June 24, 2008 — Lassen Municipal Utility District customers will soon be paying more for electricity. Ray Luhring, LMUD’s general manager, recommended a pair of rate hikes to the Board of Directors on Thursday, June 19.

Luhring recommended the board raise the district’s facilities charge for domestic and agricultural users from $8 per month to $10 per month.

The facilities charge consists of the “costs associated with the reading of meters, the generation and processing of bills and payments associated therewith and the physical facilities associated with the meter,” according to Luhring’s recommendation.

The board will hold a public hearing on Tuesday, July 22 to discuss raising the facilities charge.

Luhring also recommended the board increase the rate the district charges its customers by 1 cent across all rate schedules.

“After reviewing the calculated data from the Power and Delivery Cost Adjustment worksheet for the 12 months ended March 31, 2008,” Luhring wrote, “it is recognized that LMUD must make a rate adjustment accordingly to keep pace with increasing costs associated with operating our district.”

Based on costs over the last 12 months, the PDCA allows the general manager to raise the rates a maximum of one-half cent per kwh at the end of every quarter, based on the recommendation of an ad hoc committee comprised of two LMUD board members.

The district’s last rate adjustment was implemented on Sept. 20, 2007. The new rates, if approved, would be 14.5 cents per kilowatt hour for residential customers, 15.5 cents per kwh for agricultural customers, 14 cents per kwh for general service metered demand, 16 cents per kwh for general service non-demand, 13.5 cents per kwh for industrial service and 14 cents per kwh for reactive, standby and supplementary service.

Bowden appointed directors Jay Dow and Wayne Langston to the ad hoc committee.

“It should be noted,” Luhring wrote, “that adjusting the rates by this amount will take LMUD rates back to the August 2001 levels. If this proposed increase is approved, LMUD customers will have enjoyed approximately seven years of electricity consumption at very attractive rates and, even with this proposed increase, will still enjoy a very valuable service at a reasonable price.”

In his recommendation, Luhring wrote, “LMUD must make a rate adjustment accordingly to keep pace with increasing costs associated with operating our district.”

At the meeting, the board approved a budget presented by Bill Stewart, LMUD’s controller. Stewart said staff had cut about $800,000 from the budget, but even with those cuts the district needed to raise the rates.

Director Fred Nagel expressed some concerns about approving the budget because it contains revenue generated by the rate increases that have not yet been approved.

Bud Bowden, the board’s president, who participated in the meeting by telephone from Lakeland, Fla., said, “We may be getting the cart ahead of the horse a little bit.”

In the end, the board decided it could always revise the budget if the some of the projections used to create it changed.

Stewart asked the board to make the new 1-cent increase effective Tuesday, July 1.

Stewart said the district could adopt a one-half cent per kwh increase for the quarter ending in December and another one-half cent per kwh increase for the quarter ending March.

“We have to proceed with what we’re doing,” Nagel said, “or we’re going to fall behind.”

Luhring said the PDCA increases would not be applied retroactively and would only apply to new bills.

Nagel noted the increase in the rate stabilization fund from $3 million to $6 million might have been a good thing considering the rising energy costs the district faces.

The board also approved a $21.5 million budget for the 2008-2009 fiscal year.

According to Stewart’s calculations, even with the rate increases, the district would suffer a $40,089 shortfall.

Nagel said the $2 increase in the facilities charge would generate about $250,000 per year and each one-half cent rate increase would generate about $600,000 per year.

Nagel said it was important the district operate in the black and not use its reserves for day-to-day operations.

The board also approved a bid award for remodeling the customer service area in the district’s office.