Modesto-area farmers will pay higher water rates this year, irrigation leaders decided Tuesday after a hearing dominated by a dispute over electricity customers being forced to subsidize farm water prices.

The issue last week leaped from the boardroom to the courtroom with a class-action lawsuit asking a judge to reverse the 90-year-old subsidy.

Some in the audience spoke about the legal challenge and asked for more aggressive action to eliminate the policy. Power customers will shoulder 82 percent, or more than $17 million, of the cost for delivering water this year, even after Tuesday’s rate increase.

I’m hopeful the electorate will become more attuned to these costs and rates, and we can see a change in the board at future elections. – Lee Delano, retired MID assistant manager

“I object to this subsidy,” said Lee Delano, a retired MID assistant manager.

Steve Mohasci, a retired utility economist, said 115,000 MID electricity customers, many of them poor, are overpaying to keep water prices low for about 600 farms, with the average subsidy about $157,000.

“That’s not exactly equitable social policy,” he said.

John Duarte, who owns a Hughson nursery, calculated that farmers will pay $16.75 per acre-foot of water with Tuesday’s increase and concluded, “I think the water’s too cheap.” Farmers would need to pay about $92 to cover MID’s delivery costs, but charging that much would lead to growers pumping more groundwater, lowering water tables and perhaps resulting in “astronomical environmental problems,” he said.

“I encourage getting to a more realistic water rate,” said Duarte, figuring that about doubling the new price might strike a balance.

I believe the class-action lawsuit could be the genie let out of the bottle. – John Duarte, Hughson nursery owner

Board member John Mensinger, who represents an urban district, said, “I happen to agree (Tuesday’s increase) is not enough.” But a majority of the five-member MID board are themselves farmers, and even if they wanted sharply higher prices, state law governing rate hikes would prevent that without going through another three-month approval process, Mensinger said.

Others came to farmers’ defense.

“I want to compliment this board for staying fast and not wavering,” said dairyman Pete Verburg.

$21.2 million What MID will spend this year delivering water

$3.82 million What MID will charge for water

Attorney Stacy Henderson, who represents some growers, said MID’s irrigation division deserves, but doesn’t get, “proper credit” for some things that benefit its power division; farm advocates have noted that MID canals accept power poles and carry rainwater away from the city, for instance. Henderson predicted that “misrepresentations will be clarified,” and “the result will be that what MID is doing is fair, legal and proper.”

Tuesday’s action will bring 20 percent more water revenue to MID. A drought surcharge imposed in each of the past two years will not be levied this year; MID expects to deliver 36 inches of water, double last year’s historic low 18-inch allocation.

Board members Nick Blom and Larry Byrd, both irrigation customers, said small farms struggle to make ends meet and all farmers pay electric bills like everyone else. Byrd said agricultural pumps brought MID $13.8 million in 2015.

Small family farms are dwindling but they’re still out there. – Nick Blom, MID board

“Three or four people have been beating the drum about the subsidy – I can hardly say the word, it makes me so sick to think about it,” Byrd said. “Now the snowball has gotten bigger and they’re all tickled pink because they’ve gotten what they want with all this media attention, but it’s pitting the farmer against the city.

“I’m not going to let anybody put pressure on me,” Byrd continued. “Hell yes, I’m ready to take on the fight.”

I’m not going to have pressure put on me by three or four individuals or The Bee or any editorial on how I decide to vote or what’s good for the district. – Larry Byrd, MID chairman

Duarte, a 2011 MID candidate who had not previously addressed the issue, said he “didn’t hear any disrespect” from Tuesday’s audience. “We’re just giving you ideas on how we see things and what you might want to weigh,” he said.

The class-action lawsuit mentions the farm subsidy while focusing on the larger issue of MID simply charging more than it costs to deliver electricity. Bonding documents last summer suggested that MID’s net electricity profit came to $466 million from 2010 to 2014, or an average $93 million a year; the extra money pays down debt and builds reserves.