During the Lassen Municipal Utility District (LMUD) Board of Directors meeting, the board approved the establishment of two new financial accounts aimed at stabilizing rates and addressing financial losses from depreciation. The decision came after a 4-0-1 vote, with new board member Charity Moore abstaining. The accounts include a board-designated reserve of up to $5 million to manage rate fluctuations due to market changes and a $15 million fund for special capital projects.
Jim Chapman, a resident of Susanville and frequent attendee of LMUD meetings, expressed concerns about the creation of these accounts, suggesting they resemble “slush accounts” and urging the board to prioritize returning some funds to ratepayers, particularly in light of the district’s solid cash reserves. He highlighted that LMUD currently has cash on hand far exceeding established goals, including 181 days for unrestricted reserves and 286 days for total reserves.
Chapman acknowledged the need for a reserve fund but emphasized that a portion of the excess funds should be returned to the community, particularly for relief from current rates. He pointed out that many residents, including ranchers and farmers, would appreciate rate reductions as they navigate financial challenges.
Director Jess Urionguena responded to Chapman, expressing caution about the excess funds and the need for financial security against unforeseen expenses. He emphasized the importance of being prepared for potential costs that could arise in the near future.
Nick Dominguez, the general manager, explained the rationale behind the proposed $15 million special capital projects account, stating it would be dedicated to infrastructure investments and help clarify financial planning over the long term. He noted that this approach would prevent the conflation of depreciation funds with new capital expenses, thus providing clearer financial metrics.
Chapman remained critical of the plans, arguing that the creation of these funds could obscure the true financial picture for ratepayers and could lead to a loss of public trust in the utility. He urged the board to maintain focus on its mission to provide reliable service and lower rates, warning against adopting practices reminiscent of larger utilities like PG&E.
Dominguez reiterated the intention behind the new accounts: to stabilize rates and ensure funds are available for necessary capital improvements. However, Chapman called for greater transparency and communication with the community regarding these financial decisions, suggesting that alternative methods could achieve the same objectives without resorting to creating additional accounts.
