The Turlock Irrigation District Board of Directors approved a $516.2 million 2011 budget on Tuesday, but made a last minute change to redirect $590,000 from electric capital projects to fund rehabilitation of the district’s canal system.
The budget does not call for a rate increase – in contrast with the Modesto Irrigation District’s 7 percent rate increase for 2011. In total, the Operating and Maintenance spending plan is up less than 1 percent from the current year’s budget, largely due to union salary increases and state mandated increases in renewable energy resources.
“I’m pretty proud of where we are. I think it’s pretty impressive,” said TID Director Michael Frantz.
The approved budget includes eight fewer positions for TID than in 2010. None of the positions to be eliminated are currently filled.
The budget allows for new sources of revenue for the district, including an anticipated one-time $4.5 million state grant for TID’s 1.2 megawatt fuel cell, operated in partnership with the City of Turlock’s wastewater treatment plant. The budget also calls for $2.2 million in revenues from the sale of renewable energy credits, generated by the district’s new 136.6 megawatt Tuolumne Wind Project in Klickitat County, Wash.
“Whether or not that’s ongoing or a one-time situation will be driven by the policy of the board,” said TID Chief Financial Officer and Assistant General Manager of Financial Services Joe Malaski.
The budget projects increased fuel and purchase power costs – up $3 million from the current year to $294.1 million – but most of that increase will be offset by $10.9 million in enhanced revenue from the wholesaling of energy.
Directors by and large agreed with the budget, as proposed and drafted over the past four months. But directors expressed concern that irrigation needs were not fully addressed in the $181.8 million 2011 capital improvement plan presented Tuesday, the majority of which would fund the district’s proposed 174-megawatt Almond 2 Power Plant near Ceres.
The irrigation capital budget was previously increased $410,000 from the plan initially proposed in November to finance a tie from Lateral 4 1/2 to Lateral 5 1/2 and an additional $250,000 in canal rehabilitation. Director Ron Macedo moved that an additional $590,000 be directed to that rehabilitation.
“I appreciate what you’ve done there though I don’t think it’s gone far enough,” said Macedo. “… Based on our presentation a couple weeks ago, when we’re 100 years behind on our gunite, I think it’s beholden to us to take action.”
That presentation showed the district is far behind on maintaining its canal system by resurfacing canal walls with gunite – a form of sprayed concrete. At the then-current rate of spending $1 million per year on gunite rehabilitation, it would take 100 years to repair the whole system; an increase to $2 million per year would finish the job in 50 years, while $3 million per year would do the job in 33 years.
Those projections are reliant upon canals continuing to deteriorate at their current rate. As the district was forced to drag canals with heavy chains this year to clean them from aquatic growth – as opposed to the use of chemical solutions in past years – a potential for increased deterioration exists.
The district is projecting a banner water year for 2011, with potentially an additional $5 million in revenue coming from generation and irrigation water sales made possible from the expected torrential rain.
“If we end up with another $5 million that’s a good start to potentially delaying another rate increase,” said TID Director Charlie Fernandes.
But by not using some of that revenue to do the work now, Macedo said, it could cost the district more in the future.
As additional water revenues are at the whim of the clouds, at Frantz’s suggestion the additional $590,000 for gunite rehabilitation was redirected from within the existing budget so as not to raise the total budget cost. The work will come at the expense of the lowest-priority electric capital projects.
With Macedo’s motion, the district will spend $2.05 million on gunite in the coming year. The district will spend 2011 preparing a better plan to maintain the canals long-term, Macedo said, which could involve more spending on gunite.
“It’s a start. It’s just a start,” Macedo said. “I think going forward to next year, you need to do even more.”
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