• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Valley Citizen

Pursuing truth toward justice

The Valley Citizen

Pursuing truth toward justice
  • Arts
  • Education
  • Environment
  • History
  • Nature
  • Politics
  • Wit
  • About

MID Faces Conundrum about Need for Rate Increases, by Bruce Frohman

December 29, 2013 By Bruce Frohman Leave a Comment

DSCN0256The Modesto Irrigation District (MID) is the primary electricity supplier to northern Stanislaus County and the town of Mountain House in San Joaquin County.   

The Board of Directors of MID has been discussing an electric service rate increase in 2014. The numbers suggested have ranged from zero percent to a double digit increase. Current MID electric rates rank among the highest in California. 

The debate about the rate increase centers on the overall financial condition of the utility. MID has borrowed heavily in the past to finance the expansion into Mountain House and has had trouble containing ongoing operating expenses.   

The utility operates “the Cadillac” of electrical equipment, with an excellent record of outage-free service. Unlike Pacific Gas and Electric Company, MID rarely experiences an outage due to equipment failure. Automobile collisions with power poles are probably the biggest cause of outages.  

High salaries are also a major expense. The quality of the employees has helped make the utility one of the most reliable in California. Cutting salaries could result in personnel losses that would compromise the reliability of the utility in the long run. Reliability is the key to customer retention in a competitive market. 

Impediments to a Rate Increase 

The biggest impediment to a large rate increase is the present high electric rates. With MID having one of the highest rate structures in California, the public has grown increasingly critical about further increases. MID Board member turnover in recent elections has installed new faces who are politically sensitive and who don’t want to cause a storm of public protest. The previous Board had been insular and mostly free of public scrutiny until the large rate increases of recent years. 

Another major and recent impediment to a rate increase is competition. Solar energy companies are moving into the Modesto electric market. They are attempting to take MID’s electrical customer business incrementally by selling products and services to businesses and residences. They do so by promising lower monthly costs than customers presently pay the MID. The higher MID raises rates, the more vulnerable the utility is to the competition.   

One company offers residential customers an electric solar lease for $99 per month. As the average monthly electric bill rises farther and farther above the $99 level, the MID residential customer base is going to erode. At some point, another rate increase could result in a total offset of increased revenue through customer losses. In theory, every current MID customer could opt for solar if MID’s prices go high enough. With energy deregulation in California, the competition will only get more intense, making MID’s electric product more price sensitive. 

No Easy Solution 

In order to overcome the present financial bind of the Modesto Irrigation District, the Board of Directors will need to find a way to enhance revenue without losing customers.  Given the limitations resulting from the impediments to rate increases, the task seems daunting. For the sake of the utility and its customers, the Board will need to be creative. The utility can no longer afford to act like a monopoly.    

 

Filed Under: Featured, History Tagged With: MID electric rates, Modesto Irrigation District rate increases

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Note: Some comments may be held for moderation.

Primary Sidebar

Off The Wire

California faces catastrophic flood dangers ? and a need to invest billions in protection
California faces catastrophic flood dangers and a need to invest billions in protection
A new state plan for the Central Valley calls for spending as much as $30 billion over 30 years to prepare for the dangers.
www.latimes.com
Oakland will get millions for the ?inhumane? crisis at one huge homeless encampment. Officials say it?s not enough
Oakland will get millions for the “inhumane” crisis at one huge homeless encampment. Officials say it’s not enough
Gavin Newsom’s administration has awarded Oakland a $4.7 million grant to come up with…
www.sfchronicle.com
Alaska?s Fisheries Are Collapsing. This Congresswoman Is Taking on the Industry She Says Is to Blame.
Alaska’s Fisheries Are Collapsing. This Congresswoman Is Taking on the Industry She Says Is to Blame.
Mary Peltola won her election by campaigning on a platform to save the state’s prized fisheries. A powerful fishing lobby is standing in her way.
www.politico.com
Jimmy Carter's final foe: A parasitic worm that preyed on millions in Africa and Asia
Jimmy Carter’s final foe: A parasitic worm that preyed on millions in Africa and Asia
One of former President Carter’s biggest hopes is wiping out an infectious parasitic disease that’s plagued humans for millennia. How close is he?
www.latimes.com
Climate Extremes Threaten California?s Central Valley Songbirds - Eos
Climate Extremes Threaten California’s Central Valley Songbirds – Eos
A “nestbox highway” in California’s Central Valley is guiding songbirds to safe nesting sites and giving scientists a peek at fledgling success in a changing climate.
eos.org
Alaska Republican touts benefits of children being abused to death
Alaska Republican touts benefits of children being abused to death
Republican David Eastman suggested the death of child abuse victims could be a “cost savings” to wider society.
www.newsweek.com
Editorial: Newsom's drought order amid wet winter threatens iconic California species
Editorial: Newsom’s drought order amid wet winter threatens iconic California species
Gov. Gavin Newsom has effectively ended environmental regulations protecting California rivers and migratory fish by extending drought-year waivers.
www.latimes.com
Two-thirds of McPherson Square homeless remain on street, D.C. says
Two-thirds of McPherson Square homeless remain on street, D.C. says
As of Thursday, just two of the more than 70 residents of McPherson Square had been placed in permanent D.C. housing.
www.washingtonpost.com
More Building Won?t Make Housing Affordable
More Building Won’t Make Housing Affordable
America’s housing crisis has reached unfathomable proportions. But new construction isn’t enough to solve it.
newrepublic.com
Why YIMBYs are about to sue the daylights out of cities across the Bay Area
Why YIMBYs are about to sue the daylights out of cities across the Bay Area
Housing advocates are about to deliver a message to the Bay Area: Comply with state…
www.sfchronicle.com
At the heart of Colorado River crisis, the mighty 'Law of the River' holds sway
At the heart of Colorado River crisis, the mighty ‘Law of the River’ holds sway
At the heart of tensions over water allotments from the Colorado River is a complex set of agreements and decrees known as the ‘Law of the River.’
www.latimes.com
Biden restores roadless protection to the Tongass, North America's largest rainforest
Biden restores roadless protection to the Tongass, North America’s largest rainforest
The Tongass National Forest in Alaska, a focus of political battles over old-growth logging and road-building in forests for decades, has received new protection from the Biden administration.
theconversation.com

Find us on Facebook

The Valley Citizen
PO Box 156
Downtown Bear Postal
1509 K Street
Modesto, CA 95354

Email us at:
thevalleycitizen@sbcglobal.net

Footer

The Valley Citizen
PO Box 156
Downtown Bear Postal
1509 K Street
Modesto, CA 95354

Email us at:
thevalleycitizen@sbcglobal.net

Subscribe for Free

* indicates required

Search

• Privacy Policy

Copyright © 2023 The Valley Citizen

Dedicated to the memory of John Michael Flint. Contact us at thevalleycitizen@sbcglobal.net

Editor and publisher: Eric Caine

Website customization and maintenance by Susan Henley Design