South Gate Mayor Turns Off on Utility

When Lillie J. Guastavino and 5,000 other residents thought the idea of the city running its own utility was a bad one, they said so. And City Hall listened.

“I listen to the will of the people,” said Mayor Henry C. Gonzalez, announcing Tuesday that he is abandoning a proposal for the city to buy Southern California Edison Co.’s system here.

Score one for the people.

Gonzalez said he will ask his four council colleagues to entertain a motion to vote down the plan at the next regular meeting Sept. 14.

Last month, the council postponed for 30 days its vote on beginning condemnation proceedings against Edison after a majority of more than 800 people who attended a public hearing on the issue voiced disapproval.

Citizens also used the mail--with a little help from Edison--to let the City Council know where they stood. About 5,000 residents sent stamped post cards that Edison had provided to City Hall opposing the proposal.

Many, like Guastavino, phoned and met personally with council members to express their opposition.

Guastavino, 75, who has lived in the city since 1937, said she is considering launching a recall movement against some council members who supported the city’s effort to form its own utility.

“They are dropping the Edison idea but you never know what they’ll try next. I don’t trust them,” Guastavino said.

Need for Money

Officials had contended that by going into the electricity business, South Gate could raise money to replace about $1.2 million in lost federal revenue-sharing funds. The money would pay for such city services as police protection and recreational activities. Officials claim that the city could run the system more cheaply and pass some of the savings on to the customers.

The council voted 3 to 0 last June to take over Edison operations by Jan. 1, 1988.

Gonzalez announced he was giving up on the idea at a meeting of the industrial committee of the South Gate Chamber of Commerce where a debate on the issue was scheduled to take place among citizens, city officials and Edison.

There was no debate. There was no need for it, Gonzalez said.

“I plan to make a motion at the next meeting that we forget it. I still think it was a good idea but the people have spoken and I will listen,” said Gonzalez in an interview.

Gonzalez said he believes he will have the unanimous support of his four colleagues.

Two of them, Councilmen John Sheehy and Del Snavely agreed in interviews that the idea should be discarded.

“I was against it all along because the people were not adequately notified,” Snavely said. “The people should have been allowed to vote on it,” he added.

“In view of the situation, (abandoning) it is the only reasonable thing to do,” Sheehy said.

During earlier votes on the issue, Sheehy and Snavely had abstained.

Awaits Survey

However, Councilman Herb Cranton, who favored the plan along with Gonzalez and Councilman Bill DeWitt, said he will not make a decision until he receives the results of a city survey that is being sent to all the city’s 25,000 households and businesses. It asks if they want the city to pursue the takeover.

“I will wait until it (the survey) comes back. I will act then. I will do the will of the people,” Cranton said.

DeWitt was on vacation and could not be reached for comment.

The survey was to be delivered to residents by a private mail service hired by the city. Distribution was expected to begin by Friday.

The service was expected to cost the city less than $6,000, in contrast to the estimated $25,000 Edison spent to alert customers to the city’s attempted takeover.

“We did not include postage (as Edison did). We could not afford to do so,” said City Administrator Bruce Spragg.

Spragg said he could not speculate on how many of the surveys will be returned.

City officials, like Cranton, said they blame themselves for not getting information to citizens earlier.

“We goofed. We didn’t reach the people earlier. The survey is really after the fact. But I will wait for the results,” Cranton said.

Spragg described the survey as an “orderly retreat” by the city but, along with Gonzalez and some other officials, warned that ways must be found to replace needed revenue.

‘No Fat Left’

“There is no fat left in our budget. We are set for this year (1987-88) but will have to look at cutting services or find ways to raise revenues. We had to take nearly $2 million from our $3 million in revenues to balance the budget this year,” Gonzalez said.

Ronald D. Blake, Edison vice president for the company’s western division, said the utility was pleased with Gonzalez’ decision to drop the takeover idea.

“We truly believe it is in the best interest of the city not to pursue this,” Blake said.

The city and Edison could not agree on numerous elements in the plan.

According to Edison officials, the city’s feasibility study done in June by Ivanhoe Energy Services & Development Inc. underestimated the costs of acquiring Edison’s distribution system and about 50 miles of transmission lines that run through the city.

The study said the system was worth about $15 million. Edison officials said it was worth more than $58 million.

Edison also contended that the city could not run the system efficiently and that the city was not prepared to handle major disasters.

City staff countered that Edison was worried mainly about losing the estimated $30 million it earned annually from South Gate customers.

The city said it could reduce costs by buying the distribution system and purchasing power wholesale from Edison and other suppliers. The federal government regulates the wholesale price of electricity.

South Gate would have been the first city in Southern California in 50 years to buy out Edison facilities and form its own utility.

There are 10 publicly owned utilities in Southern California, and more than 30 statewide.

Most cities that operate their own facilities started their systems around the turn of the century and did not buy from Edison.

In the past, some cities have studied the possibility of forming their own utilities but these studies have never gotten beyond preliminary stages.