Modesto Irrigation District critics assail forced subsidy

People concerned at the prospect of higher electric bills are starting to line up.

The latest include Paul Baxter, a former Modesto deputy city manager, and Steve Mohasci, who worked for an investor-owned utility in Iowa. Both are retired.

Lee Delano, a former Modesto Irrigation District assistant general manager over water operations, has presented a slideshow to community groups, railing on the unfairness of keeping farmers’ irrigation prices artificially low by charging electricity customers extra.

Travis Malek, who hosts a social media site dedicated to the same issue, calls for protest support at www.facebook.com/OccupyMID.

Some critics cite research by The Modesto Bee, including these findings:

▪ In 2003, families paid less for MID power than customers of other area utilities. But as of last year, average families in Modesto were paying $261 more per year than those in Turlock, and $300 more than Merced.

▪ MID’s per-customer income shot up 130 percent in 12 years, compared with the statewide average of 36 percent for public utilities.

▪ MID’s average income from homes in 2012 was more than all others in California except for Hercules Municipal Utility.

▪ One hundred fifty-six MID employees – more than one-third of its workforce – were paid at least $100,000 in 2013.

Before this year’s PG&E increase, its ratepayers were paying a little less than MID’s, according to a Sacramento Municipal Utility District rate comparison. This year, PG&E’s customers pay a little more, the same source says.

Other people have done extensive research themselves, leading to varying conclusions.

For example, Delano says electricity customers pay about 89 percent of irrigation costs; Mohasci says it’s 85 percent.

Delano figures the subsidy at more than $133 million since 1971; Mohasci went back to 1927 and came up with an estimate of $249 million, including capital improvements.

Delano’s reckoning means the average family pays $16 more than it should each month, or nearly $200 a year.

Both men say a few rich farmers realize huge benefits from MID’s transfer-of-wealth policy.

Mohasci, for example, crunched federal agriculture census numbers and found that Stanislaus County’s 35 largest farms in 2012 received more than 49 percent of the subsidy benefit.

“For the irrigation division, the electric division is definitely the goose that laid the golden egg,” he said.

He also found that profits for farms throughout the county have increased about 15 percent each year since 2001, while personal income for other people has stagnated or declined.

“The average income in this county is $40,000. Why is that group paying (subsidies to) someone who’s making $200,000 a year?” Mohasci said.

MID notes that its employees’ salaries and benefits account for only 15 percent of its $471 million budget. Mohasci calls that “accurate but misleading” because the district can do nothing to combat the rising price of transporting natural gas for turbines – which the district blames for its budget deficit, and is its main reason for seeking higher rates. Subtracting fuel costs from the district’s operating budget means it’s spending 46 percent on labor, Mohasci concluded.

MID charges ratepayers more

Mohasci and Baxter say PG&E’s costs should be much higher than MID’s because as an investor-owned utility, PG&E pays local, state and federal taxes, pays yearly shareholder dividends and floats bonds at higher interest rates. MID pays no such taxes or dividends and gets discounted bond rates as a nonprofit entity.

Yet MID in 2012 spent 14.1 cents to produce each kilowatt of energy, compared with PG&E’s 13.4 cents, Mohasci said.

He analyzed revenue and found that MID charged ratepayers 17.8 cents per kilowatt hour in 2012, compared with PG&E’s 15.6 cents and TID’s 15 cents. MID’s industrial charge of 10 cents per kilowatt hour, meanwhile, is lowest of the three, suggesting an institutional coddling, he said, of industrial customers as well as farmers.

“It’s a corporate culture, I think, to support the irrigation part,” he said.

Baxter said city dwellers historically looked at MID with a “favorite-son attitude” because agriculture feeds people and the economy. “One hand washed the other,” he said, “but MID is no longer a mom-and-pop operation. They would be best served by providing transparent information so the community can understand the revenue-and-expense picture for water as well as for electricity.”

Even if the district produces a comprehensive cost-of-service analysis, Baxter said, “it means nothing if it’s not credible. You have to have trust in this dialogue. If you don’t feel you’re getting reliable and trustworthy information, it creates a cloud over the discussion.

“The main thing is it’s in our community’s best interest to see MID succeed,” Baxter continued. “If they continue to struggle, the community is going to suffer with them, unless some change occurs to help right their ship.”

This story was originally published November 15, 2014 at 8:00 PM with the headline "Modesto Irrigation District critics assail forced subsidy."