Utilities Advisory Commission - November 4, 2026

Commission recommends annual fee to reserve electric capacity

The Utilities Advisory Commission voted 4-1 to recommend that the City Council approve a capacity-reservation program for new or expanded electric loads of at least 2.5 megawatts. Staff proposed a nonrefundable annual charge of about $38,000 per megawatt, with an initial one-year agreement that could remain in effect for no more than three years.

The agreements would hold identified substation and sub-transmission capacity when multiple applicants are competing for limited room. Separate agreements would address customer-specific distribution upgrades. Staff estimated that about six active prospective loads are seeking a combined 20 megawatts across the city.

Commissioners supported creating a formal process that could discourage speculative requests, but they questioned how the charge was calculated. Staff based the proposal on the depreciated value of existing assets, while Commissioner Metz argued that future energy, resource-adequacy and grid costs should be considered to avoid shifting costs or risks to existing customers.

The commission removed the word “conceptually” from staff's recommendation and requested an implementation report after one year, or sooner if the program is not working. Staff plans to present the proposal to the Economic Development Committee before taking it to the City Council.

Preliminary forecast puts wastewater rate increase at 12%

Staff's preliminary fiscal 2028 forecast calls for rate increases of 7% for electricity, 7% for gas, 6% for water and 12% for wastewater collection. The wastewater projection was reduced from an earlier 14% estimate. No commission action was requested.

The projected monthly increase for a median residential customer fell to $31.50 from an earlier estimate of $38.50, a reduction of about $6.90. Staff attributed the forecasts to factors including grid-modernization spending, declining gas sales, a projected 7.5% wholesale water-rate increase and wastewater infrastructure costs.

Wastewater costs include the regional treatment plant rebuild and the resumption of sewer-main replacement at 2.5 miles per year. Staff said larger projected wastewater increases in fiscal 2029 and 2030 are primarily tied to contributions to treatment-plant reserves.

Commissioners said the preliminary report needed clearer revenue, cost and reserve projections, along with visual breakdowns showing how individual factors affect rates. Staff plans to provide more detailed information when final rate proposals return in March and April 2027.

Panel advances wastewater capital reserve target

The commission approved a recommendation to set the wastewater collection utility's capital-improvement reserve target at the average annual capital budget. The amended calculation uses 20% of the forward-looking five-year capital budget and applies specifically to the collection system.

The commission also approved forwarding a broader reserve-management recommendation to the City Council. Staff had proposed separate rate-stabilization targets equal to 10% of operating expenses, excluding supply costs, for the electric, gas, water and wastewater collection utilities.

Commissioners questioned whether the same target was appropriate for utilities with different risks and whether separate rate-stabilization reserves were needed in addition to operating and capital reserves. Their discussion focused on customer affordability, liquidity, bond-rating considerations and whether empty electric, gas and wastewater stabilization reserves should be retained.

Staff will recalculate the wastewater stabilization amount using collection-system expenses, incorporate drought-related demand reductions into the water cost-of-service study and develop clearer rules for reserve deposits and withdrawals. The recommendations are expected to proceed to the Finance Committee and then the City Council.

Primary sources

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