UAC backs 6% electric rate increase and $5M transfer for grid modernization

The Utilities Advisory Commission reviewed staff’s FY27 electric financial forecast and recommended the City Council approve a 6% overall electric rate increase for FY27.

Director Belier told the commission that roughly half of the electric utility’s costs are supply related and the rest are for distribution and operations. Staff proposed a 6% increase — described as a 4.5% distribution increase combined with supply adjustments — to fund a multi-year grid modernization capital program the city plans to finance in part by bond issuances later this decade. “We are actually planning to do a bond issuance in 2027 for the first tranche of funding for the grid modernization project,” Director Belier said.

Why it matters: the city’s grid modernization program is a multi‑year program projected to require large capital investments (staff presented a roughly $400 million CIP over seven years for the program and related work). Staff also proposed a $5 million transfer to the CIP reserve and recommended setting aside $6 million to the hydro-rate stabilization reserve to hedge poor hydro conditions in dry years.

Commission discussion: commissioners asked detailed follow-up questions about supply mix, exposure to market rates, how power purchase agreements will be procured, time-of-use pricing and whether additional demand would change marginal costs. Subcommittee members reported general support but requested additional materials, including an accessible distribution of customer usage and the effect of the change on different usage brackets.

Vote and direction: After discussion the commission moved and seconded staff’s recommendation and the motion passed on a roll call vote (6–1). Commissioners asked staff to return with a distribution (histogram) of customer bills to better show how the change affects different customers and to refine time-of-use rate analysis at the next briefing.

Ending: The recommendation goes to the City Council for adoption. Staff said further briefings will be provided as the grid modernization plan and financing schedule are finalized.