Newberry staff proposes utility rate increases as depreciation and $80 million wastewater project loom

City staff presented the proposed 2026 budget and recommended rate changes for Newberry’s utilities Tuesday, saying electric rates would rise 4.5%, water rates 7.5% with larger increases in higher tiers, and wastewater rates 8.5% for all customer classes. The increases would raise average monthly bills by about $5.37 for electric, $4.30 for water (for an 8,000-gallon monthly user) and $5.91 for wastewater, for a combined average increase of $15.58 per residential customer, staff said. Dallas, the city’s budget presenter, told commissioners the city is not projecting an increase in the Power Cost Adjustment and that, “It’ll actually stay about flat this year. So we’re not projecting an increase in the PCA for next year.” Why it matters: staff said the city’s utilities face rising input costs across electric, water and sewer — from transformers and poles to copper and underground cable — and that a major upcoming wastewater treatment plant will sharply increase depreciation costs. City staff estimates the new treatment plant will add about $2,000,000 a year in depreciation for wastewater; the city’s entire current wastewater department budget is roughly $2,000,000, staff said, meaning full funding of that additional depreciation would require a near doubling of wastewater revenue if the commission keeps the current depreciation policy. What was discussed: staff said the utilities funds must be self-supporting. The presentation noted the electric utility lacks a development-fee mechanism to fund capacity expansions — unlike water and wastewater — so rates must cover capital needs such as a planned second feed into town and debt service tied to system upgrades. The wastewater treatment project was included in planning as an $80,000,000 line in the draft budget, staff said, describing that total as the working planning figure that combines grant and loan assumptions. A staff spokesperson said the number is to avoid repeated budget amendments while bids and contract amounts are finalized. Direction requested: staff asked the commission for guidance on the city’s depreciation policy. Dallas said commissioners had previously directed staff to examine options after noting depreciation expenses are “vastly outpacing” the city’s ability to raise rates. Staff said it would return with policy options and analysis before the next budget cycle in 2027. Debate and context: commissioners and staff traded views about how much depreciation to fund now versus later. One commissioner urged excluding the wastewater plant depreciation from full funding in the short term to preserve capacity to maintain other assets; others emphasized that utility funds must remain self-supporting and that subsidizing utility rates from the general fund would shift costs to residents who are not utility customers. Staff noted they will rerun some electric purchase-power projections before the commission’s hearings because recently announced changes at a regional provider could lower the purchase-power forecast. Background figures cited by staff: the proposed electric operating budget for 2026 is $7.4 million (up from $6.4 million); the water fund proposal is $1.7 million (up from $1.46 million) based on a 7.5% increase; and the wastewater fund is proposed at $2.1 million (up from $1.9 million). Staff also said the city will add one wastewater operator FTE in anticipation of staffing requirements when the new plant comes online. What’s next: staff said it will present policy options on depreciation and updated rate projections at the commission’s upcoming hearings and will rerun purchase-power numbers before the first budget hearing.