The Lassen Municipal Utility District today released the General Manager’s PUC section 14401 Report — Considered Proposed 3-Year Rate Plan to be presented at the LMUD board’s Sept. 23 meeting.
If approved at a subsequent public hearing, the cost for an average LMUD customer who uses 800 kWh, would rise by about $20 per month.
According to the report, “In the interest of providing long-term price certainty for our customers, staff is recommending a three-year rate plan designed to ensure that utility revenues keep pace with inflation, support essential daily operations, and fund future investments in infrastructure, equipment, and facilities. This plan is essential to maintaining the financial health of the utility and continuing to execute on our mission of delivering safe, reliable, and affordable power to the communities we serve. Through the district’s board-adopted financial policy (3033), it is required to maintain financial metrics within specified parameters ‘to ensure the continued financial well-being of the District.’
“This recommended 3-year rate plan was developed using known operating expenses and a 3 percent inflation factor, future contract obligations, and purchased power forecast data. In December 2026 the district will realize a fundamental change in how purchased power is procured and delivered. This change will come with additional costs and uncertainties. Known costs related to transmission have been modeled along with forecasted energy prices. The Cash Flow Forecast utilizes data from the 4-year Capital Improvement plan presented to the Board during the FY25/26 budget process.”
Public Benefits Charge Realignment
According to the report, “On 1998, AB1890 mandated that all publicly owned electric utilities establish a non-bypassable charge to fund public benefit programs … This mandate is funded by a 2.85 percent charge on all energy sales. Since the charge’s inception, LMUD has absorbed this cost into its base rate commodity charge … Staff recommends separating the 2.85 percent public benefits charge from the base rate and listing it as a distinct line item on customer bill. Effective February 2026 billings.
This change is expected to increase the average customer’s bill by approximately $4.45 per month.
Transmission Charge Breakout
According to the report, “With the in-service of the Skedaddle Substation and the new NV Energy interconnection, LMUD is drastically improving system reliability and structurally changing how energy is delivered to our system. In order to provide transparency for these changing costs, staff recommends restructuring rates to more accurately reflect how our costs are incurred.”
The recommendation is to add a new transmission charge of 5.5 cents per kWh to all rate classes and reduce the per kWh charge by 4.5 cents, change it’s name to ‘Power and Delivery,’ rescind the resolution authorizing the 1 cent of sales to the Skedaddle Fund, amend the PDCA to remove line 10 — board designated Reserves – Skedaddle, rename the Facility Charge to System Infrastructure (but no changed to the charge).
This change is expected to increase the average customer’s bill by $7.30 per month. The report suggests three alternatives.
Commodity Charge Adjustment
According to the report, “LMUD’s commodity charge (kWh) is designed to recover variable costs associated with energy procurement and distribution. Based on industry-standard forecast data along with known future distribution costs, LMUD anticipates increases in purchased power costs and other variable expenses such as internal and contract labor, and regulatory compliance costs related to new and changing state and federal regulations. Between 2020 and 2025, LMUD experienced significant cost increases in essential materials, equipment, and services.”
The staff recommendation is to increase the Commodity Charge by 1 cent per kWh, increasing the average customer’s bill by $8.23 per month.
Time of Use Pilot Program
According to the report, “LMUD’s current billing structure applies a uniform kWh rate across all hours and seasons, which does not reflect the variable nature of our energy procurement costs. This misalignment can result in inconsistent margins — and in some cases, negative margins — during high-cost periods, which ultimately increases costs for all customers. As a community-owned utility, LMUD seeks only to recover the costs necessary to sustain safe and reliable operations. Aligning customer rates with actual energy procurement costs can help to reduce utility expenses and subsequently lower customer rates.
“Staff Recommendation Launch a Time-of-Use (TOU) pilot program for Domestic/Residential customers. This limited opt-in program will allow LMUD to evaluate the effectiveness of TOU pricing and assess its potential for broader implementation.
