MID Board Report Archive

Modesto Irrigation District (MID) Board Meeting of Tuesday, February 27, 2007
Contact: MID Public Affairs Department, Maree Hawkins, (209) 526-7390
The next MID Board meetings will be March 13 & 27 and April 10 & 24.

Water report

Assistant General Manager Walter Ward, Water Operations, said the latest figures show the central Sierra snow pack at 50 percent of normal.  This latest series of storms is expected to boost totals.  The California Department of Water Resources produces runoff forecast based on April 1 snow depth. Average rainfall in Modesto by the end of February is 8.75 inches, compared to this season’s total of 6.76 inches.

Modesto rainfall and historical averages in inches:

Credit/debit card program on its way

The Board unanimously approved a 12-month pilot program with Western Union to provide a convenience fee-based processing program for alternative forms of payment such as debit/credit cards.  Allowing customers to pay a utility bill by debit/credit card provides an alternative to cash or check and allows customers to float their payment until funds are available.  In addition, customers at risk of disconnection can make their payment with their debit/credit card to maintain service.

Information Technology Manager Pat Wheeler said two options had been considered:

• MID develops a secure web page, swipes the card, and pays all credit card company fees.  The credit card fees would be spread over all ratepayers, not just those who use the service.
• MID contracts with a third party, such as Western Union.  Western Union takes the credit/debit card via phone or web. The customer using the service pays a convenience fee (transaction fees: $3.50 for residential, $13.95 per commercial).

The third party vendor can also provide online balances for each account even if the customer does not utilize the service.  MID cashiers will not be able to do the transaction, but for customer convenience a computer kiosk will be placed in the main office lobby.

A program start date has not yet been established.

Information items

Cost of service workshop

Walter Ward reviewed services provided by the Water Operations Division.  He noted that some items clearly benefit either the irrigation water users or the electric ratepayers.  Assigning a percent allocation to services that benefit both groups is more difficult.  The Board asked staff to assign services to categories and work on an allocation when the service provides mutual benefits.

Market outlook

MID Finance Advisor Jerry Gold, senior vice president at First Southwest Company, provided his annual bond market overview.  MID’s finances, both debt and cash reserves, are important factors in the ratings bond rating agencies assign.  The ratings determine MID’s interest rate, an important factor in the cost of financing.

He noted that the current cash reserves projection for Year End 2010 is $156 million or 194 days of expense coverage.  This contrasts to last year’s projection of $60 million or 67 days of expense coverage.  The current adjusted Debt Service Coverage for Year End 2008 is 1.2 percent, an improvement over last year’s projected debt service coverage of 0.96 percent. The improvement is based on reduced projected expenditures and increased projected revenues. MID currently holds A+ ratings from Fitch Ratings and Standard & Poor’s.

Natural gas prepay transactions

Pricing and Risk Administrator Scott Van Vuren discussed prepay energy commodity transactions as a way to cut natural gas fuel costs.  While prepay transactions are not a new concept, recent changes in law and regulation have enabled deal structures to evolve which mitigate much of the risks to MID.  In the most simple prepay, MID would advance funds to a supplier and the supplier would promise to deliver gas in the future. The Board indicated it would like staff to pursue this by detailing costs, savings and risks.

Greenhouse gas emissions

Senior Engineer Richard Smith, Resource Planning, discussed the greenhouse gas emission performance standard mandates MID must follow as of July 1. Investor-owned utilities have been under the regulations since Feb. 1. The goal is to ensure that all electricity load-serving utilities internalize the significant and under recognized cost of emissions and to reduce California’s exposure to costs associated with future federal regulation of greenhouse gases.  

The regulations provide a new business framework for both investor-owned and public utilities, especially in the area of long-term contracts, extending the life of power plants, new facilities and purchase of renewable energy. MID has been able to shape some of the California Energy Commission’s proposed regulations for public utilities through its involvement in the California Municipal Utilities Association working group.

General Manager Allen Short noted that no one has really calculated the ultimate cost to the ratepayer.  “It will be expensive since you can’t build new hydro, or nuclear in California, or purchase power generated with coal.  And there is not enough renewable energy on the market.”