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IID Adopts Resolution to Tackle Energy Cost Volatility

-Editorial

The Imperial Irrigation District Board of Directors took action to adopt Option “B” at their Dec. 19 meeting which will alleviate billing spikes and guarantee adequate collections. The option was voted 4-1 with Director Gina Dockstader casting the dissenting vote.  

In response to the recent surge in market volatility impacting energy costs, the Imperial Irrigation District (IID) took a decisive step on September 5, 2023. The board approved Resolution No. 31-2023, ushering in a comprehensive plan to reform IID Electric Bills and protect ratepayers through equitable billing.

Presented as information at the December 5th, 2023 board meeting, the resolution paved the way for an Energy Cost Adjustment (ECA) Action Plan. Prepared by staff, the plan offers two options for the board’s consideration, aiming to alleviate billing spikes and recover rising energy costs in the year 2024.

The proposed interim solution approved back in September introduced a revised ECA schedule, addressing an aspirational rate stabilization fund minimum balance and supporting a more dynamic ECA model.

The current Energy Cost Adjustment factor (ECA), adopted in 2015, was initially designed to reflect the variable costs of energy, including the costs of fuel and power purchase. However, the events of summer 2023, which include unforeseen market volatility, record-breaking temperatures, unexpected unit outages, and transmission disruptions, have highlighted the limitations of the current ECA. These market fluctuations resulted in bills for some customers doubling from one month to the next.

The financial impact of the plan depended on the board’s choice between Option A and Option B for the year 2024. Option B, presented to mitigate billing spikes and ensure sufficient collections, particularly during high consumption months, has gained traction. The Board seeks approval for this option, coupled with an interim revision to the Energy Cost Adjustment Rate Schedule.

Notably, the General Manager is empowered with the authority to take necessary actions, including modifying average billing criteria, to meet the goal of setting an annual enrollment window and providing flexibility around eligibility.

In alignment with IID’s commitment to customer protection, the Board directed the General Manager to prepare an action plan with clear goals:

One is to mitigate billing spikes during high-consumption months. Second collections are sufficient to meet IID’s financial obligations with minimal rate impact.

The Interim Plan for 2024 entails leveling ECA Factor collections throughout the year, transitioning REAP and EEAP customers to Average Billing, and modifying Average Billing parameters. Looking ahead, a Long-Term Plan (2024+) is on the horizon, slated for development through holistic rate evaluation and an accurate cost-of-service assessment.

Option A proposed three separate ECA factors, while Option B advocated for an objective calculation approach, aiming to stabilize monthly billing costs without seasonal or monthly variability. The transition of all REAP and EEAP customers to Average Billing is a key component of Option B, fostering monthly bill leveling.

To promote market Average Billing for all residential customers, IID plans to initiate open enrollment during January through March. This strategic move incentivizes average billing adoption, with relaxed program parameters for customers with less than a 12-month history.

IID General Manager Jaime Asbury mentioned that they are proactive measures aimed at ensuring the financial health of the district while providing customers with a more predictable and equitable billing experience. The orderly transition and comprehensive plans underscore IID’s commitment to navigating the complex landscape of energy cost fluctuations, she said. 

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