Manager’s Message – May 2022

Managing Finances in an Era of Increasing Inflation and Serving Our Customers’ Needs

Lassen Municipal Utility District (LMUD) actively monitors and manages costs necessary to operate the district. Our board has adopted several policies that guide how we handle the money we collect from you, our customer-owners. As a not-for-profit, publicly owned utility, our goal is to collect no more than necessary to run your utility safely and efficiently. We take our role as the stewards of your money seriously.

We continually seek the best pricing on electrical components and other supplies we procure. We provide opportunities for multiple suppliers and vendors to submit bids, which allows us to select the most economical price possible. For funds LMUD maintains in reserve, we obtain market-based interest earnings (based on U.S. Treasury bills or notes and U.S. government agency discount securities). This helps offset the effects of inflation on funds held in reserve. These options are strictly regulated by California laws that govern the investment of public funds.

Collecting revenue and managing funds to ensure the utility remains financially healthy is a big job, but that’s only part of the equation. We also manage programs that return funds directly to our customers. We provide incentives for energy-efficient lighting, appliances, heating and cooling systems. We also budget more than $100,000 a year to help our income-eligible customers, families and senior citizens meet their wintertime energy bills by offering a discount on their energy use.

LMUD’s energy-efficiency programs pay for a large portion of lighting upgrades and customer rebates for our commercial customers. We have returned tens of thousands of dollars to single and multifamily residences with direct-install programs, which we offer free to customers. Expenses are paid directly through LMUD’s Public Benefits Program, funded largely through LMUD revenue. Efficient appliances and lighting projects have reduced energy use by more than 200,000 kilowatt-hours this past year alone, and reduced business and residential customers’ monthly energy costs.

To say we are faced with financial challenges is an understatement. This year and last, disruptions in the supply chain and lost manufacturing capacity have resulted in inflation that our economy has not experienced in decades. In March 2022, the Consumer Price Index increased by 8.5% from April 1, 2021, to March 31, 2022. This has affected parts and supplies that we buy for maintenance and new construction. LMUD continues to work diligently to minimize the impacts of cost increases.

LMUD experienced a rate increase in 2021. This was primarily a response to higher energy costs from our power provider, Western Area Power Administration, and additional charges for energy provided by Honey Lake Power during the Dixie Wildfire. However, our residential rate of 14 cents per kWh is the same as it was in 2008. Rates have been adjusted throughout LMUD’s history, but it would be hard to find anything today that was the same price as nearly 15 years ago. This is a testament to our desire to collect only the revenue we need to maintain our financial health.

As the economy continues to change, rest assured LMUD is working to ensure the funds we collect are used in the most beneficial and economical way possible on each project or program with which we are involved.

—General Manager Pat Holley