Oct. 28, 2008 — Lassen Municipal Utility District customers will have an opportunity to comment on changes to the district’s Revised Power Delivery Cost Adjustment mechanism at a public hearing set for 5:30 p.m. on Thursday, Nov. 13. The public hearing is required under the Municipal Utility District Act.

Responding to a question from LMUD Director Fred Nagel, LMUD General Counsel Jaimee Jones said the district needed to hold a public hearing regarding changes to the PDCA mechanism, but a public hearing is not required when the board uses the PDCA to change the rate.

According to the PDCA, the district’s rates may be changed up or down quarterly by no more than half a cent per kilowatt-hour. The rates also may remain unchanged.

The board approved the PDCA in December 2005 “to help the district protect its customers from the volatility of purchased power and the unpredictable costs of state and federal mandates.”

LMUD was formed in 1988 when local ratepayers reacted to investor-owned CP National’s rate of 17 cents per kilowatt-hour.

According to LMUD’s Web site, on May 10, 1988, the newly formed LMUD district immediately lowered its domestic service rate to 9 cents per kilowatt-hour. The rate was lowered again to 8 cents per kilowatt-hour on Oct. 1, 1996.

Costs skyrocketed following the deregulation of the electric industry, and LMUD increased its rate to 11.5 cents per kilowatt-hour on Feb. 6, 2001. A second increase followed on Aug. 1, 2001 when the rate soared to 14.5 cents per kilowatt-hour.

The district lowered the rate to 11.5 cents per kilowatt-hour on Jan. 1, 2002.

Following the implementation of the PDCA, the district raised rates to 12 cents per kilowatt hour on March 1, 2006, 12.5 cents per kilowatt hour on June 1, 2006, 13 cents per kilowatt hour on Sept. 1, 2006 and 13.5 cents per kilowatt hour on Dec. 1, 2007.

According to the district’s Web site, domestic customers also pay a facilities charge of $8 per month per meter and a .135-cent per kilowatt-hour commodity charge.

As required by law, LMUD General Manager Ray Luhring reported the need for the changes to the board prior to scheduling the public hearing.

According to Luhring’s report, he’s recommending a number of changes designed to simplify the process.

Jones recommended the board consider a resolution she wrote that pared down the process.

If the revised policy is approved, the board will disband the rate committee that reviewed financial information provided by district employees, including the general manager, and then approved rate changes through the PDCA.

Under the revised policy, the district’s employees would provide the financial information to the board of directors who when then make the decision to raise or lower the rates or leave them unchanged.

According to Luhring’s recommendation, “The costs over which LMUD has control, when adjusted for inflation, have remained relatively level.”

Luhring said the mechanism should be revised to “allow for changes in taxes, mandates, contracts and other components that can, and do, change from time to time.”

The original PDCA document runs 10 pages. The revised PDCA document, if approved, is only four pages long.