A power plant in Lodi will provide the Modesto Irrigation District with less energy than planned because the utility is short of money for the project.
The district board voted 3-2 on Tuesday to get 30 megawatts from the natural gas-fueled plant, rather than 66. Thirteen partners will split the rest of the 280-megawatt capacity.
Financial experts for the MID said it could not afford the larger stake because the board raised customer rates 7 percent last month, rather than the recommended 11 percent. That left the MID short of the income and reserves sought by rating agencies involved in issuing bonds for capital projects.
Directors Tom Van Groningen, Paul Warda and Glen Wild voted for the 30-megawatt stake, which was more than the 20 megawatts recommended by the MID staff. Cecil Hensley and John Kidd dissented.
The decision to pull back on its level of involvement in the Lodi project comes at a time the MID has faced criticism for rate increases.
The organization insists that hikes are necessary to get the favorable bond ratings to pay for new sources of energy. But critics argue that, in a time of economic hardship, the MID should reconsider such projects to reduce spending and help ease the burden on ratepayers.
The Northern San Joaquin Valley economy has struggled since the collapse of the housing market in late 2005 and unemployment rates have spiked. Stanislaus County's jobless rate is 17.5 percent.
In November's election, all three MID incumbents faced a challenger, a rarity, and rates were an issue throughout the campaign.
As a result of Tuesday's decision, the MID will spend an estimated $41 million on the Lodi project, down from $90 million for the larger share. The district already has contributed $9.4 million for planning and design, but it will recoup about $5.2 million of that from two partners that are increasing their stakes.
The project will help the MID meet an expected increase in demand of 50 to 75 megawatts as of 2012, said Greg Salyer, manager of resource planning and development. It will be the best-performing gas plant in Northern California, providing more electricity per unit of fuel than any other, he said.
"What this plant offers is an opportunity for the district to own a piece of a highly efficient plant," Salyer said.
Having an ownership stake reduces the MID's reliance on wholesale power purchases, where prices can be unpredictable.
Hensley agreed that it is a good project but said 30 megawatts is too much for the MID's budget.
Kidd said the weak economy has slowed the growth in power demand. "Our community is in pretty tough shape right now, every place I can see," he said.
The plant, planned by the Northern California Power Agency on behalf of several public utilities, will be built next to an existing gas plant along Interstate 5.
The partners plan to sell bonds in April, start construction in June and generate power in 2012.
Meanwhile, the MID has started construction on a 50-megawatt expansion of its gas plant on Woodland Avenue in Modesto. It expects a 50-megawatt increase in wind power from the Pacific Northwest later this year and is considering a 25-megawatt solar plant on North McHenry Avenue.
The MID often sees demand top 600 megawatts on summer days.
Bee staff writer John Holland can be reached at email@example.com or 578-2385.