Customers of the Modesto Irrigation District would get an 11 percent electricity rate increase under a proposal going before its board Tuesday.
This would raise the average monthly residential bill from about $130 to $145. Actual bills are far higher in summer than winter.
The increase is needed to cover the cost of providing power and maintain reserves at a level that keeps interest rates on bond issues low, according to a brief staff report released late Friday afternoon.
The lower-than-expected increases during 2009 have left the MID with less money to start 2010 than originally planned.
Board member Paul Warda said he was "concerned" about the proposal and that it would have to be "thoroughly justified" to get his vote.
"I just think we've got to be cognizant of the economy, and people are having one hard time making ends meet," Warda said. "These are tough times."
The district had three planned rate increases in 2009 — 7 percent in January, 6.5 percent in June and 5.4 percent in September. The board reduced the June increase to 2 percent and canceled the September increase, reasoning that customers needed a break in the recession and that prices had dropped for natural gas, the main source of power.
The board's decisions to reduce and cancel rate increases came amid growing public outcry about rising energy bills as the region's economy is slumping, valley unemployment is spiking and residents are struggling financially.
Those decisions occurred before the November election. All three MID incumbents faced a challenger, a rarity, and rates were an issue throughout the campaign.
Modesto attorney Richard Harriman, who lost to incumbent Tom Van Groningen in the District 3 race, said Saturday that the latest proposal to raise rates is no surprise to him. He called the timing of the proposal "convenient," coming as soon as it does after the election.
Harriman said proposing an 11 percent rate increase when ratepayers are having a hard time making ends meet shows that the MID is out of touch with the people it serves and heading in the wrong direction by piling up too much debt.
Van Groningen said he won't approve any increase that is greater than necessary to keep the MID on solid financial footing. "It may make sense that we have to do something, but how much I don't know," he said Saturday.
He said delaying or canceling rate increases in 2009 was like "kicking the can down the road" — eventually rates would have to go up. "I've always maintained that this is a business, and you've got to operate it like one.
"People want and need energy, but there's a cost associated with supplying it," Van Groningen said. "I recognize people are hurting, but we've got to do what's prudent for MID, so when they flip the switch the lights come on."
Warda assured that he and other board members won't sign off on any increases until they've had a chance to weigh the proposal carefully.
Harriman isn't so sure.
"This is way too short notice to the public for a matter of this importance," he said. "The MID board should give at least 30 days public notice and include written notice in the MID electric bills."
The Turlock Irrigation District is not raising power rates in the new year. Last February, it raised them 13 percent for homes and 12 percent to 20 percent for commercial and industrial users.
Pacific Gas & Electric Co. imposed a rate increase Jan. 1, charging most customers 3 percent more.
Also Tuesday, the MID board will consider approval of a major solar energy project on 160 acres at McHenry Avenue and Patterson Road.
The 25-megawatt project, presented to the board last month, would be the district's largest solar venture by far but still amount to just 2 percent of its power capacity.
The system would be built and owned by SunPower Corp. of San Jose, which would sell the power to the MID over 25 years. It could be running by spring 2011.
The MID board will meet at 9 a.m. Tuesday at the district office, 1231 11th St., Modesto.
Bee staff writer Merrill Balassone contributed to this report.
Bee staff writer John Holland can be reached at email@example.com or 578-2385.
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