MID could cancel earthquake insurance policy

The prospect of higher electricity bills will take center ring at Tuesday’s Modesto Irrigation District meeting, but the board also will consider dropping its earthquake insurance.

The district has been paying $250,000 annual premiums for a potential payout of $5 million if “the big one” hits.

A risk consultant said the sort of earthquake that comes every 500 years would do about $15 million worth of damage to district property such as canals and pipelines, and MID could cover that by taking out a relatively reasonable 30-year loan while saving the $250,000 yearly payment.

“Post-loss financing appears to be less burdensome than pre-loss insurance,” a report concludes.

Most of the attention Tuesday will focus on a proposal to raise electricity rates 3.5 percent, to cover a predicted $12 million budget shortfall. Critics say it’s unfair to ask more from MID’s 115,000 power customers because they already subsidize the district’s 3,100 farmers, who in recent years have paid $11 million less than it costs the district to deliver water.

The board could discuss the inequity Tuesday, but is not expected to consider higher irrigation rates until January.

The MID board meeting will start at 9 a.m. in the chamber at 1231 11th St., Modesto. See a staff report on the rate proposal at http://tinyurl.com/MIDreport.

This story was originally published November 24, 2014 at 3:08 PM with the headline "MID could cancel earthquake insurance policy."