Modesto Irrigation District decides to kick the can down the road on electricity rate hike

10/21/2013 6:28 PM

10/21/2013 9:51 PM

The Modesto Irrigation District’s power customers will have to wait until after the Nov. 5 election to learn whether they’ll pay more next year.

Board members this morning will consider a $442.7 million proposed budget for 2014, but will punt on the politically sensitive question of raising electricity rates.

District spokeswoman Melissa Williams did not link the postponement to the election, but acknowledged that the hot-potato dialogue won’t be touched until after the new board majority is seated.

Three incumbents on the five-member board are stepping aside, creating unprecedented turnover at the utility’s highest level.

The proposed spending plan is a relative smidge below last year’s $444 million adopted budget. Leaders expect to plug a $3.5 million gap between total income and expenses with reserves, a report says.

MID’s operating budget, which doesn’t include capital expenses, traditionally has been in better shape. According to the district’s 2012 audited financial statements – the latest available – MID received $389.2 million that year and paid $316 million, for a net operating profit of $73.2 million, up from $55.4 million in 2011 and $25 million in 2010.

As usual, 90 percent of revenue in the 2014 proposed budget, or $385 million, would come from selling power, compared with 5 percent from water customers, or $22.8 million.

Electric rates paid by 113,000 customers in homes and businesses were stable in the 1990s but increased every year in the 12 years prior to 2013. Leaders left rates alone last year after receiving advice from an attorney who warned that a raise might run afoul of new state law linking rates to actual costs of providing services while farmers’ irrigation rates are kept artificially low.

Board members in April could not agree on whether to raise water rates 10 percent, with some saying they should be hiked even more and others defending a grower-friendly culture. Candidates have pointed to that moment as evidence of dysfunction.

The district expects to spend $65.5 million next year on debt payments, about the same level as in the past four years. As of Jan. 1, MID was carrying $800 million in outstanding debt from 18 bonds issued since 1998, and expects to pay that amount plus $577 million in interest through 2040, for a total of $1.35 billion, according to 2012 audited financial statements.

Also on today’s agenda is a proposal to spend $80,000 on monitoring water quality of the district’s mountain snowmelt source, the Tuolumne River, in the wake of the historic Rim fire.

Such catastrophic fires are known to alter soil chemistry, resulting in debris-tainted runoff with increased levels of metals and other pollutants.

Study results would be shared with another consultant monitoring water quality at MID’s Modesto Reservoir, where some canal water is treated and mixed with well water for Modesto’s water customers.

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