Former Modesto Irrigation board member explains class-action lawsuit ruling | Opinion

There has long been a concern that the Modesto Irrigation District’s electric revenues subsidize the supply of irrigation water to farmers. Some electrical rate payers believe this is unfair. This concern, and the opportunity for lawyers in Southern California to possibly make millions in legal fees at the expense of MID ratepayers, led to a (class-action) lawsuit that was just decided with a tentative decision by the judge.

The judge determined that California law allows MID to allocate certain revenues, including wholesale electrical sales outside the district, to the irrigation side. As a result, he found that MID’s rates were legal and reasonable. The MID board has discretion to allocate these revenues, and it could choose, if it wished, allocate them to the electrical side.

The MID board has preferred over the years to keep irrigation rates low. I served as an MID director for nine years; I favored increasing the price of irrigation water, but the board majority didn’t agree with me. That said, the board in April will consider a 20% increase in irrigation rates. I think this is appropriate and hope they will consider irrigation rate increases in future years as well.

There were two judges in this case. Both agreed that MID should have used a better process to explain and justify a 2016 electrical rate change. The second judge ruled that the lawyers from Southern California will be paid legal fees by MID, as they correctly complained about the process in 2016. This led to a better and legally sound study of electrical and water rates in 2018. To use a Las Vegas term, the suing lawyers got a feedback on their investment, not a jackpot.

Had the Southern California lawyers’ reasoning been accepted, MID would have taken money from its reserves, which belong to the ratepayers, to compensate electrical ratepayers. If this had been $10 million, the lawyers would have received approximately $2.5 million to $3 million for their work. From my point of view, this would have been a way to send millions of dollars outside Modesto. The lawyers still will be paid, but it will be a much smaller amount. Better to keep our money local.

Modesto benefits from electrical rates far lower than those paid to PG&E and other investor-owned utilities. MID power is more reliable than most other utilities, and the district employs hundreds of people in Modesto. This region is blessed and fortunate to be served by MID.