Utility nixes rate hike, salary increases
Rather than raise rates by one-half cent per kilowatt-hour, the directors voted to suspend the $100,000 per month contribution the district makes to its rate stabilization fund for the next three months. According to a financial report dated Nov. 30, the district holds $4.5 million in the fund.
The proposed rate increase — authorized through the district’s Power Delivery and Cost Analysis mechanism — came before the board and the public for the first time since the policy was revised last month. Previously an ad-hoc committee comprised of LMUD management and directors approved PDCA rate increases without board approval or public comment.
The board established the PDCA in December 2005 “to help the district protect its customers from the volatility of purchased power and the unpredictable costs of state and federal mandates.”
The district has raised its rates under the PDCA five times since its inception — on March 1, 2006, June 1, 2006, Sept. 1, 2006, Dec. 1, 2007 and June 1, 2008.
Currently residential customers pay 14 cents per kilowatt-hour, a $10 facilities charge and mandated tariffs, charges and taxes.
During the public comment portion of the meeting, LMUD customer Debbie Stampfli said the district should look at cutting costs rather than raising rates. She cited a number of areas where the district could cut costs including hiring an employee to trim trees rather than using an outside contractor, discontinuing the Ruralite magazine, streamlining the district’s billing procedures and eliminating items such as the district’s coffee service, Christmas party and novelty gift items.
“I’d be willing to give that up if my rates didn’t go up again,” Stampfli said.
When the rate increase came up on the agenda, Director Jay Dow suggested the board not add the $100,000 per month to the rate stabilization fund. Instead, he said that money could be used for the district’s costs as an alternative to a rate increase.
“Maybe we could hold off for the next few months and try not to increase the reserves and hold the rates,” Dow said.
Director Fred Nagel cited the difficult economy and said it would be nice to not have to raise the rates now.
“It’s a tough call,” Nagel said.
Dow said energy prices are falling, and asked controller Bill Stewart if he had any future power purchase projections from the Western Area Power Administration — the agency that purchases and schedules most of LMUD’s power purchases.
Ray Luhring, LMUD’s general manager, said the district could request that information.
Dow said the board needed that information before it made a decision to raise the rates.
Stewart said not putting money into the rate stabilization fund might not be in the district’s best interests.
He said since Sept. 30, 2006 the district has taken “fairly large money hits on past decisions.” He added that the rate stabilization fund was part of the district’s operating reserves and the board had directed the reserves be replenished at the rate of $1 million per year.
Director Wayne Langston said customers use more electricity in the winter, but he wanted to get the ratepayers through the winter before possibly raising the rates in the spring.
After the board unanimously agreed not to raise the rates and suspend the contribution to the rate stabilization fund, Stampfli said, “I’m proud of you guys.”
The board tabled Luhring’s recommendation to raise management salaries by up to 5 percent until a later date. According to Luhring’s recommendation, the district’s management has not received a raise since January 2007.
Luhring’s salary is set by contract with the board, and was not included for a possible wage hike. Luhring sought raises for 12 management personnel.
His recommended increases would have raised the district’s management payroll by a total of $37,531 per year. He noted all the increases were within the district’s approved salary ranges.
“The management team overall has shown a commitment to reducing costs, paying close attention to the board-approved budget and managing within those give parameters,” Luhring wrote.
“I hate to be a Grinch,” Nagel said, citing the “poor timing” of Luhring’s request. “I have a real hard time supporting this” during the current economic slow down.
Dow agreed, and said management was asking for a raise at the same time it was asking for a rate increase.
Langston said the district’s rates had increased by 2 cents over the past two years and the possibility of raising the rates another 2 cents in coming years “scares the living hell out of me. It’s time to tighten down, not spend more.”
President Bud Bowden and Director Matt Lavacot acknowledged the tough times, but said management deserved the increases because their wages had not gone up in two years.
“We need to honor our word to our employees,” Bowden said. “We budgeted for this raise.”
But Dow said including a line item for a pay increase in a budget is not a promise to employees.
“I don’t represent the employees,” Nagel said. “I represent the constituents and the community.”
Luhring acknowledged management employees at the district were well paid, and said, “I’m extremely proud of these guys. They’ve done a great job. We’ll live with whatever decision the board makes.”
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