MID considers holding off on rate hike

The Modesto Irrigation District board talked this morning about reducing or canceling the electricity rate hike set for Sept. 1.

Rates would go up an average of 16 percent that day unless the board acts, possibly at its meeting next Tuesday.

Officials said they are leaning toward a change because wholesale power costs have dropped and customers are hurting from the recession.

“Under the current economic conditions, I can’t see an increase at this time,” Director Cecil Hensley said.

The board in November approved a three-phase rate increase for 2009. For residential customers, rates rose 7 percent in January and 2 percent in June, the latter reduced from the original 6.5 percent.

The third phase in September was to be 5.4 percent, but it actually would have to be 16 percent to make up for the smaller June increase and to achieve the total annual income spelled out in the November vote, MID officials said.

Director Mike Serpa suggested wiping out the entire 2009 increases, if it would not damage district finances.

The board also is considering reducing the target for the amount of money MID has in reserve.

This would reduce the immediate need for rate increases but also would likely bring a downgrade in the district’s bond rating, General Manager Allen Short said.

This in turn would mean higher interest payments on bonds sold to finance capital projects, he said.