Board shall determine the terms and conditions of service for the Yolo Territory in accordance with the Municipal Utility District Act (Public Utilities Code, Sections 11501-14403.5), other applicable laws, and the conditions imposed by LAFCo.

g. Voter Approval. SMUD shall not provide electric service to the Yolo Territory unless this ordinance is approved by a majority of voters in SMUD's existing territory voting at the November 7, 2006 election and the LAFCo ordered ballot measures pursuant to Government Code Section 56129 and 57075 are approved by a majority of voters in the Yolo Territory voting at the November 7, 2006 election.

Section 4: Compliance with Sacramento LAFCo Conditions. In providing electric service to and annexation of the Yolo Territory, SMUD shall comply with the conditions set forth in LAFCo Resolution Nos. LAFC 1313 and LAFC 1314.

Section 5: Interpretation. This ordinance shall be liberally construed to effectuate its purposes.

Section 6: Severability. If any provision of this ordinance or the application thereof is held invalid, that invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable.

Section 7: Enforcement. Any person residing within the Sacramento Municipal Utility District may sue for injunctive relief to compel compliance with the provisions of this ordinance.

Section 8: Limitation on Amendment. This ordinance may be amended or repealed in accordance with the procedures set forth in this section.

a. Amendment by Vote of the Electorate. This ordinance may be amended or repealed by an ordinance placed on the ballot by initiative petition, or by majority vote of the members of the SMUD Board, that becomes effective only when approved by the voters in SMUD's service territory.

b. Amendment by SMUD Board of Directors. Upon certification of recovery of the Surcharge Amount and the end of the Surcharge Period, as described in Section 3.d., the SMUD Board of Directors may amend this ordinance pursuant to the procedures set forth in Article 5 (commencing with Section 11907), Chapter 3, Division 6, Part 4 of the Public Utilities Code. Except as expressly set forth herein, the SMUD Board of Directors shall not have the authority to amend this ordinance.