MID finds costly accounting error

jsmith@mercedsunstar.comOctober 3, 2012 

Merced Irrigation District officials recently discovered an accounting mistake going back decades that has cost the district unknown millions of dollars.

According to a recent announcement, previous MID staff members failed to adequately charge Pacific Gas & Electric Co. for employment and retirement costs associated with the New Exchequer Dam hydroelectric project agreement signed in 1964.

MID General Manager John Sweigard, who recently discovered the error, said PG&E has agreed to pay the district about $2 million over the next two years.

"I was happy to have found it and glad that PG&E agreed to work with us," said the MID head official, who was appointed in 2010. "I don't know why anyone didn't take the time or find this sooner."

PG&E has agreed to pay $1.4 million in unfunded pension liabilities, $143,000 in retired medical benefits and $406,000 in administrative costs.

While PG&E has not paid these charges for decades, the MID agreed to only recoup administrative costs dating back to 2008, and outstanding retirement costs.

"The long-term past is the long-term past," Sweigard said. "I believe we've rectified what's owed to the ratepayers."

Under the 1964 agreement, PG&E continues to reimburse the MID for the cost of operating the hydroelectric project. Under the deal, PG&E agreed to pay for the construction of the Exchequer Dam in exchange for the revenue from the project for almost 50 years.

"If this had not been identified and the current contract expired, MID water ratepayers would have been left holding the bag for these employee expenses," Sweigard said.

The payments will be made by PG&E in installments as part of normal monthly operating expenses until the MID takes control of the hydroelectric project and the associated revenue in July 2014.

Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or jsmith@mercedsunstar.com.

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