Hurricane adopts five‑year power rate design with PCA; council asks for monitoring and staged review

The Hurricane City Council adopted a five‑year power rate design and approved a Power Cost Adjustment (PCA) mechanism intended to pass wholesale power cost fluctuations through to customers using a 12‑month rolling average.

Jill Dersett of Utility Financial Solutions presented the study’s three components: a five‑year financial projection, a cost‑of‑service analysis and a rate‑design proposal. She said power costs represent roughly 74% of the utility’s expense structure and projected wholesale power costs increasing about 3% for planning purposes. Dersett recommended a PCA to flow those changes to customers using a rolling average to avoid sharp month‑to‑month bill spikes. "We take your power cost over 12 months...so that as a new month comes on an old month falls off," she said, describing the smoothing method.

Dersett’s projections showed average capital spending rising from about $4.0 million per year to roughly $10.8 million per year over five years. The plan pairs the PCA with bonding to finance growth‑driven capital projects; Dersett said bonding could account for roughly 70% of the capital plan in some years and help stabilize rates.

Council members raised affordability concerns. One council member noted staff estimated the PCA would translate to about a $2.31 monthly increase for a 1,000 kWh customer in year one (rising to $2.61 by year five under the consultant’s assumptions) if wholesale costs follow the consultant’s projection. Council members emphasized the ability to use reserves and the council’s discretion to limit how much of any single-month spike is passed through. "If you get a really high power bill and we're not comfortable bringing all of that through the PCA, we can make an adjustment to offset some of that through the cash balance," Dersett said.

The Power Board had recommended the PCA unanimously; after debate the council voted unanimously to adopt Resolution 2026‑17 approving the five‑year rate design with PCA and bonding approach. Council members also asked staff to present an interim review in about a year and asked for continued reporting on impacts to customers, particularly fixed‑income households.

Why it matters: The PCA is intended to protect the utility’s financial position from market volatility while avoiding sudden, large rate shocks for customers. The council paired the PCA with reserve oversight and bonding and directed staff to monitor impacts.

Next steps: Resolution adopted; staff to report back in approximately one year with early results and to keep the council informed about bond timing, reserve use and customer impacts.