Modesto Irrigation District wants 3.5% more from electricity customers

Electricity customers would pay about 3.5 percent more under a proposal going to the Modesto Irrigation District board on Nov. 25.

Staff members say the rate hike is needed to cover the district’s rising costs for producing power for 113,000 customers in Modesto and several neighboring cities and communities.

The proposal ignores a dispute over MID’s long-standing policy of charging electricity customers more to keep farmers’ irrigation rates artificially low, amounting to several millions of dollars each year. Board members can expect to hear from people disgusted at the inequity, several critics said.

The board expects in January to separately consider whether to charge more for irrigation water.

An average family using 850 kilowatt hours per month, currently paying $152, would pay $5 to $6 more under the proposal, a report says.

The MID board on Oct. 28 approved a 2015 budget with a $12 million deficit and warned that rate increases were on the horizon.

Although more than one-third of MID’s employees in 2013 were paid at least $100,000, labor accounts for 15 percent of the district’s costs, said Jimi Netniss, the district’s budget and rates administrator. The $12 million gap, he said, is mostly owing to anticipated hikes in the price of transporting the natural gas that MID burns in turbines to produce electricity. The natural gas comes through Pacific Gas and Electric Co. pipelines.

Netniss wants to bridge the gap with higher rates, and he proposes a radical change in the way they’re structured.

Customers currently pay a fixed charge of $12.50 per month, supposedly representing overhead costs, plus fees for how much power they use. Netniss proposes jacking up the fixed charge to $20 per month to more accurately reflect MID’s true costs, he said; he wants to reduce the usage fee at the same time, but not by the same proportion. The difference comes to an overall increase of about 3.5 percent for average customers.

The average low-income family enjoying discounted rates currently pays about $114 per month, and the new formula would increase that bill about 50 cents. Commercial and industrial customers could pay up to 4 percent more. The average increase across all customer categories would amount to 3.5 percent, Netniss said.

Business owners have been invited to an information meeting starting at 9 a.m. Thursday at the MID office, 1231 11th St. Homeowners can learn more in advertisements and in notices to be posted on MID’s website sometime next week, spokeswoman Melissa Williams said.

“The (Nov. 25) public hearing is their opportunity to make comments, ask questions and engage with the board,” she said. The panel then could adopt the proposal, change terms or postpone a decision.

Under a state law known as Proposition 218, water rate hikes follow a procedural formula spelling out public notices and opportunities to lodge protests.

An attorney two years ago privately advised the board that seeking a rate increase for electricity might trigger a similar vote of the people under terms of a subsequent ballot initiative approved by California voters. That law, Proposition 26, could affect the district’s practice of covering irrigation costs each year with millions of dollars of electricity income, the attorney said.

Agriculture advocates note that farming helps to replenish groundwater and canals carry stormwater from Modesto streets at no charge; those benefits and others should factor into discussions about equity, they say. MID staff has promised comprehensive analyses but none has been produced.

This story was originally published November 8, 2014 at 6:59 PM with the headline "Modesto Irrigation District wants 3.5% more from electricity customers."