Rolla Municipal Utilities forecasts higher costs, proposes modest rate rise for FY26

Rolla Municipal Utilities (RMU) presented a quarterly operational and financial update to the City Council on Aug. 18, reporting lingering costs from storm restoration and continuing upward pressure on wholesale power prices. RMU business manager Jason Grondell and finance manager Gwen Cresswell said year‑to‑date operating revenues for FY25 were about $25.4 million and operating expenses about $28.1 million, producing a net loss of roughly $585,000 through the third quarter. Staff attributed expense increases to tornado‑related restoration and higher power‑purchase costs. RMU said total tornado recovery costs were approximately $1.5 million; about $500,000 of that damage was to a roof expected to be covered by insurance, leaving roughly $1.0 million of unreimbursed costs; FEMA reimbursement at 75% was being pursued for eligible expenses. For FY26, RMU’s draft budget projects electric revenue of roughly $32.9 million and electric expenses of about $32.82 million (a narrow operating margin), while projected water revenue is roughly $5.126 million against expenses of $4.814 million. Gwen Cresswell said the utility intends to implement modest rate adjustments effective Oct. 1: the residential energy rate is proposed to rise from 8.5¢ to 9.1¢ per kilowatt‑hour, about a 6 percent increase, producing roughly $1.2 million in additional electric revenue. Staff noted a series of generation‑and‑market items affecting long‑term costs, including repairs to Chillicothe generation, participation in regional combustion turbine projects and changes to capacity credits for local generation. RMU also reported continued work on local electric and water infrastructure projects (undergrounding lines, replacement mains, Nogogami pressure zone pump station) and said much of the tornado restoration has been completed. Why this matters: higher wholesale power costs, aging infrastructure and recovery from storm damage are increasing the cost base for municipal utilities nationwide; RMU’s staff said the proposed rate change is calibrated to restore a modest operating margin and to help fund capital and reserves. Council questions: members asked about rooftop or distributed solar for homeowners, how net metering works and prospects for regional coal‑plant closures; staff said solar interconnections are common and customers are encouraged to consult RMU about net‑metering nuances. RMU also noted the utility has no debt and contributes a 5 percent pilot payment in lieu of taxes to the city coffers (budgeted at about $1.9 million for FY26). Next steps: RMU’s Board of Public Works approved the FY26 budget July 29; the proposed retail energy rate increase is scheduled to go into effect Oct. 1, 2025, subject to final administrative steps. Council received the presentation and asked follow‑up questions; the matter requires no council vote to take effect when implemented by RMU under its governing board.