July 1, 2008 — Lassen Municipal Utility District customers will pay a little bit more for their electricity beginning July 1. LMUD’s new rates will rise by one-half cent to 14-cents per kilowatt-hour for residential customers. According to Bill Stewart, LMUD’s controller, the rate increase will cost about $5 per month for an average residential customer who uses about 100 kilowatts of electricity. All other rate categories will rise by one-half-cent as well.

The district implemented its last one-half-cent increase on Sept. 20, 2007.

Stewart said an ad-hoc committee comprised of two board members, legal counsel and LMUD staff met on Tuesday, June 24 and approved the increase as provided in the publicly owned utility district’s Power and Delivery Cost Adjustment policy. According to that policy, the district may raise its rates a maximum of one-half-cent per quarter based upon the recommendation of the ad-hoc committee.

This rate increase is based on the district’s costs for the quarter ending March 31.

Stewart said the increase will generate about $675,000 for the district, “but I have every expectation we’re going to need a little more.”

According to Stewart, the district will hit another PDCA “trigger point” on June 30. He expects the ad-hoc committee will approve another one-half-cent increase effective Sept. 1.

The district could have raised the rate one-half-cent for the quarter ending Dec. 31, but Stewart said with three new board members just appointed by the Lassen County Board of Supervisors, no increase was proposed.

At the LMUD Board of Directors meeting on Tuesday, June 19 Stewart and Ray Luhring, LMUD’s general manager, proposed a one-cent increase in electrical rates and a $2 increase in the “facilities charge” to help the district offset rising wholesale energy costs.

A public hearing on the increase in the facilities charge, which, if approved, will raise the charge from $8 per month to $10 per month, is set for 5:30 p.m. on Tuesday, July 22.

Budget
Stewart presented a draft $22 million 2008-2009 budget to the board on June 19. The budget projections include the proposed one-cent increase in rates and the $2 increase in the facilities charge. The figures also include a 3 percent increase in the cost of doing business.

According to the district’s projected budget for 2007-2008 and the draft 2008-2009 budget, the district anticipates its sales to increase from $19.9 million in 2007-2008 to $21.5 million in 2008-2009.

Power purchases are projected to increase from $11.6 million in 2007-2009 to $12.8 million in 2008-2009.

The district’s income from operations is expected to rise from $691,921 in 2007-2008 to $1.7 million on 2008-2009.

The district’s contribution to cash, is expected to rise from $2.5 million in 2007-2008 to $3.8 million in 2008-2008.

Stewart said the district will pay a $2.5 million principal payment on the 2000 Series Bond. The money from that $7.8 million bond, issued in 2000, was used mostly for infrastructure improvements. That bond will be paid in full in 2011.

Stewart said the district has paid on bonds nearly every year since its inception and recently paid off the $20 million bond issued when the district was purchased from CP National 20 years ago.

The district also cut $800,000 from its capital improvement budget for 2008-2009 because there were more projects scheduled than the district could “reasonably accomplish” Stewart said. “We’ll have to revisit capital improvements next year. This year, we had more than we could do.”

Stewart said his proposed budget for the next year should be fairly accurate.

“I believe this is a fair budget,” Stewart said. “We’re maintaining the costs that are within our control efficiently, but we’re a pretty small fish in a pretty big pond.”