New year brings LMUD rate hike to customers

Customers of the Lassen Municipal Utility District will see the results of a rate change to their January bills. The change, passed by the LMUD board at its Nov. 27 meeting, increases the kilowatt-hour commodity charge from 13 cents to 13.5 cents, a half-a-cent increase. The utility is also moving forward with a procedure to assess a possible future facility charge increase after the new year.

LMUD detailed in its quarterly Power Delivery Cost Analysis worksheet at their Nov. 27 meeting, that they under-collected revenue by approximately $.00386 per kilowatt-hour through the 12 months ending Sept. 30.

LMUD staff recommended the board look to increase the facility charge by $4 to $5 as a way to “make sure everyone is paying to use the infrastructure” already in place, said general manager Doug Smith.

Smith told the board a rate increase of a half cent per kilowatt-hour would increase the revenue by the same amount at the $5 increase: around $650,000 per year. There is a specific difference in procedure for raising rates. Whereas the board can raise kilowatt-hour rates upon assessment of their PDCA, there would need to be public hearings in order to raise the facility charge.

Smith and board member Fred Nagel mentioned that the PDCA worksheet did not show the funds set aside for the Hayden Hill line or the expenses from the Whaleback Fire, but still reflected several quarters of under-collection by the utility.

The combined costs accumulated by LMUD in the past few months due to these issues have added up to around $4 million in expenses they did not anticipate. These expenditures have brought LMUD’s reserves below comfortable territory.

However, a member of the public alleged the change to the facility rate would be unfair to low-income and small-energy users. The current facility charge is $20 per meter.

Nagel stated his concern for a rate hike, saying to keep the kilowatt-hour rate low counters the state’s efforts to conserve energy usage and raising the facility charge would encourage energy users to consume more.

Assistant general manager Pat Holley added that changes in California’s energy policies dictate half of the state’s energy be supplied from renewable sources by 2030. This change will most certainly impact the future of LMUD’s costs in doing business, losing energy revenues and sales.

The board and staff also discussed the future changes to the energy industry; other than the increase in solar installations by major local energy users, as appliances become more energy efficient and with a stagnant growth of new customers in the area, LMUD sees not only a decline in revenue, but also a decline of total energy consumption.

Smith drew comparisons to other utilities where customers pay fixed rates for service, such as water and cable.

Smith also compared LMUD rates to the Plumas-Sierra Rural Electric Cooperative, located in Portola. PSRE’s kilowatt-hour price is 14.78 cents and its facility charge is $28.

The meeting ended with final thoughts on the future of the utility’s rates.

“Sooner or later we’re going to have to redo our whole rate schedules,” said Nagel.

Ideas like a staggered rate schedule or a system designed around demand seemed like possibilities the utility would look into in the future.