Is city setting stage for an electric rate increase?

If you're a regular reader of this column, you know that I think Lodi's electric rates need some stability.

You also know that Lodi's rates rank in the top three or so, and I'm not talking about the best, but the highest. So when a reader of this column told me that our city manager was discussing rates in his weekly update, I was interested.

In the weekly update of Dec. 19, 2008, City Manager Blair King states: "Turlock Irrigation District's board voted Tuesday to raise electricity rates 13 percent for residential customers, and 12 percent to 20 percent for commercial and industrial customers beginning Feb. 1. That comes on the heels of a similar increase by Modesto Irrigation District and a 6 percent increase by PG&E in October."

While I appreciate City Manager King keeping us updated on electric rates in the area, you must ask yourself why he would give us these tidbits of information. After all, do you really care what people are paying for electricity in these areas? Unless Lodi decides to start using Turlock or Modesto for electricity, you probably don't. So for me, this looks a bit like laying some foundation for a rate increase in Lodi. So let's look at these rate changes a bit more.

I called Turlock, and the last time they changed residential rates was February 2006. Their new rates are going to be effective February 2009. So their residential customers had no change in rates for three years. Stability.

Modesto increased their rates Jan. 1. Prior to that, they increased rates on Jan. 1, 2008, and May 1, 2008. They are also planning to increase rates 7 percent on June 1, 2009, and 6 percent on Sept. 1. So, while they have changed rates often, the changes are known, unlike Lodi's monthly adjustment.

Now, before you say you are glad that you don't have the rates of Modesto or Turlock, let's take a look at the bills. For this analysis, I assumed 850 kilowatts are used and the only charges are for the kilowatt usage. In other words, I did not add taxes, surcharges for solar energy or Lodi's monthly energy cost adjustment, which except for one month only added to your bill.

Turlock Irrigation District:

$ 91.26 at current rates.

$ 102.83 starting in February 2009.

An increase of 4.1 percent a year.

They have a two-tiered rate structure in winter and three in summer.

Modesto Irrigation District:

$ 118.70 at current rates.

$ 132.94 about one year from now.

This will be an increase of 12 percent.

They have a two-tiered rate structure.

Lodi:

$ 155.35 at current rates.

Lodi has a five-tier rate structure.

So, at current rates, Lodi charges 70.2 percent more than Turlock and 30.9 percent more than Modesto. When Turlock increases their rates, Lodi will be 51.1 percent higher. Heck, Modesto will increase their rates two more times and Lodi's charges will still be 16.9 percent higher.

I am sure that some of you will say that if you don't like Lodi's rates, move. Well, remember that I didn't bring this up; the city manager did, so I think the comparison of rates is very fair.

What the city manager put in the weekly update was accurate but incomplete. He should have included that even with the rate increases in Turlock and Modesto, Lodi's rates are still significantly higher. What the city manager should also tell you is that rates will very likely increase in 2010.

So while it may seem that other utilities are gaining on us, I bet you that our City Council will make sure that we stay in the top five and they will do it by using percentage increases from other places, places that have much lower rates than we do.

Our electric utility pays for most of its power long-term and has secured its debt financing, actually increasing the debt by $17 million for nothing — but that's another story. So, why can't we have stability in our rates?

John Johnson, CFA, is a Lodi-based business appraiser. Contact him at john@johnejohnson.com or 369-1451.

Reader Feedback

loadeye wrote on Jan 6, 2009 5:45 PM:

" That ECA is just another con job from the NCPA, delivered by the chairman of their board, your Mayor Mr. Hansen. "

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Neo wrote on Jan 6, 2009 5:29 PM:

" Dogs; I understand what you`re saying but that does in no way rationalize a full 32% ECA for the month of December. I would like to ask Mr. Johnson how the city can possibly rationalize that amount of increase. It is to me, simply beyond the pale. "

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dogs4you wrote on Jan 6, 2009 2:29 PM:

" Neo this might be a day late, however if you stumble by check out my post. Oil might be at a 5 year low, never the less power produced in California doesn`t come from oil. Natural Gas is the primary source, followed by hydro, solar, wind. "

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Whoa Nellie! wrote on Jan 5, 2009 5:05 PM:

" JJ- way to take KING KING to task.

He's the fox dressed in sheep's clothing.

King just has that "snake oil salesman" look about him. I just cant trust him 100%. "

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loadeye wrote on Jan 5, 2009 1:23 PM:

" And here's another example of Hansen, Hitchcock and King making the big decision for Mr. Morrow:

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20080405/A_NEWS/804050324 "

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loadeye wrote on Jan 5, 2009 1:18 PM:

" And here's the know how and blame game from your manager and council:

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20080311/A_NEWS/803110312 "

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loadeye wrote on Jan 5, 2009 1:15 PM:

" And try this link also:

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20070308/A_NEWS/703080350 "

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loadeye wrote on Jan 5, 2009 1:12 PM:

" City council at a meeting a couple months or so back already laid out a plan for three electric rate raises before 2010. They will pay for Lodi's cost of the new power plant, another for the new transmission lines and one for the water treatment plant.

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20051104/NEWS01/511040316 "

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patton1 wrote on Jan 5, 2009 11:23 AM:

" Blair is looking for more taxes. He should be making more cuts instead. If RDA fails, our rates are really going to jump. "

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Neo wrote on Jan 5, 2009 8:47 AM:

" I just opened my Dec. City of Lodi electric bill. For 477 KWH I was charged an ECA "electricity cost adjustment" of $21.95!! Isn`t the cost of energy supposed to be going down lately??? I mean oil is at a 5 year low!!! "

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nextel wrote on Jan 5, 2009 8:12 AM:

" Mr King rather. "

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nextel wrote on Jan 5, 2009 8:06 AM:

" Good Op-Ed John,

Mr Blair seems to think we're all out to lunch with power rate comps. I'm leaning to solar ASAP. "

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