Modesto Irrigation District proposal ignores subsidy

A proposal to change water rates for farmers would have some paying more money and some less, but would not bring more revenue to the Modesto Irrigation District or affect the massive subsidy borne by its electricity customers.

The staff proposal, to be reviewed at Tuesday’s board meeting, features a fundamental switch to volumetric pricing similar to the structure adopted a few years ago by the Turlock Irrigation District. Farmers would pay a fixed per-acre charge plus a fee based on how much water they use.

Those hit hardest would be farmers not taking water but reserving the right to in future years. Such standby charges, called “facilities and maintenance” fees in district lingo, would rise dramatically because of the new fixed base component.

All other farmers actually would pay less for water. That’s because MID staff developed the rate adjustment with a goal of keeping total revenue the same.

“It’s a place to start,” said John Davids, the district’s irrigation operations manager, declining to predict how the proposal might be received by a politically sensitive board. “We’ll see what the discussion is.”

Critics in recent times have railed on a policy of undercharging 3,100 farmers about $11 million a year while overcharging 115,000 electricity customers about $44 million a year. Both figures are based on the district’s actual costs to deliver services.

Outcry over the inequity prompted the board in December to put off staff’s recommendation to raise electric rates 5 percent. Some board members said they would not consider an electric rate increase in 2015, while others asked to revisit the issue in February or March – after the board begins making things more fair by tackling water rates.

Some board members called for an eventual move toward true “cost of service,” or charging closer to the amount needed to provide either service, plus a little more to replace and upgrade equipment. Farmers’ rates might triple under that scenario.

But the proposal going before the board Tuesday is revenue-neutral, bringing the same $18.8 million in total water income – far less than the district will spend to bring water from Don Pedro Reservoir via the Tuolumne River and canals to farms.

If enough snow falls in the mountains, most farmers actually would pay less this year than last – $380 to cover 10 acres with a total of 2 feet of water this summer, compared with $444 in 2014. That’s because growers last season paid hefty drought-year surcharges that so far aren’t contemplated for the coming season.

However, the $380 charge would be more than the $290 paid on a parcel of that size in 2013, Davids said.

His proposal would bring MID’s per-acre-foot charge to $11.86 – far lower than TID’s $19.57, but more than the Oakdale Irrigation District’s $7.71, or the $9.86 charged by the South San Joaquin Irrigation District.

Board approval on Tuesday would kick off a several-week rate hike process required by state law, during which customers could submit protests.

Davids also will suggest that leaders schedule time during their Jan. 27 and Feb. 10 board meetings “to discuss a long-term plan for irrigation rates.”

This story was originally published January 10, 2015 at 5:36 PM with the headline "Modesto Irrigation District proposal ignores subsidy."