Electricity rates will not jump next week in the Modesto Irrigation District, thanks to a unanimous vote by its board Tuesday.
Directors canceled a rate hike that would have averaged 16 percent, saving a typical home about $21 a month.
"I'm gratified that you have rescinded the increase for September," Modesto resident Ray Hayes told the board. "I certainly do thank you for this, and I appreciate what the board is doing for us."
A typical home's average monthly bill, now $130, would have hit $151 with the increase. Commercial and industrial customers also would have paid more.
Board members, in discussing the move this week and last week, cited the reduced cost of wholesale power and a desire to help customers during tough economic times.
"If we have no increase, I think we'll be fine through this year," said Director John Kidd, who noted the low prices for the natural gas that generates much of the MID's power.
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 a planned 6.5 percent.
The third phase in September was set to be 5.4 percent, but it would have had to be 16 percent to make up for the smaller June increase and to achieve the annual income spelled out in the November vote, MID officials said.
The district's operating expenses totaled $128.6 million in the first half of 2009, compared with a budgeted $153.8 million, the staff reported last week.
The $25.2 million in savings more than made up for a $21.4 million shortfall in expected income in the same six months. The MID has seen reduced power demand during the recession.
Canceling the September rate increase will hamper the MID's efforts to build its reserves. Its goal is $200 million by 2011, compared with $121 million this year.
Failing to reach the goal could bring a downgrade in the district's bond rating, which means increased interest on the bonds sold to finance capital projects, MID officials said.
Dropping one notch from the current A-plus rating would add $3.25 million to the cost of a $100 million bond issue, they said.
The board in the near future might formally amend the $200 million reserve goal, because it is impossible to reach at the current power rates.
Bee staff writer John Holland can be reached at email@example.com or 578-2385.