LMUD general manager announces resignation effective July 5

Yesterday, Lassen Municipal Utility District General Manager Pat Holley announced his resignation. File photo

Lassen Municipal Utility District General Manager Pat Holley announced his resignation at last night’s, Tuesday, June 27, LMUD Board of Directors meeting.

According to a statement from LMUD, Holley’s announcement came as a report of action taken during closed session during which the board had been conducting an employee evaluation of its general manager.

According to a statement from LMUD, “Pat Holley has resigned from his position as general manager of Lassen MUD in order to spend time with family and pursue other career opportunities. Mr. Holley’s last day as GM will be July 5, 2023.

“Board President, Fred Nagel, directed staff to begin the process of recruiting a replacement. An interim general manager will be named at a later date.

“Mr. Holley thanked the board for the opportunity to serve the district.”

What a difference a year makes
Exactly a year ago, at its Tuesday, June 28, 2022 meeting, the LMUD Board of Directors gave Holley an 8 percent raise following a performance evaluation, raising his salary to about $226,000 annually.

According to a statement from LMUD, “Based on the general manager’s performance evaluation, the board agreed to allow the additional compensation as outlined in his employment contract to be added beginning next pay period with the board’s gratitude.”

According to his contract, Holley is eligible for a 3 percent raise annually, and the board may also grant an additional 5 percent raise as well.

Responding to a question from Lassen News last June, LMUD said, “The additional 5 percent was based on Pat’s performance evaluation. Three percent is contractual. His current annual salary is 209,000. His salary after the raise will be approximately 226,000.”

Recent rate increases may have changed the board’s opinion of Holley
LMUD customers suffered a nearly 36 percent rate increase since Holley bragged in his November 2022 manager’s message that the district’s 14 cents per kWh charge was “the same today as it was in 2008 — a great accomplishment in today’s economy.”

LMUD’s rates have soared since Holley delivered that message — the district’s rates increased by .5 cent effective December 2022 to 14.5 cents per kWh, another 1.5 cents to 16 cents per kWh effective January 2023, another .5 cent to 16.5 cents per kWh effective March 1, 2023 and another 2.5 cents per kWh to 19 cents per kWh (effective in April’s billing).

According to the minutes of the Nov. 22 board meeting, former LMUD director candidate Curtis Bortle, who was defeated by incumbent Bud Bowden in last November’s LMUD election, expressed his concern regarding a rate increase coming so close on the heels of an election. According to the minutes reporting Bortle’s concern, “This could appear unethical since previous discussions prior to the election talked about how competitive LMUD is.”

Other controversies that erupted during Holley’s tenure include the district’s final reluctant agreement to remove the Hayden Hill transmission line and issues involving keeping new Skedaddle substation project on time and within budget.

Rate increase information
In March, Holley offered a staff report to the board to explain the need for the rate increases. He said unfortunately the district’s purchased power cost — the district’s largest expense — has not only increased, it has gone up and then been sustained at unprecedented high rates.

“They (purchased power rates) have doubled and stayed at that level for the past three months, and perhaps another month,” Holley informed the board. “This continues to be driven by extremely high, unprecedented natural gas rates which led to higher electricity prices because with all the power generation in California, and all of the renewables that you would think are producing power — actually natural gas produces about 50 percent of our power during these peak consumption periods.”

According to Holley, the district’s normal monthly billing from the Western Area Power Administration would be less than $1 million during these winter months, but the January bill was $2.3 million, $2 million in February and the district expects another high bill for March that hasn’t arrived yet.

“So, we’re on a path to maintain these very high levels, which is very detrimental to our cash position,” Holley said. He said he’s spoken with other regional utility managers and many of them say they are facing the same problem.

Holley added while LMUD’s normal budget is $21 or $22 million per year, these costs will require a budget of more than $30 million per year.

“This is the last thing we want to do is have to raise rates,” Holley said. “It’s uncomfortable. It is unpleasant. We don’t want it, but the forces that drive these prices are beyond our control. They truly are, and we’re doing everything that we can to contain our costs, and in our upcoming budget we’re going to scrub everything we can to get every bit of cost savings that we can.”

Looking to the future, while LMUD staff hopes the price of purchased power will drop, they’re projecting the price will remain high during the next five years. In the fiscal year 2025-2026, the district expects to see savings once the Skedaddle Project comes on-line, but the first year of real saving won’t be realized until fiscal year 2026-2027.

LMUD took on a $20 million bond obligation in October 2021 to fund the Skedaddle project, and Holley said the rate increase also is necessary to meet the bond covenants.

Holley’s history with LMUD
Following closed session on Tuesday, July 27, 2021, the LMUD Board of Directors announced it had unanimously approved a contract for Pat Holley to become the publicly owned utility district’s general manager. LMUD hired Holley as assistant general manager in March 2017.

According to that agreement, the board may terminate Holley for cause at any time and without cause within five years of the execution of this contract as he will be considered an at-will employee during that time period. Should he be terminated without cause, he shall receive a severance payment equal to a year of his current salary. Holley may resign with 60 days written notice.

Holley reportedly is on vacation until his final day at work July 5, and Lassen News was unable to contact him for comment on this story.