Win-River Casino switched from Pacific Gas and Electric Co. to Redding Electric Utility power Monday, a day before state voters defeated Proposition 16.

The City Council on June 1 had unanimously approved extending REU service to the Redding Rancheria — a 30-acre sovereign nation just beyond the city’s southwestern border along Clear Creek — to avoid triggering Prop. 16 voting requirements.

Had it passed, the PG&E-bankrolled initiative would have forced the city to seek two-thirds approval among REU ratepayers and Redding Rancheria residents before the utility could devote public money to extending service to the tribe.

REU did not want to risk losing a major customer like the Rancheria, Director Paul Hauser said Wednesday.

“There was a concern Prop. 16 was going to pass,” Hauser said. “We may have had other, more pressing issues, but if we didn’t deal with this, we may never have the chance again.”

PG&E poured over $40 million into its Yes on 16 campaign, outspending opponents $500 to 1.

Redding, long at odds with PG&E, ranked itself among the measure’s opponents.

“It’s pretty bad for democracy to have a company try to buy protection for itself,” Hauser said.

REU and a half-dozen other municipal utilities went to court in March to have Prop. 16 thrown out, claiming the initiative was a thinly disguised effort by PG&E to quash competition from public power providers and so-called Community Choice Aggregators like the Marin Power Authority. But a Sacramento County Superior Court judge last month rejected that argument.

Hauser said he was convinced until just before the Tuesday election voters would approve Prop. 16.

“We knew what they were going to spend and what we weren’t going to be able to spend,” Hauser said. “But then they really started ramping up advertising efforts at the end, and as we got closer to the election, the more it looked like they were in trouble.”

Some 53.6 percent of Shasta County voters casting ballots in Tuesday’s election rejected Prop. 16. That margin was slightly higher than the statewide no vote of 52.5 percent.

However, voter turnout in the off-year primary election was extremely light by local standards, at 38.29 percent.

Precincts in rural western Shasta County, along with many precincts in Redding, voted against the measure.

Precincts supporting Prop. 16 extended up Highway 299 into eastern Shasta County and back across Highway 44 to Anderson and Cottonwood.

Many property owners in these areas were outraged by Transmission Agency of Northern California plans announced last year for high-voltage power lines across their land to tap planned wind and geothermal energy in Lassen County and Nevada. REU is a member of TANC, a consortium of municipal utilities.

Voters in the Rancheria opposed Prop. 16, while most neighboring precincts supported it, preliminary election returns show.

The city has provided water to the Rancheria since 1995 and sewer service to the tribe since 2000. The tribal government has discussed with city officials switching from PG&E to REU power for at least five years, said Gary Hayward, general manager at Win-River Casino.

“We were seeking better rates and better service. It’s that simple,” Hayward said.

The Rancheria has seen six power outages this year, Hayward said, adding that such outages have been “pretty common year in and year out.”

The Rancheria spends roughly $1 million a year on electricity as a PG&E customer. The tribe expects to save at least 10 percent, or $100,000 a year, as an REU customer, Hayward said.

Anticipating the switch to REU, the Rancheria in 2008 installed new underground conduits, wires and switches during the first phase of its casino expansion. The equipment links to a master meter at the city limits, which means REU had to spend little to extend service.

“All they had to do was get the agreement and swap out the meter,” Hayward said.

The cost to connect the Rancheria to REU power was approximately $11,000, Hauser said. The Rancheria paid about $7,800 of that fee, he said.

The city will charge the Rancheria a flat commercial rate of about 12 cents a kilowatt hour. That rate covers the added cost to the utility of supplying power to keep Win-River slots going. But the Rancheria's rate will actually be a little lower, since those slots go 24 hours a day throughout the year.

Utilities spend more ramping up to meet fluctuating demand than on customers, like the Rancheria, whose usage is fairly consistent, said Hauser. REU passes those "load" costs or savings on to the customers, he said.

Hauser declined to state exactly how much below 12 cents a kilowatt hour REU will charge the Rancheria.

REU will also grant the tribe a 3 percent discount for taking electricity at a primary voltage meter. The utility offers that same discount to several other large users.

In his report to council, Hauser said serving the Rancheria and large customers like it benefits all utility customers, since rates include the costs of delivering power through substations and over transmission lines. Major users with large bills help dilute those "fixed" costs, he said.

The Rancheria, with its casino, consumes about 1.2 megawatts each month, or about half what Mercy Medical Center uses, Hauser said.

Win-River Casino and other customers with fairly uniform power usage help the utility lower its overall average costs, Hauser said.

Utilities like Santa Clara's Silicon Valley Power, serving many large commercial customers with fairly constant demand, face relatively low marginal costs and can charge lower rates than REU.

Redding must build extra capacity to meet heat wave-driven peaks, Hauser said. That capacity, built to meet peak, goes unused the rest of the year.

The tribe in 2008 formed Redding Rancheria Utility Corp. to avoid regulatory complications with the anticipated move to REU power, he said.

The Rancheria’s utility corporation will distribute this power to its 11 customers. These include the casino, tribal offices and private homes, Hayward said.

The Rancheria also will handle electric service billing and maintain the utility equipment on its land, he said. The tribe, a government in its own right, will set rates for its customers.

© 2010 Record-Searchlight.