Despite drought conditions, the Sacramento Municipal Utility District said Tuesday that it will not enact a rate surcharge to cover for shortfalls in its hydroelectric capacity.
SMUD said that advance planning for drought risks included financial buffers to mitigate increased power costs.
However, “Next year could be more challenging,” the utility warned.
SMUD said three straight dry years have “significantly impacted” its hydro contracts and a network of dams and reservoirs in the Upper American River Project. The utility plans to transfer about $35 million from its designated hydro reserve funds to purchase power to replace the shortfall in hydro generation.
Hydro power is the utility’s most economical power source. The 688-megawatt UARP produces about 15 percent of SMUD’s typical power needs, or enough to power more than 240,000 homes.
SMUD said a fourth consecutive dry year would likely prompt a hydroelectric rate surcharge next year that could be as high as 4 percent. The surcharge would be in effect for 12 months.
Call The Bee’s Mark Glover, (916) 321-1184.