Troubled Lassen Utility OKs 49% Rate Increase

Residents fear rise will wreck economy

Carl Nolte, Chronicle Staff Writer

Thursday, February 8, 2001 ©2001 San Francisco Chronicle

URL:http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/02/08/MN164562.DTL

The beleaguered Lassen Municipal Utility District, which had been caught in the midst of the state's energy crisis, voted Tuesday night to raise rates to its 11,000 customers by an average of 49 percent.

The rate increase -- although unprecedented for the district -- is less than the 162 percent increase the utility district's General Manager John Baxter outlined as a worst-case scenario last month. The proposed jump in electric bills had residents of Susanville, the county's only incorporated town, up in arms.

Many residents claimed such a big increase would wreck the area's economy.

The utility district got in trouble over the fall months, when Baxter assumed that power rates would go down in the winter. Instead, they went up, and the district lost $3 million in a few months.

On Tuesday, Baxter told the district's board that he had worked out a three- pronged plan to ease the rate increase: First, he negotiated a lower rate from some suppliers; second, he proposed transferring the Sierra Army Depot account to another power district with lower rates; and third, he is relying on an as- yet unspecified state bailout plan.

The Sierra Army Depot at nearby Herlong was the district's biggest customer.

Because the district was selling power to the depot at a loss, it was the largest contributor to the district's deficit.

The district board approved the plan Tuesday by a 4-to-0 vote. One of the board's five seats is vacant because a board member resigned after receiving threats from residents upset over the proposed rate increase.

The new rates -- an increase of 3.5 cents a kilowatt hour for residential customers and 4 cents for most commercial customers -- makes the district's rates higher than the state average but lower than the district's "worst case" scenario.

The increases were "accepted reluctantly," said Phil Bertanzoni, a critic of the district. "It was like being told you'd been diagnosed with the weakest form of cancer."

The increase is effective immediately, but could be reconsidered at another meeting next week.

E-mail Carl Nolte at cnolte@sfchronicle.com.

©2001 San Francisco Chronicle Page A10

-- Swissrose (cellier@azstarnet.com), February 09, 2001