Explaining done

In a Voice of the People submission dated May 4, Imperial resident Mark Juel writes that “IID has some explaining to do” and states, “Time for Mr. Hamby, and the rest of the IID Board of Directors to tell us why they are overcharging us so much and why we aren’t getting all of the overcollections back!”

Mr. Juel references an Imperial Valley Press article covering the “Approve energy cost adjustment billing factors – May 2022” item on the April 19 IID board meeting in La Quinta.

The normally perfunctory approval of monthly billing factors was anything but and became an often confusing and contentious hour-plus-long debate over a range of issues beyond the scope of the item. As a result, the IVP article made some understandable misstatements given the nature of the meeting’s muddled discussion.

In short, IID’s energy cost adjustment is the portion of our monthly power bills meant to collect for variable costs, while the base rate portion of our bills is meant to collect for fixed costs. In past years, the ECA has remained relatively stable. But as a result of rolling blackouts across California in the summer of 2020, IID’s strategy was to insulate its ratepayers from the heightened risks of unreliability. That more reliable energy came with a cost. Under the existing ECA formula, those heightened costs would have been collected through the ECA during four summer months. This, I felt, was not acceptable as it would spike the ECA nearly to the same rate as the base rate and really hurt people during summer months, and in the month of August in particular.

A strategy was developed to drop down the ECA dramatically to 1.5 cents per kilowatt hour in the summer months to provide ratepayers relief. For context, if the ECA was allowed to float on its own it would have spiked to nearly 8 cents per kWh. This was accomplished by slightly raising (over collecting) the ECA in non-summer months in order to provide this summertime relief with a dramatically lower ECA (under collecting) when air conditioners are running full blast and bills are already higher due to high usage. It’s a good strategy, I believe, for those who would rather have flatter bills year-round rather than unbearable bills in the summertime.

Entirely separate and apart from this, however, was the item discussion about dropping the ECA further. The 2022 budget estimated purchased power and fuel costs to be $316 million. Due to staff diligence, those costs ended up much lower at only $302 million. Staff recommended lowering the ECA slightly, not only for the month of May, but for the remainder of the year to reflect the amended budget.

I moved and received a second on the staff recommendation. The motion failed 2-3. I moved and received a second on the staff recommendation with any additional proceeds that might be collected to be applied against the over $50 million in losses resulting from the controversial and costly Desert View Power contract over the next five years. The motion failed 2-3.

Other board members were insistent on lowering the ECA even deeper, which more than likely will result in a significant under collection. It remains to be seen how IID will collect sufficient revenues to pay its own bills based on a speculative “what if” scenario of the purchased power and fuel budget being reduced by another whopping $9 million. More than likely it will require an ECA hike later in the summer to cover for a fleeting ECA cut this month. Such are politics, I’ve come to learn.

At any rate, I would encourage Mr. Juel and others to watch the meeting and make their own informed opinions, and hope this explanation satisfies yesterday’s request.

JB Hamby is the IID director for Division 2 and can be reached at (760) 790-7153.