The Tuesday meeting of the Modesto Irrigation District Board was another head shaker. The topic of our interest was the 2016 rate workshop which was conducted by MID’s Planning, Pricing and Risk Manage,r Jimi Nitniss. Now Jimi, whose compensation package comes to around $195,000 a year, has questionable goals and apparently has way too much time on his hands.
How Do You Lower Rates and Remain Revenue Neutral?
If you take a look at your bill you’ll notice a fixed monthly charge of $12.50, an environmental adjustment and a capital adjustment. And of course the really bad news, your electric usage. But MID Staff has a way for you to lower your electric rates but at the same time pay the same amount for the first 500 kWh. Huh? That’s right some might call it smoke and mirrors but MID says it’s all the rage with other utilities. MID_2016_Residential_Rate_Design
That’s a direct quote from MID Director Paul Campbell at Tuesday’s workshop. See it isn’t about making things better, it’s about making them appear better. Staff wants to raise your fixed fee from $12.50 to $20.00 and charge less for the first 500 kWh. So the cost is a wash or revenue neutral. BUT MID gets to say they have the lowest residential rates around. So how does this help us? It doesn’t. It’s all public relations. The electric rate remains the same for everything more than the first 500 kWh used, .18 per kWh. Lots of fanfare with little or no effect.
The Driving Force Behind the Change
Jimi says since Turlock Irrigation District (TID), Sacramento Metropolitan Utility District (SMUD), and Roseville all do it it must be a good idea. The idea is to have fixed cost on your bill to more accurately cover MID’s fixed cost. But it still doesn’t cover it all of the fixed costs, all it really does is pretend to lower your bill, which of course it doesn’t do. To our mind it’s like a placebo for electric ratepayers. And at the end of the day you still have the headache.
Most people don’t realize just how much the residential ratepayer subsidizes industry in Modesto. Right now you’re (residential) paying .16 per kWh in the summer and .13 per kWh in the winter. Large industrial businesses around Modesto are paying as little as .05 per kWh summer and .03 Per kWh winter rates. Do you know that .03 is cheaper than the cheapest power MID buys (Don Pedro hydro is almost .04) but hey as long as homes are paying .16 and .13 who cares? If MID wants to emulate Roseville and SMUD and virtually ALL of the utilities in the Bay area they will bring industrial and residential closer in line. For these bay area companies don’t use they residential rates to subsidize their industrial base like we do. And if you’re curious farmers and ranchers are paying .10 per Kwh summer and winter. Forget the water subsidy, open your eyes to the electric subsidy.
If you would like to watch the workshop you can see the magical effect of the rate adjustment on the MID Board. There will be a public hearing in November, so stay tuned.