Electricity customers worried about a possible rate increase will get a chance Tuesday to see how the Modesto Irrigation District has tightened its budget.
The district staff, which has proposed an 11 percent rate hike, will review cost-cutting measures that include leaving 10 percent of the MID's jobs vacant and deferring $6.8 million in capital projects.
This will lead up to a possible vote on the rate increase, which would raise the average residential bill from about $130 to $145 a month.
Several ratepayers have urged the board to trim spending instead.
"Especially in these hard times, people don't need that kind of an increase," said Rick Hudson of Modesto. He has been a customer since 1965 and wonders what has happened to an agency once known for its cheap power.
Customers have suggested that the district put off major projects and pull out of Mountain House and other expansion areas outside its core service area.
MID officials have said the projects, mainly expanding the district's gas- fueled power generation, will benefit ratepayers in the long run by making them less dependent on outside suppliers.
They said the housing slump has slowed growth in the expansion areas, but these investments still will pay off.
The board held a Jan. 12 rate hearing. Since then, the staff has suggested adding a third tier to the billing system so heavy power users would pay more than others. The board also might create a surcharge that would go up or down as certain costs change over the year.
The MID's $481.5 million budget for 2010 is down from last year, mainly because of a drop in the cost of wholesale power from other sources.
Officials nonetheless said a rate increase is needed to build up enough reserves to satisfy bond-rating agencies, which help determine the interest rates on bond issues for capital projects.
The board also has had to deal with the effects of rolling back some of last year's increases. A 7 percent hike took effect as planned in January, but a June increase was cut to 2 percent and a September increase was canceled.
General Manager Allen Short said the district faces high costs in meeting state and federal mandates for renewable energy, reduction of greenhouse gases and system reliability.
"It's a really delicate balance because what we have facing us are a number of issues we can't control," he said.
Mother Nature has helped, at least a little. The past week's storms put the Sierra Nevada snowpack above average, increasing the supply of cheap hydroelectric power. This source, however, is small compared with gas-fired plants.
The rate proposal comes at a time of high jobless and foreclosure rates.
"I don't think that you can justify raising the rates because right now there are too many people who just can't pay it," Modesto resident Lee Ogle said at the Jan. 12 hearing.
The MID reported a 40 percent increase in late bill payments last year over 2008, along with a 15 percent jump in service disconnections.
The district has taken steps to ease the burden, including extensions to as much as 10 days on shutoff notices, spokeswoman Melissa Wil- liams said.
Officials provided other details about district finances:
• WORK FORCE: The MID employs 422 people, down from 468 a year ago. The unfilled vacancies range from electrical and water operations to finance and administration.
Employees have not had a cost-of-living increase since late 2007. Merit raises are provided, but most employees no longer get them because they have reached their top salary.
• DEFERRED SPENDING: The district is putting off $2.6 million in substation work, $1.7 million worth of new conductors, $1 million in vehicle purchases, along with several other projects.
• EXPANSION: In Mountain House, a new town west of Tracy, the MID projects that its costs will exceed income by $8.8 million until 2015. Over the next decade, as the community expands, income will surpass costs by $20 million.
In Ripon, Escalon, Riverbank and Oakdale, where the MID and Pacific Gas & Electric Co. operate, the MID had an $18.2 million net loss from 1996 to 2004 but projects a $152 million surplus from 2005 to 2025.
Bee staff writer John Holland can be reached at firstname.lastname@example.org or 578-2385.