Immediately after approving this year’s $600,000 deficit budget, the Lassen Municipal Utility District set a date for the utility to discuss the real possibility of an increased facility rate charge for its customers.
LMUD will hold the hearing to decide whether to increase facility rates at its regular monthly meeting, July 23.
During a presentation of the utility’s Power Delivery Cost Analysis, LMUD general manager Doug Smith noted that May’s PDCA showed the utility was not collecting enough revenue to meet expenses.
Smith told board members that the draft budget presented at LMUD’s June 5 budget workshop also indicated the need for increased revenue to cover increasing costs.
In addition, the utility is in the early stages of its Skedaddle substation and an interconnection agreement with NV Energy, considered by LMUD as an important capital project because of the future reliability of the electric service to customers.
The utility is banking on the projects’ completion for cost savings to help offset the expenditure.
In order to receive the best issuance of a bond rating — to cover for the debt — the utility must have an adequate supply in its reserves. So, the higher the debt, the higher the bond rating will be needed to keep interest low for the utility.
The last time LMUD increased its facility charge was back in 2016, when it went from $14 to $20. After analysis performed at the time indicated that the true cost of service approach was used, the facility charge could be as high as $38, depending upon methodology and other factors.
However, a recent analysis performed indicated the true cost of service for residential customers in the absence of a demand charge would be around $45 per month, with a corresponding reduction in the energy charge around 15 cents per kilowatt-hour.
Staff is currently recommending an increase in the monthly facility charges for the respective cost levels as follows: $20 will become $25, $35 will be $44 and those currently paying $240 will see it increase to $300.
Customers and residents are welcome to attend the utility’s monthly meeting, at 5:30 Tuesday, July 23 at 65 S Roop Street.