"Everyone is for it NOW" - distribution of Don Pedro power.
Print version of chapter
In this single statement Modesto Morning Herald
summed up a bitter two-year battle over whether
to distribute or wholesale the energy generated
at Don Pedro Dam Powerhouse. The occasion was
the November 11,1923, arrival of the first "juice"
to light homes, businesses and public buildings
The ultimate decision to generate and distribute
its own power has been properly labeled by Mathew
Fiscalini, who served nearly 29 years as a Modesto
Irrigation District director, as "the most important
thing that the people of Modesto and Turlock have
But it wasn?t easy. It took strong-minded, courageous
? at the time some said foolhardy ? people to
accomplish the feat in the face of powerful opposition
from a well-established private utility.
From the outset, it had been assumed electrical
generation would be an integral part of the Don
Pedro Project. The use of electricity was not
new to Stanislaus County. It had been around in
a limited way since 1891, although many of the
older generation looked upon it as an unnecessary
In 1893 when La Grange Dam was built, the huge
Niagara Falls power project of New York still
was in its design stages, yet the Stanislaus
County News forecast that the man-made La
Grange Dam could be "the Niagara Falls of the
West" by offering similar energy potentials.
The first formal step for the development of
electrical energy came in the spring of 1912 when
the Turlock Irrigation District filed for an additional
325,000 acre feet of water specifically for generation
purposes. Subsequent agreement between the two
districts conveyed 31.54 percent of this right
to the MID .
Throughout the preliminary discussions of the
Don Pedro Project there was no question but that
a powerhouse would be included. On July 18, 1919,
six days before a formal decision was made to
include generating facilities in the project,
consulting engineer A. J. Wiley submitted to the
two districts a detailed design, including penstocks
buried deep in the concrete dam, for a 15,000
kilowatt power plant. A budget of $609,000 for
the plant?s construction was adopted.
It was to be two years before construction began,
During that interim there began a conflict between
the Modesto district and the Pacific Gas Electric
Company which was to develop into a full scale
war lasting 20 years. Although the two utilities
now are working together, only a score of years
ago "PG&E" was considered a bad word by many
old-timers in the region.
The battle was over who was going to distribute
the power generated at Don Pedro.
It all started early in 1920 when the irrigation
districts sought to acquire from the Sierra &
San Francisco Power Company, a subsidiary of PG&E,
the old La Grange Ditch and Mining Company property
which would be inundated by Don Pedro Reservoir.
The private utility replied that it would relinquish
the property only if the two districts agreed
not to compete in retail distribution of electricity
and also sold to PG&E all of the power generated
at Don Pedro.
The districts immediately initiated court action
to condemn the property. The case was settled
in mid-1921, but that lawsuit launched a series
of legal battles between the private utility and
the Modesto district which were to go on until
In exchange for the lands flooded, ditches destroyed
and all of Sierra & San Francisco Power Company?s
rights on the Tuolumne River, the districts agreed
to provide PG&E with 10 million kilowatt hours
of energy in each of the next 25 years. Additionally,
water would be furnished the gold dredge at La
Grange. At the same time, a contract was signed
providing that PG&E would supply the power
needed during construction of Don Pedro Dam and
Work on the powerhouse began in November 1921
when contracts were awarded for the purchase of
the turbines, generators, transformers, switchboards
and a traveling crane. All of these items, plus
the lining for the penstocks, cost $291,478. Excavation
for the powerhouse began that month.
As construction progressed, the Modesto district
faced two choices: Retail the power within the
district, building its own distribution system
at a cost of more than $1 million, or wholesale
the energy to PG&E.
At the time the agreements were reached on the
La Grange Ditch and Mining Company property, PG&E
undoubtedly believed the MID was inclined to wholesale
its share of the electricity to the private utility.
The belief was justified, for that, indeed was
the thinking of the board. In fact, none of the
MID directors questioned that the plans showed
only two transmission outlets from the powerhouse:
one for Turlock, which always had insisted it
would distribute its own power, and one for PG&E.
When the MID subsequently decided to distribute
its own electricity, a third outlet had to be
As 1922 opened the Modesto district hired San
Francisco consulting engineer Louis F. Leurey
to survey the comparative costs of wholesaling
or retailing the energy. Leurey advocated wholesaling.
In designing the dam and powerhouse, Wiley had
estimated that water stored behind Don Pedro Dam
would generate 16,000 horsepower of energy during
the months of January through September. This
would drop to about 5,000 horsepower during the
remaining dry months.
Based on this, Leurey estimated that the Don
Pedro Project had a potential of 90 million kilowatt
hours of energy each year. Of these, 10 million
would go to PG&E through the Sierra &
San Francisco Power Company , 53 million to the
TID and 27 million to the MID . Leurey estimated
that consumption for the entire district would
vary from 700 to 2,000 kilowatt hours per year.
By comparison, the average home today consumes
about 750 kilowatt hours per month.
Although the state Legislature in 1919 had allowed
irrigation districts to enter into the power business,
the MID legal counsel had decided that it could
not retail energy outside of its district boundaries
without approval of the State Railroad Commission,
predecessor of the Calfornia Public Utilities
Since the authority for irrigation districts
to enter the power business in competition with
private utilities was so new, it was not known
how the state regulatory agency would react to
an application to go beyond district boundaries.
With this uncertainty facing them, MID directors
wondered what to do with what appeared to be a
Furthermore, Leurey argued that the cost of building
a distribution system would be substantial and
the district would not be guaranteed any preferential
treatment from the City of Modesto or County of
Stanislaus in seeking right-of-way for its distribution
lines. Leurey maintained that PG&E was serving
the area well at the time and to compete with
the private utility would result in a devastating
At the time, PG&E had nearly 4,000 meters
installed, serving primarily the City of Modesto
and nearby residential areas. Rural areas were
without electricity, however, as the private utility
had neither the inclination nor the energy to
serve regions where customers were far apart.
It would require at least 100 more miles of distribution
lines to reach these people.
An inventory made by the MID in March 1922 placed
the value of PG&E?s system, including six
substations and 130 miles of distribution lines
at $606,400, without considering depreciation.
Leurey estimated that if the MID were to take
over the system it would cost at least an additional
$135,000 in severance damages and the district
would lose a substantial taxpayer.
The cost to build a new system, including transmission
lines from Don Pedro, was estimated at more than
$1.4 million. Operating the system with a skeleton
staff would cost $50,000 a year, plus another
$25,000 for standby steam generation for use during
the water-short months of October, November and
With these facts in mind, the Modesto board invited
PG&E to make an offer to purchase the district?s
share of Don Pedro power. The response was that
the private utility would not deal with one district
alone, but would purchase for 10 years all the
power from both districts, exclusive of that already
committed under the Sierra & San Francisco
Power Company agreement.
The proposal provided that the two irrigation
districts would control water releases to meet
PG&E power demands, "subject to irrigation
and domestic needs." The company would furnish
at cost the electricity required for district-owned
drainage and pumping plants.
A month after the proposal was submitted, the
Modesto board accepted it, but cut the term of
the contract to five years. The board reasoned
that the district?s drainage and pumping requirements
would not exceed a third of the power available
and there was no guaranteed retail market, especially
since many of the larger energy consumers already
had long-term contracts with PG&E.
Furthermore, the board concluded that if the
district wholesaled its power, revenue would start
coming in immediately while it would be a year
or more before it could build and start operating
its own retail system.
The only argument in favor of a retail distribution
venture fraught with uncertainties was that it
would provide jobs and keep the money at home.
On June 14, 1922, the MID Board of Directors
voted 4-1 to wholesale the power to the private
utility. Directors J. R. Broughton, H. J. Coffee,
H. W. Guyler and C. A. Hilton favored wholesaling.
Only Director E. L. Routh opposed the proposal.
In making the decision, the board forgot one
important thing. Earlier it had set June 21st
as the date of a straw vote on the issue of wholesaling
vs. retailing. One week after the board?s action,
the people of the district voted 1,468 to 625
in favor of retailing and supported the issuance
of bonds for this purpose by a 1,400-574 majority.
The board still was not convinced.
The Modesto district?s engineer, Percy Jones,
placed the cost of a new distribution system at
$1,163,000; only $300,000 in unsold bonds remained.
With the district already bonded for $4 million,
the board was reluctant to incur an additional
$1 million indebtedness even though the district
for the first time ever had received above-par
prices in the sale of Don Pedro construction bonds
in January 1922.
Six months after the straw vote, the people took
direct action. Guyler, Coffee and Hilton were
recalled from office on December 20th.
Broughton, however, survived a recall election
held one week later.
Even with three advocates of wholesaling Don
Pedro power to PG&E replaced by MID distribution
supporters, some hesitation to undertake such
a monumental task must have remained in the minds
of board members. Late in January 1923 a coupon
questionnaire was placed in the two daily newspapers
asking opinions of whether the district should
retail or wholesale the power. Once again the
results were overwhelmingly in favor of the district?s
marketing its own power.
Two straw votes and the recall of three directors
finally convinced the MID board. The district
then approached PG&E, offering to buy that
portion of its distribution system within the
boundaries of the MID . The response was negative
in a roundabout way. The company claimed in only
leased the system from Sierra & San Francisco
Power Company and it understood the latter was
not willing to dispose of any property.
In a College of the Pacific master?s degree thesis
submitted in 1946, Robert M. Graham stated that
company officials involved had admitted to him
that PG&E was willing to sell at the time,
but the undisclosed price offered by the Modesto
district was too low. Thus, the decision was made
to freeze out the MID rather than sell out. A
fight which was to last 17 years was on.
Without hesitation, Turlock had proceeded with
its own system and on February 20, 1923, agreed
to carry Modesto?s power to its substation in
Empire, from which the MID could serve much of
its own area.
April was a turning point for electrical distribution
in both districts. Energy first flowed over Turlock?s
transmission lines April 3rd, the same
day Modesto called for bids for distribution system
material and moved to build its own transmission
lines to its PG&E-served pumping plants to
avoid long-term contracts with the company.
The district charged the private utilities had
joined to impose an exorbitant price for the Tuolumne
River rights needed by the districts for the construction
of Don Pedro Dam and Reservoir. Modesto consulting
electrical engineer H. A. Storrs contended that
the districts had given PG&E 10-million kilowatt
hours a year ? a $1 million value over the 25-year
term of the agreement ? for a dilapidated plant
which could generate only 4-million kilowatt hours
per year. Furthermore, Storrs argued, the Waterford
Irrigation District already had purchased from
Sierra & San Francisco Power Company the rights
to the water for the months of May through October.
Not only did Turlock flatly refuse to join the
rebellion but issued a stinging rebuke of the
Modesto district for adopting the resolution and
going public with it before consulting the TID.
The effort came to naught. The districts began
delivering the power to PG&E May 20, 1923.
Meanwhile the retail vs. wholesale debate went
Modesto Morning Herald editor Leslie A.
Ferris, one of the first to fight for the MID ?s
distribution of its energy, injected the issue
into 1923 city council and school board elections.
He called for the election of those candidates
who had openly supported the public distribution
of Don Pedro power.
Editorializing on the morning of the April 10th
election, Ferris declared: "To vote for anti-distributionists
for the city council at this time is dangerous
to this movement."
Even after the recall of a majority of its members
on charges that they opposed local distribution,
the MID Board of Directors seemed divided on the
issue. Director Routh, who 10-months earlier had
been the only one to vote against the original
move to sell out to PG&E, was accused of vacillating
and being dilatory in proceeding with retail distribution.
He was recalled April 25th.
In February, Routh and anti-distributionist Broughton
had been instrumental in unseating as president
of the board Empire Director J. C. Garrison, a
strong advocate of retail distribution. This truly
was behind Routh?s recall, after which Garrison
was re-elected president. This, the Modesto Morning
Herald, said, "undoes the damage done previously
by Routh and anti-distributionists."
The new board immediately voted to fire any employee
who opposed retail distribution, declaring: "Any
unloyalty on the part of any employee to the cause
of distribution is a serious menace to the welfare
of all taxpayers."
This time the board meant business.
The installation of transmission lines to 26
MID drainage pumps was started in April. These
now would use Don Pedro "juice" to pump groundwater
into canals, lowering crop-threatening high water
tables in several areas.
In mid-May the Modesto School Board opted for
Don Pedro power to heat as well as light the new
Modesto Junior College and two grammar schools
in California to be heated by electricity and
the school trustees? decision was seen as strong
support of the MID ?s entry into the power distribution
business. Future additions to existing schools
also would be heated and lighted by MID power,
the school board ruled.
Things were moving too fast for PG&E, which
began to fight back by soliciting its customers
with long-term contracts at favorable rates. This
caused sufficient concern to the district that
the MID board issued a statement stating, "Any
citizen or concern entering into such obligations
would be detrimental to the Modesto Irrigation
District and its taxpayers."
The first MID meter was installed on October
23rd. Six days later MID Electrical
Superintendent Webster Johnson threw the switch
which fed the power into the district?s pipe yard.
There were no ceremonies or crowds, but as the
lights in the yard began to glow, Johnson cried
out: "We?ve done it! Watch us go!"
Mammer?s Bakery and the Community Market Building
received electricity the same day. The next morning
MID crews were in the field promising to make
from 25 to 50 residential service connections
The City of Modesto contract to provide power
for lighting streets and public buildings and
for pumping domestic water was signed November
2nd by Mayor Sol Elias, long an MID
activist who had a significant role in getting
the district going again after the 1901 ouster
of anti-irrigationists. The PG&E contract
had expired in 1922. Mayor Elias and the city
council kept negotiations on a month-to-month
basis, meanwhile meeting quietly with irrigation
district officials to assist in developing the
distribution system. In response to the city?s
support, the district gave Modesto a most favorable
.015 per kilowatt hour rate for pumping domestic
water and for street lighting.
By November 10th, 23 businesses and
61 residences were on the line along with the
new junior college and two grammar schools. The
Salida Lighting District was being served. Other
contracts were being processed.
Formal dedication of the electrical distribution
system came as part of the city?s November 12th
Armistice Day celebration; November 11th
fell on a Sunday. Following a Friday night test
of lights strung through the streets for celebration,
the Modesto Morning Herald commented:
It really did seem as if Modesto
took on new life ? the sense of ownership of power
seemed to transmit itself into the very veins
of the Modestans who congregated about the streets
and rode about in automobiles, apparently anxious
to absorb every bit of the first light from Don
That this sense of "new life" was felt by the
individual homeowner was confirmed recently by
long-time resident Russell Briggs. Briggs grew
up on a McHenry Avenue farm a little over a mile
beyond Modesto?s city limits which then were at
Morris Avenue. Recalling how difficult it was
to study his high school lessons by the light
form kerosene lamps, he exclaimed:
That was the most memorable event
in my life ? getting electricity in our home.
We didn?t have electricity until the MID put a
power line in front of our house.
Briggs noted that most people who had not received
electricity from the private utility ? even though
in some cases its power lines were just across
the street from their homes ? felt that way and
that was the reason for the strong vote for the
distribution of MID power.
As the distribution system came alive, MID engineers
recommended a rate schedule which undercut PG&E
by 10 to 25 percent. This proposal was rejected
by the directors, who instead gave special consideration
to residential service for cooking and heating
and to farm and commercial users for pumping or
drainage. PG&E rates were matched in other
The board also specified that rates for in-town
service would be lower because consumers were
closer together and easier to serve. Farmers were
expected to consume larger amounts of power than
city dwellers because of pumping and farm equipment
use and therefore would benefit from a rate scale
which decreased as consumption increased. This
had been proved by PG&E experience.
With the system working, the time had come for
the Modesto board to make good on its earlier
commitment to provide electricity for everyone
in the district, city and rural alike.
Additional substations and distribution lines
needed to cover all rural areas would cost $357,800.
Serving the communities of Empire and Salida would
add another $12,500, with an additional $275,000
needed to complete the work in Modesto. The MID
had invoked the provisions of the Raker Act to
require the City of San Francisco to provide standby
service from its Hetch Hetchy system. Connecting
to the bay city?s transmission lines would cost
an additional $50,000. All this would require
a new bond issue in the amount of $500,000.
For a fledgling power agency, this was a lot
Directors were most receptive, however, when
the petitions calling for these additional bonds
were filed November 19, 1923, just three weeks
after the first service had begun. At the December
14th bond election the affirmative
vote was 1,282 to 121.
Construction bids received February 5, 1924,
were rejected as too high and the district proceeded
to build the substations, transmission and distribution
lines with its own crews.
As new lines were installed, business boomed.
By the spring of 1924 there were more than 2,500
meters on the line; 12 months later, this had
more than doubled to 5,400.
In spite of the David and Goliath situation in
opposing PG&E, the Modesto Irrigation District
had successfully embarked upon what USDA expert
Elwood Mead called "the best cash crop of an irrigation
The Modesto district sold its "cash crop" in
every way possible, including establishing its
own retail store for the sale of electrical home
appliances. Additionally, it wholesaled these
items at cut rates to furniture and hardware store
operators who agreed to promote electrical goods.
The MID retail store?s profit margin was minimal
since the whole purpose was to increase electrical
consumption. In 1933 the retail store was closed,
however, at the request of depression-hit local
merchants suffering from the competition.
Within a year of the start of electrical operations,
the district was approaching the maximum dry-season
capacity of its share of Don Pedro-generated power,
although on an annual basis the district had power
to spare. Thus began a search for additional energy
sources, a quest which continues to this day.
The acquisition of a 1,250-watt standby steam
plant was the first step.
The need was especially critical in 1924, for
that was an extremely dry year. That fall, after
its own irrigating season had ended, the Waterford
Irrigation District gave water to the MID for
power generation purposes.
These were interim measures that did not solve
a lasting problem.
The Modesto district?s energy consumption far
exceeded early expectations and by 1927 the demand
exceeded its supply of Don Pedro power. There
was no alternative but to look to outside sources
for additional energy.
The TID could not, however, help its energy-hungry
partner in Modesto. Entitled to more than two-thirds
of the energy generated at Don Pedro, Turlock
had been faced with a different problem: a substantial
surplus. In 1924 the Turlock district had solved
its surplus problem through long-term contracts
selling to San Joaquin Light and Power of Fresno
all of its surplus Don Pedro power. This agreement
was reached even though the irrigation district
was competing with the private utility at the
retail level in the southern portion of the TID.
The Modesto district, therefore, in 1928 faced
two unpleasant alternatives: 1. Expand its diesel
generating capacity, involving a major capital
outplay. 2. Go, hat in hand, and ask PG&E
for wholesale supplies of energy.
It was a bitter pill to swallow, but the most
practical solution was to seek assistance from
PG&E. The company refused to help its competitor.
The district then turned to the San Joaquin Light
and Power Company in Fresno. Again it was rejected.
Directors then covered both bases, advertising
for bids on the diesel-powered generating plant
and bringing a State Railroad Commission action
against both private utility companies, seeking
to force them to provide MID ?s needed additional
energy. On the day before a scheduled June 26,
1929, hearing on the matter, San Joaquin Light
and Power capitulated and the diesel plant bid
opening was canceled.
The contract between the private utility and
the MID provided that during the winter months
the Fresno-based company would supply needed power,
which would be transmitted over TID lines, and
purchase MID ?s surplus power during the summer.
If the Modesto district were to expand to the
point where it had no surplus, San Joaquin Light
and Power would provide standby service.
The agreement was approved initially by a 3-2
vote of the MID Board of Directors. Opponents
were disturbed that the agreement let a private
utility get its foot in the door. The arrangement
proved most satisfactory, though, and continued
in effect until March 1944. Time proved that the
Modesto district was able to maintain its independence.
In 1925 a review of the first 16 months of electrical
operations revealed that the MID had made an 8.26
percent profit on its power sales, substantially
more than anticipated. A rate study found that
the district?s rates were higher than other publicly-owned
utilities, including the neighboring TID.
Faced with a choice of cutting power rates or
reducing irrigation taxes, MID directors chose
the former course, anticipating the lower rates
would lure more customers from PG&E and encourage
existing customers to use more energy. Lower power
rates would be appreciated most by city dwellers
and businesses, whose irrigation taxes were relatively
low. Two-thirds of Modesto?s commercial firms
already were using Don Pedro electricity.
Two predictions made by the MID board at that
time were to prove most accurate: The day would
come when energy revenues would eliminate the
need for irrigation taxes, and low power rates
would attract business and industry to the community.
This was expected even though the officers and
citizens of the district still considered energy
a "by-product" and every preference was given
to delivering water for irrigation.
In March 1925 a reduced rate schedule was put
in force, but it was so favorable that consumption
expanded rapidly and the district?s electrical
distribution net profits soared to 10 percent
the following year.
As success continued in both the Modesto and
Turlock districts, Don Pedro?s generating capacity
had to be doubled by adding two 7,500-kilowatt
generators. A 1926 election on a $236,000 bond
issue to finance Modesto?s share was approved
by a 15-to-1 margin. However, the bonds were not
sold because the district was able to finance
its share of the project from electrical revenues.
Work was started on February 1, 1927. It was
not an easy job for work could not interfere with
the operation of the existing three generators.
Other problems faced by structural contractor
T. E. Connolly included the opening of penstocks
installed initially in the dam in anticipation
of the additional generators. The tricky part
was the removal of penstock plugs from the dam?s
upper face 170 feet below the surface of the reservoir.
The turbines and generators, broken down into
25- and 30-ton pieces, were hauled by 1927 model
trucks ? not trains this time ? 35 miles from
Hickman to the powerhouse in only two days by
the Los Angeles trucking firm of Allen Brothers,
whose trucks also hauled all the cement at 18
tons per load.
The two new generators were placed in operation
in July of the following year. Direct transmission
lines from Don Pedro to Modesto, also financed
from MID electrical profits, were placed in operation
the following month. The capacity of these lines
was doubled in 1935.
As a result of early expansion of the distribution
system and this addition to Don Pedro, all farms
within the Modesto district had energy available
to them by July 1928, long before the Federal
Rural Electrification Administration delivered
power to most agricultural areas throughout the
nation. The independent-minded Modesto Irrigation
District had accomplished this on its own without
seeking outside help.
After completing such a major system expansion
using only operating revenues, the board again
reduced electrical rates and thereby touched off
a rate war.
PG&E responded with a rate cut, which the
MID sought to have reversed. The district charged
the new rates were lower than rates the company
charged in other areas. The California Railroad
Commission found that to force the company to
cancel the reduction would be "a serious and unjustifiable
departure from the long and unbroken trend of
statutory, judicial and commission precedent both
in this state and elsewhere which overwhelmingly
sustains the right of a utility to meet in good
faith a competitive rate without rendering itself
subject to a charge of unlawful local discrimination.
To do otherwise would be to deny the right of
the utility company to maintain its own existence
by meeting the rates of its competitors."
The 1930 purchase of the Modesto Gas Company
by PG&E introduced low-cost natural gas for
heating, bringing a new element of direct competition
with MID ?s offering of low-cost electricity for
heating. It also increased the company?s incentive
to carry on the public vs. private utility battle
and stay in Modesto.
The struggle between the two utilities drew statewide
attention, with newspapers taking sides. The San
Francisco Examiner, published in PG&E?s
headquarters city, editorialized in December 1930
that the private utility had "weepingly" explained
it had been forced to cut Modesto rates below
those in other communities "because the district
aggressively and unfairly reduced its own rates."
Then the Examiner editorial writer asked:
What do you make of this, Watson?
How does it all fit in with the privately owned
utilities? claim that public ownership is inefficient
and feeble and what not? Favorable testimony for
an enemy is to be taken seriously. The PG&E,
enemy of public ownership, certainly gives testimony
favorable to public ownership as it works in Modesto.
In that depression year the Modesto district
had built a surplus of $100,000 from power revenues.
Here at home, the newspapers were feuding. The
Modesto Evening News had supported wholesaling
the power, a position which caused the Morning
Herald to label its competitor as the "power
company propaganda volcano?belching a willfully
and maliciously falsifying wreath of smoke."
The following year, PG&E adopted another
tactic. The Modesto Tribune revealed that
three major MID customers, General Petroleum,
Firestone Tire and Rubber and the Borden Company,
had switched to the private utility. Basically,
it was the result of a company "tit for tat" move
which in effect said, "Use our power or we won?t
buy your products." The company referred to this
policy, according to the Tribune, as "reciprocity
Modesto was not alone in its battles with a private
On April 23, 1931, the now merged Modesto
News-Herald under McClatchy Newspapers ownership
reported that the Federal Power Commission was
launching a nationwide investigation of the "power
trust." The paper commented that the probe would
be "extremely distasteful" to power companies
as it would reveal how federal licensees are operating
in intrastate business without state licenses.
And that, argued the News-Herald, may "strike-dangerously
close" to a system by which the rates of the interstate
operations are "clouded and veiled in a maze of
figures and cross figures."
PG&E had friends, too.
Legislative efforts were made in Sacramento during
the early 1930s to force public utilities to pay
property taxes. The private utility was one of
the Modesto district?s largest taxpayers, while
the MID paid neither state nor county taxes because
of its public nature.
The attempt failed, however, as farmers argued
before a farmer-dominated Legislature that if
they and the utility that provided their water
both were taxed, it would be double taxation.
The rebuttal that tax-paying farmers with power
already experienced the same "double taxation"
was passed off with the claim that private companies
were in business to make a profit, while irrigation
districts were there to serve the farmers with
water at the lowest possible price without a profit.
Locally, at least on PG&E friend took things
in his own hands. Former MID Director Laud C.
Gates, during a 1954 interview on the occasion
of his 80th birthday, recalled one
large landowner dug up the MID ?s new power poles
when they were placed in the road right of way
near his home.
"He got fined $250," noted Gates, who was a combative
advocate of public power. "We should have sent
him to San Quentin."
Pressure continued to mount for Modesto to acquire
the PG&E distribution system and as 1932 neared
an end Director John B. Fiscalini, whose son Mathew
later followed his footsteps on the MID board,
declared such an action "essential to safeguard
the investment the Modesto Irrigation District
has made in its own electrical project. Duplication
of the two systems as they exist at present and
duplication of the overhead charges are a great
added expense. Consolidation of the two systems
would mean a very real savings."
The elder Fiscalini, talking to farmers, predicted
that consolidation would result in a reduction
in irrigation taxes of 90 cents on each $100 assessed
valuation of property. Fiscalini?s predictions
proved far too conservative as ultimately irrigation
taxes were eliminated.
The News-Herald constantly attacked the power
company and private utilities in general for "overcharging"
consumers. In 1933 the News-Herald compared the
average PG&E rate of 5.32 cents per kilowatt
hour to public utilities? rates in Seattle, 1.5
cents; Tacoma, 2.3 cents, and Ontario, Canada,
1.5 cents. Some Canadian communities paid less
than 1 cent per kilowatt hour.
The low costs also resulted in higher consumption,
it was noted. The average private utility consumer
used 600 kilowatt hours per year, whereas in Seattle
the figure was 1,600, in Ontario 1,800 and in
Winnipeg, Canada, a tremendous 4,000 kilowatt
hours per year, according to the paper.
On the local front, the newspaper argued the
public distribution of power gave stability to
the district?s bonds. It pointed out that, while
the MID and TID were sound fiscally, irrigation
districts throughout the state were defaulting.
Earlier, holders of bonds in the Merced Irrigation
District, which wholesaled its power to PG&E,
had stormed that district?s offices demanding
payment of the interest due, but there was no
In the meantime, the Modesto district continued
to cut power rates, forcing PG&E to do likewise.
Across-the-board reductions were made in October
1932, March 1933, December 1935, February 1937
and April 1938. In July 1939 and November 1940
further commercial rate reductions were ordered.
Still the district was able to turn a profit.
In the first decade of operating the distribution
system, electric rates were reduced five times
and the charges for electric service to MID customers
were among the lowest in the United States. By
1933, electrical sales returned $530,000. With
operating costs of $311,400, the net revenue was
41 per cent of the gross.
In mid-1934 the MID once again made a formal
offer to buy out PG&E. Although the district
and the company were close on the value of the
physical plant, they were far apart on severance
costs. The Railroad Commission was called in to
arbitrate and set the total purchase price, including
severance, at $222,000, which the Modesto district
promptly offered the company. The offer was rejected
and the MID continued to prosper.
In spite of the obvious success of the Modesto
district?s electrical system, it was to be six
more years before PG&E gave in. During those
years, the number of MID customers climbed steadily,
topping the 10,000 mark in 1938. Capitulation
came only after the district initiated formal
condemnation proceedings to acquire the private
company?s distribution system. Before the suit
went to trial, PG&E accepted the fact that
the struggle was making its own electrical distribution
grossly unprofitable. The company was serving
only 1,000 customers with annual receipts totaling
PG&E finally agreed to sell. On June 10,
1940, the MID Board of Directors approved a purchase
agreement by which the district would withdraw
its condemnation suit and pay $325,000 for the
company?s system. PG&E agreed to wholesale
power to the local district when additional energy
was needed, which soon was to be the case.
On August 14,1940, the same day as the Railroad
Commission approved the sale, the Modesto Irrigation
District made a down payment of $50,000 to PG&E.
The balance was paid off at the rate of $3,100
a month plus interest. The final payment as made
in June 1944.
The fight was over. By the end of 1940 the MID
had 11,974 meters on line. The vision of the early
advocates of distributing Don Pedro power had
Retired Director Mathew Fiscalini?s father, John,
had served as an MID director during the height
of the PG&E battle and was the object of an
unsuccessful recall attempt launched by power-distribution
foes. The younger Fiscalini recently put the matter
Really, the most important thing
(during the MID ?s first century) was that the
people voted in Modesto and Turlock to generate
our own electrical energy and distribute it ourselves.
In Merced to the south and South San Joaquin and
Oakdale to the north, their people said, "Let
PG&E pay off the bonds." Today they?re still
paying high taxes and still buying power from
PG&E. So, our people living in that era made
the most important decision ever made.
Our people living in the Modesto
and Turlock Irrigation Districts have had the
advantage of the low-cost power all during those
years and for all the future.
We always have said that?s the
main reason why industry has come to Modesto and
Turlock. But I think the individual home owners
themselves are the ones who get the big benefit.
A food processing plant or any plant passes the
costs on, whereas the individual cannot pass it
on. So, our people are certainly getting the advantage
of the thinking of the people in the early 20s.