EL CENTRO – The Imperial Irrigation District is poised to raise electricity rates for the first time in 20 years â€” a move that is sure to anger ratepayers, but that district officials say is long overdue.
Under a proposal endorsed by the district’s energy advisory committee Monday night, residential consumers would be hit with an 8.4 percent hike in their base electricity rates, plus an additional $6 in monthly fees. Average residential users would see their bills increase about $120 per year.
But even if the district’s board of directors approves the rate increase later this month, ratepayers would still pay far less than Southern California Edison customers in the west valley.
While Edison and other utilities have raised rates in recent years to meet increased costs, Imperial Irrigation District customers are actually paying less for electricity than they were five years ago.
“Over the last four years, we’ve deferred taking action on this,” district general manager Kevin Kelley said. “We can’t anymore.”
The proposed rate increase would help cover the rising costs of providing electricity â€” particularly the costs of complying with the state’s renewable energy mandate, which requires utilities to buy 33 percent of their power from renewable sources by 2020.
Some of the additional funds would go toward reducing carbon emissions from the district’s coal-fired San Juan power plant, as required by California’s long-term greenhouse gas reduction mandate.
The rate hike would also help the district pay for a $68 million battery storage project to help guard against future blackouts. The district is building the battery system as part of a massive settlement with the Federal Energy Regulatory Commission, in response to a 2011 power outage that left 2.7 million people without power, many of them in the Coachella Valley.
The district’s energy committee, which advises the board of directors, signed off on the rate increase with little controversy Monday night.
Gil Perez, one of two board members to oppose the rate increase, called the 8.4 percent rate hike “a heck of an increase to have all at one time.”
“When the people start getting their bills, you’re going to have a line over here coming out of the doors, of people trying to get assistance because they can’t pay their bills,” he said.
Other committee members not only voted in favor the proposed rate increase, but applauded it.
Mark Weber, who represents La Quinta, said supporters of the state’s renewable energy mandate â€” himself included â€” have to be willing to pay more for clean energy.
“You can’t support renewable energy portfolio standards, but not want to have the rates go up,” he said. “You can’t have it both ways.”
The rate increase wouldn’t be the first time Imperial Irrigation District customers have seen their electricity bills go up over the past few years.
While the district hasn’t raised its base electricity rate in 20 years, it has changed its “energy cost adjustment,” an add-on that accounts for the fluctuating costs of natural gas and fuel.
The energy cost adjustment was lowered from 5.01 cents per kilowatt-hour to 3.24 cents per kilowatt-hour in 2011, then raised to 4.15 cents per kilowatt-hour earlier this year. That increase added about $9 to the average residential electricity user’s monthly bill.
Belen Valenzuela, the district’s interim chief financial officer, noted that even with the proposed base rate increase, residential customers would be paying less for electricity than they were between 2008 and 2011, when the energy cost adjustment was higher.
They would also be paying far less for electricity than most Californians, according to an Imperial Irrigation District analysis.
Under the new rates, a home using 1,000 kilowatt-hours per month would pay about $133 â€” compared to $147 for Los Angeles Department of Water and Power customers, $225 for Edison customers and $261 for San Diego Gas & Electric customers.
The Imperial Irrigation District has managed to keep its rates so low, spokeswoman Marion Champion said, because of its high levels of local control. Unlike Southern California Edison, the district is not heavily regulated by the California Public Utilities Commission, which oversees rate increases for Edison and the state’s other investor-owned utilities.
“Our board of directors reviews all of our rate increases, and they have to approve it,” Champion said. “And they’re a publicly elected board â€” they see their neighbors walking down the street every day.”
The rate increase proposal, however, would take some control out of the hands of the board.
Currently, the board must approve all changes to the energy cost adjustment. But under the rate restructuring proposed by district staff, the energy cost adjustment would naturally “float,” going up or down as the costs of fuel, natural gas and renewable energy rise or fall.
Based on current market conditions, the district projects that overall residential electricity rates could increase 11 percent in 2015 and 4 percent in 2016, before holding steady in 2017 and increasing five percent in 2018. Those projections, though, are highly speculative, and it’s possible consumers will get a credit in 2016 if costs are lower than expected in 2015, Valenzuela said.
It’s particularly important to restructure rates now, Valenzuela added, because the district risks damaging its credit rating if it doesn’t increase its cash reserves over the next few years. The district had less than $6 million in unrestricted cash on hand in 2014 â€” much less than the $128 million it should have had, she said.
“This is one of those subjects we’ve kind of avoided for a while,” Valenzuela said. “We’re at the point where, with those operating reserves, something has to be done.”