Tuesday, May 5, 2009 • Utility, Rancheria resolve usage issue

Publisher’s note: This story originally appeared in the Tuesday, May 5, 2009 edition of the Lassen County Times.

Electric rates will not increase for Lassen Municipal Utility District customers living on the Susanville Indian Rancheria — thanks to a tentative agreement reached last month between the two entities.

Keri Richards, LMUD’s business office manager, told the LMUD Board of Directors at its Tuesday, March 31 meeting the SIR’s usage had exceeded its base resource allocation through a Bureau of Reclamation hydroelectric project administered by the Western Area Power Administration.

As part of that allocation of inexpensive hydroelectric power, SIR customers receive a 20 percent discount on their LMUD bills. But the discount does not apply to power used by SIR customers in excess of that allotment. The publicly owned utility district’s board discussed the issue at its March 31 meeting but put off making a decision to give the two entities an opportunity to work out a satisfactory solution.

Representatives from LMUD and SIR met Friday, April 3 to discuss the matter and reached an agreement that was announced at the Tuesday, April 28 LMUD Board of Directors meeting.

The tentative agreement creates a formula that allows SIR customers to continue to receive the 20 percent discount and provides a mechanism for LMUD to receive payment for any excess power the SIR may use and for the SIR to receive credit for any unused portion of its allotment from WAPA. To take effect, the agreement must be approved by the LMUD board.

According to the tentative agreement, all SIR residential and business customers will continue to receive the 20 percent discount. The new Diamond Mountain Hotel will be billed separately at LMUD’s regular rate beginning July 1.

The tentative agreement also calls for a change in LMUD’s billing practices for SIR customers. LMUD will begin reading SIR customer’s meters near the end of the month and monitor usage monthly through 2009.

According to a letter from LMUD to the SIR, “This should narrow the calculation variance between monthly usage and monthly allocation and provide more accurate data for analysis.”

The calculation comparing the SIR’s allotment with its usage is complicated because the amount of power allotted to the SIR varies depending upon the water conditions that lead to the generation of hydropower. The amount of electricity used by SIR customers also varies. In addition, the reporting of the amount of the SIR’s allotment from WAPA also may be delayed for a number of months, adding another layer of complexity to the calculations.

The tentative agreement seeks to resolve those problems.

At the end of LMUD’s fiscal year, June 30, “an audit of the accounts included in the allocation will be performed and if the usage by the Rancheria has exceeded the allocation for the previous year, a charge for the difference will be applied to the Diamond Mountain Hotel account,” the agreement reads. “In the event that the allocation for the previous fiscal year exceeds the usage for that period, a credit will be applied to the Diamond Mountain Hotel account for the discounted amount the hotel would have been allowed under the discounted rate … ”

According to an April 7 presentation to the SIR’s tribal council by Jim MacKay, the SIR’s tribal administrator, during the discussions with LMUD, “it was pointed out that the hotel has its own meter and if LMUD charged the regular rate for that meter, the tribe should not exceed the power allocation.”

LMUD plans to complete the year end calculations within 60 days of the close of its fiscal year on June 30. SIR and LMUD both agree to settle the account — either by a payment or a credit — by Sept. 30 each year.

According to MacKay’s presentation, the SIR has exceeded its allocation by 675.48 megawatts over the past two years.

As part of the agreement, LMUD will not charge the SIR customers for the excess electricity they have already used.

Director Wayne Langston wondered why the district was not trying to recover the lost income due to the SIR exceeding its allotment.

Richards said although the SIR’s usage sometimes has exceeded its allotment, LMUD customers have benefited when the SIR used less electricity than its allotment.

According to the agreement, the 20 percent discount will no longer be applied to area light charges and other fixed costs with the SIR jurisdiction. The 20 percent discount had mistakenly been applied to these bills as well.

Facility charge
A second issue regarding LMUD’s facilities charge billing practices at the SIR also came to light.

The facility charge for the district’s residential customers is currently $10 per month.

The facility charge consists of the costs associated with the reading of meters, the generation and processing of bills and payments and the physical facilities associated with the meter.

Richards said Evelene Twitchell, one of LMUD’s former general managers, interpreted the discount agreement between SIR and LMUD to include the 20 percent discount on the facility charge as well.

She said the district has lost about $250 per month by erroneously applying the discount to the facility charge.

According to a report by Ray Luhring, LMUD’s general manager, “ … due to a misunderstanding of the existing Letter of Agreement with the SIR, all SIR meters have been receiving a 20 percent discount on their facility charge which never should have been discounted.”

SIR residential customers will now pay the same $10 per month facility charge as other LMUD residential customers.

SIR customers on the general service rate schedule will pay an additional $5 per month for the facility charge.

LMUD and the SIR will draft a cooperative joint letter to the residential customers explaining the change in the facility fee that becomes effective July 1. LMUD will not try to recoup any past charges.

Public hearing
Luhring submitted his report to the board and asked the directors to hold a public hearing on the matter as required by the Public Utilities Code.

The public hearing will be held at 5:30 p.m. Tuesday, May 26 at the LMUD boardroom, located at 65 S. Roop St. in Susanville.

The intent of the public hearing is to solicit comments on the general manager’s report so the board can hear and consider comments regarding the SIR’s allocation from WAPA and the revised facility charge.

The public is invited to attend and provide oral and/or written comments. Written comments must be received at 65 S. Roop Street, Susanville, CA 96130 at or prior to the meeting.

Copies of the general manager’s report are available at the LMUD business office during normal business hours  — 8:30 a.m. to 4:30 p.m.

After the public hearing, the board may authorize Luhring to execute the agreement.

Background
In his presentation to the SIR Tribal Council, MacKay outlined the timeline for the relationship between the two entities regarding the allotment from WAPA.

According to his presentation, in 1997 a Federal Register Notice was published seeking applicants for a power allocation from WAPA through the Central Valley Project.

In 2000, the SIR signed a contract with WAPA for an allocation of 0.103 percent of the base resource. According to the contract, SIR will receive this allocation from January 2005 through December 2024.

In 2001, upon completion of the paperwork with WAPA, LMUD became the designated point of delivery for the SIR’s allocation. LMUD granted a 20 percent discount to all customers on lands under SIR jurisdiction. The discount would not apply to SIR loads that exceeded the allocation.

In 2003, SIR, LMUD and WAPA signed a contract allocating the allotment to LMUD.

In 2009, LMUD notified SIR it was exceeding its allocation.