Rate Increase Effective 4/1/2023

At the March 28, 2023, board meeting, the LMUD Board of Directors voted unanimously to approve a 2.5-cent rate increase across all rate classes. The new rate will take effect with customer's April utility bills, affecting their March energy usage. This latest rate adjustment represents a 35% increase of the utility's 2022, residential rate of 14-cents per kilowatt hour. The new rate for residential customers will be .19 cents per kilowatt hour. Non-residential customers (small commercial) will increase 33% from the 2022 rate of 15.5-cent per kilowatt hour to 20.5 cents per kilowatt hour. The increase affects each rate class differently.

This series of rate increases have largely been driven by the price that LMUD pays for wholesale power. Historically, the average monthly wholesale power cost is around 800,000 this time of year, however, in the past three months, December, January, and February, LMUD’s monthly power bills have been more than two million dollars – totaling over 6 million dollars.

This is the fourth increase for the utility since November 2022. Rates – Lassen Municipal Utility District (lmud.org)

If you have questions regarding the increase, please contact us at 530-257-4174. If you need assistance meeting your electric bill, LMUD has several programs to assist customers in need. Please visit our rate assistance page for more information. Bill Pay Assistance – Lassen Municipal Utility District (lmud.org)

Frequently Asked Questions:

  1. Why did we state that the rate increase would be 7/10 of a cent and then go to 2.5 cents? At the February Board meeting a 12-month historical costs analysis (Power Delivery Cost Analysis [PDCA]) was presented to the Board of Directors with an indication of under collection of 1.2 cents per kilowatt-hour. The Board voted to increase rates by the maximum allowable by the PDCA, 0.5 cents per kilowatt-hour, leaving 0.7 cents of under collection remaining. The board also scheduled a rate hearing to be held during the March board meeting. They directed staff to prepare an additional analysis that would project the increase in purchased power costs for the foreseeable future. This analysis was presented at the March board meeting and indicated an additional 2.5 cents per kilowatt-hour of under collection. (See FAQ #6 for more information.)
  2. What is the average price of electricity in California? The price per kilowatt hour varies from utility to utility. LMUD is community-owned and not for profit. Our current, residential per kilowatt hour rate is 19 cents. PG&E, a for profit investor-owned utility charges an average of 35 cents per kilowatt hour.
  3. Why weren’t rates raised in 2022 when the PDCAs showed we were under-collecting? LMUD Staff had determined that a number of elements of our wholesale power bills, and settlement statements were questionable and had resulted in overbilling.  For that reason, LMUD asked our wholesaler for a complete review of our purchased power bills.  This review continued through several monthly statements up until October of 2022. Due to the uncertainty of the billings, LMUD management made the decision to wait until the errant billings were resolved and the other unusually high bills reviewed for accuracy before recommending a rate change.
  4. How much of our power is generated locally? LMUD has a purchase power contract with two local energy producers. Honey Lake Solar, a 7.5-megawatt photovoltaic plant in Wendel and Baseload Power, a 300kW geothermal plant. Combined, this is enough energy to power about 2,200 homes. Baseload Power is projected to come online within the next 6 months.
  5. Why are rate increases retroactive? When the board approves a rate increase, they also state when the increase will take effect. In the case of the last increase, approved on March 28th, the increase took effect on April 1st. This affected some of the energy used in March.
  6. Why did LMUD have multiple rate increases? Are you only allowed to go up a certain amount at a time? The Power Delivery Cost Analysis (PDCA) is a tool used by the board to review operating costs over the previous 12 months. This analysis is updated quarterly and allows the board to increase rates by a maximum of 0.5 cents, any adjustment beyond that requires a publicly noticed rate hearing, at which the rate may be adjusted as needed. Due to the unpresented nature of the high purchase power costs, LMUD was seeing indications of under collection with each subsequent PDCA that was presented. At the February board meeting, the board directed staff to prepare an analysis that would project the increase in purchased power costs for the foreseeable future. This analysis was presented at the rate hearing scheduled for the March board meeting and indicated an additional 2.5 cents per kilowatt-hour of under collection. This forward-looking analysis was performed in a manner that allowed the Board to see the effect of the ongoing elevated purchase power prices and make one adjustment instead of the continual small increases seen in the previous months.