Bee in Turlock: Power rates might rise a little

Electricity customers in the Turlock Irrigation District face a possible rate increase that is not as large as first discussed.

The district staff in September had proposed a 5 percent increase for 2015. Under the revised proposal, rates would go up 2 percent with the new year, and the district could make two smaller adjustments later in 2015 based on conditions in the energy market. TID also would tap its “rate stabilization fund” to ease the impact on customers.

The average residential bill, now $125.33 per month, would rise to $127.42 as of Jan. 1. Smaller adjustments could follow in April and October, and they could be credits if TID’s power costs are down.

The district board will hold a public hearing on the proposal Tuesday. It could vote then or at a later meeting.

TID has about 98,000 power customers in an area stretching from south Modesto to north Merced County and from the La Grange area to the hills southwest of Patterson.

The hearing will happen a week after the board of the neighboring Modesto Irrigation District balked at a proposed power rate increase averaging 3.5 percent.

TID staff said more money is needed to cover the cost of supplying electricity. Some electricity comes from hydropower from Don Pedro Reservoir, which long has been cheap for TID and MID but now needs an expensive new license from the federal government. The Turlock district staff also cited the costs of natural gas for other generating plants, the 2013 overhauls of two of these plants and the attractive salaries needed for employees running the sophisticated grid.

The initial proposal for a 5 percent rate increase was based on a gap of about $17 million between expected income and expenses in 2015. TID has projected about $373 million in revenue and $390 million in spending with the current rates.

“This is still true,” spokeman Calvin Curtin said by email this week. “However, staff is not proposing that TID increase rates to cover the whole shortfall. Staff is proposing a balanced approach to covering the shortfall.”

The details:

▪ About $6 million of the needed $17 million would come from the initial 2 percent rate increase.

▪ Up to about $4 million would be through the adjustment based on market conditions, mainly the cost of natural gas. Under board policy, it can range from a credit of 0.5 cents per kilowatt-hour to a surcharge of 1 cent on power bills, which average 15.28 cents per kilowatt-hour. The adjustment is made each June and December.

▪ About $7 million would be drawn from the rate stabilization fund, which stands at $69.2 million. The fund is part of TID’s substantial reserves, which guard against unexpected expenses and help the district get low-interest financing for capital projects.

TID’s average residential bill has risen 32 percent since 2007, when it was $94.75 per month, but it is still among the lowest-cost providers in the state.

Actual use varies widely from the average, thanks mainly to heavy use of air conditioners in summer. West Side customers have extra charges to cover the cost of buying the system from Pacific Gas and Electric Co. in 2003.

When the board voted 4-1 in September to set Tuesday’s hearing, members made it clear that the initial 5 percent proposal could change. Director Joe Alamo dissented because he wanted to see the final budget for 2015 first. He added that an easing of the drought “would do a lot for our budget next year,” thanks to increased hydropower.

TID electricity customers bear some of the cost of the irrigation system, on the grounds that they get low-cost hydropower. Farmers, however, could see their rates more than double under a proposal that is the subject of a Jan. 13 hearing.

The water system subsidy has been controversial in MID, and it was among the reasons its board passed on the power rate increase this week. That board also is looking at boosting farm water prices, but a detailed proposal has not emerged.

This story was originally published November 26, 2014 at 2:31 PM with the headline "Bee in Turlock: Power rates might rise a little."