MID Board Report Archive

Modesto Irrigation District (MID) Board Meeting of Tuesday, May 22, 2007
Contact: MID Public Affairs Department, Kate Hora, 209 526-7454
The next MID Board meetings will be June 12 and 19, July 10 and 24.

Water report

Don Pedro Reservoir’s current elevation is 794 feet.  The reservoir is full at 830 feet.  This year’s 50 percent of average Tuolumne River runoff has reservoir water levels 24 feet less than the same time last year.

Audited financial statements for 2006

Sean Berry of PricewaterhouseCoopers, MID’s independent auditor, presented the audited financial statements for 2006. The audit opinion is unqualified. Major items:

• The audit identified no material weaknesses or significant deficiencies.
• Net assets (MID equity) grew by $26.5 million.
• Ripon Generation Station began operation in June 2006.
• Series 2006A Certifications of Participation were refinanced for a lower intent rate.
• Retail electric revenue grew due to a nine percent rate increase and a four percent increase in the number of customers.

He extended his thanks to the accounting and other staff for their high level of commitment and cooperation.

MRWTP Phase II contract award

The Board unanimously:

• Found that Western Summit Constructors, Inc. (WSCI) is the lowest responsible bidder on the Phase Two expansion of the Modesto Regional Water Treatment Plant (MRWTP); that WSCI’s bid substantially complied with bid requirements; and that the purported errors in WSCI’s bid that were cited in the bid protest dated May 3, 2007, are insubstantial and immaterial, and are hereby waived.  The Board rejected the bid protest.
• Awarded the construction contract for the expansion to WCSI.
• Authorized an additional change order authority to the General Manager of up to eight percent of the construction contract amount, provided that such change orders have been approved through the process described in the Amended and Restated Treatment and Delivery Agreement with the City of Modesto. 

By a majority vote, the Board approved a contract employee position for secretarial services for the plant project manager.

Mandatory reliability standards briefing

Assistant General Manager Roger VanHoy, Electric Resources, briefed the board on the national reliability standards that take effect June 4.  These standards are an outgrowth of large-scale power grid failures in the United States and Canada. Utilities not meeting the new standards may face fines ranging from $10,000 to $1 million per day.  Staff estimates increased annual costs between $100,000 and $300,000.

Mid-year electric rate increase option brought to board

MID’s financial picture will receive another review next month. Budget and rate Administrator Jimi Netniss said MID faces $12 million in increased purchased power costs.  The lack of snowfall has reduced available hydroelectric power.   The increased costs have caused MID’s projected debt coverage ratio to fall below the bond covenant. If MID ends the year with a debt coverage ratio below 1.1, it would be in violation of the covenant. This would result in an immediate lowering of MID’s bond rating, which means higher costs to insure bonds and could lead to bonds being called. The Board does have options, including using reserves, deferring expenses and/or a mid-year rate increase.

In other business

Controller Jake Sonke reported that first quarter financials show the beginning effect of the poor hydro year in 2007.  Cash reserves have been reduced by $7.1 million and the first quarter shows a net loss of $11.1 million.

Power supply costs are running about 9% above the first quarter budget amount and operating revenues are approximately 5% below budget levels.

The Board approved an agreement between MID and Management Advisory Services for a mobile radio system analysis. The existing 18-year-old system requires either an upgrade or replacement. MID depends on the mobile radio system to support crews responsible electrical and irrigation emergencies.  The system is required to be reliable and operational at all times. 

General Manager Allen Short reported that MID recently received the Central Valley Opportunity Center’s 2007 Service Award.  The award honored MID for its low-income programs, including discounts and weatherization. He thanked Ken Hanigan, program coordinator, for his work on MID’s behalf.