Electric Rate Adjustment

Electric Rate Adjustment

Merced Irrigation District is implementing a small upward adjustment in electric rates. The rate adjustment is the first for the MID since 2010 and is needed to help address rising operating costs and energy pricing, as well as maintenance that ensures safe and reliable delivery of electricity.

MID’s new rate structure will result in an average 2-percent rate increase over 2018 rates for MID electric customers. The increase is expected to appear in June 2019 bills and will reflect May energy usage.

MID has no profits and pays no dividends to investors. All revenue paid by customers is returned directly to the operation of the local public utility in eastern Merced County.

HOW WILL MY BILL BE AFFECTED?
In addition to the average 2-percent increase, MID customers will see an adjustment in the structure of their billing. The net bill for 2019 will reflect an average 2-percent rate increase over 2018 rates.

Further details about billing
MID electric bills consist of two major components:

1. A fixed customer charge and

2. A variable energy-usage charge

The fixed charge is generally associated with the costs of owning, operating and maintaining MID’s electric infrastructure. The variable energy usage charge reflects the energy used by a customer.

Over the next five years, MID customers can expect to see the Customer Charge portion of their bill increase. At the same time, the energy charge will be gradually decreasing. The average net cost over the five-year period is expected to be maintained at the 2-percent increase relative to 2018 MID rates.

As part of the rate adjustment, MID will reduce the number of energy-use tiers from five to two for residential customers.

WHY WAS A RATE INCREASE NEEDED?
As a public utility, an alternative to a larger investor-owned utility, MID’s goal is to maintain affordable electricity for our community while ensuring a safe and reliable electrical system. For the past decade, there has been an increase in operating costs and energy pricing. While MID’s rates stayed the same since 2010, the Consumer Price Index rose about 15 percent. That means the goods and services you bought in 2010 for $100 would cost $115 today. MID’s 2-percent average rate adjustment helps MID to address the costs of operating the utility.

The new rate for MID customers remains similar to that of other local public utilities and approximately 20 percent less than the local investor-owned utility.

HOW WAS THE NEW RATE DETERMINED?
The new rates were developed using an external cost-of-service study performed by NewGen Strategies & Solutions. The study was carried out in 2018. It took into consideration all of the expenses of running the utility and allocated those costs among all customer rate classes. The intent of the external review was to determine the fairest way to maintain safe, efficient and reliable operation of the electric system while addressing increases to the cost to meet those goals.

HOW WAS THE COMMUNITY INVOLVED WITH THE RATE ADJUSTMENT?
Beginning in November of 2018, MID held several public workshops and discussions to inform the community – and receive input – about the pending rate adjustment. Additionally, there were ads placed in the local newspaper and notices included in customer billings.

CAN I PROVIDE FEEDBACK ABOUT THE RATE ADJUSTMENT?
Yes. We have strived to inform and educated our customers about the new rate adjustment. If you have further questions or feedback for MID, we want to know. Please feel free to call a Customer Service Representative at 209-722-3041 or contact our electric department management staff by submitting your comments HERE.

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