Burlington Electric proposes 4.5% FY26 rate increase while keeping strong electrification spending

Burlington Electric Department (BED) managers presented a fiscal 2026 operating and capital budget to the City of Burlington Board of Finance and proposed a 4.5 percent overall rate increase, effective Sept. 1, 2025, to cover rising costs while maintaining investments in electrification and equity programs.

BED General Manager Darren Springer said the FY26 proposal maintains a workforce of about 123 FTEs and continues significant funding for customer electrification: approximately $1.6 million for rebates and $2 million for efficiency programs. Those programs include incentives for heat pumps, electric vehicles, e‑bikes and other electrification technologies; Springer said those investments are intentionally larger than state minimums to spur load growth consistent with the city’s net‑zero goals.

Why it matters: BED told the board it must balance ongoing investments in electrification with rising uncontrollable costs. Emily Stebbins Wheelock, presenting budget detail, said operating revenues without a rate increase would rise only about 1.5 percent from FY25 projections, while transmission and fuel costs are projected to push operating expenses up 9 percent overall. BED said REC prices and miscellaneous power supply revenues are favorable in the short term, but that transmission charges — which the utility cannot control — are the single largest increase line item.

Rate case and customer impacts: BED said the proposed 4.5 percent rate change would increase a typical residential monthly bill by about $3.78 and a typical small general commercial bill by about $4.81. The department plans to file a tariff and rate case with the Board of Finance on May 19 and seek full council consideration on June 2, officials said. BED also proposed expanding its energy assistance program to include nonprofit shelters that serve unhoused residents and to allow affordable housing providers that pay customer bills to transfer discounts to residents if documented.

Capital plan and McNeil: BED’s capital budget for FY26 totals roughly $15.2 million, the department said, funded through revenue bond and GO bond proceeds. BED highlighted McNeil generating station investments, including engineering and implementation funds for a wood‑chip dryer designed to improve fuel moisture content and efficiency; staff said the dryer engineering is underway and implementation could span FY26–FY27. BED also noted potential battery storage, transformer replacements (projected costly and long‑lead), a SCADA and advanced distribution management system, and IT upgrades.

Threats and opportunities: Springer and staff identified constrained renewable supply in regional markets, higher transmission costs, and federal funding uncertainty as near‑term threats. They said Hydro‑Québec’s reduced spot sales to New England and canceled offshore wind leases at the federal level have tightened regional renewable availability. BED also noted an EV charging grant (just under $5 million) is currently frozen at the federal level, creating uncertainty for planned charging investments.

Financial metrics and outlook: The FY26 plan projects a net operating loss of about $1.5 million (on an accounting basis) but a total net income of approximately $2.2 million after below‑the‑line items; projected ending operating cash on June 30, 2026, is about $13.2 million. BED said the budget aims to meet bond covenant targets (debt service coverage ratio minimum of 1.25) while sustaining credit metrics; management noted an adjusted debt service coverage projection around 1.15 given the mix of capital and operating assumptions.

Questions and follow up: Councilors asked about McNeil’s economics and environmental footprint; BED said McNeil has provided net benefits over the last decade and that options to reduce emissions include gaining greater operational control with joint owners and implementing efficiency measures such as the wood‑chip dryer. Councillors also asked about transit and airport access, the timing of capital projects, and how much a 1% rate change would represent in dollars — BED staff said 1 percent equates to roughly $500,000 in revenue. BED managers said they evaluated and cut roughly $4.5 million in proposed spending during budget preparation to limit rate pressure.

BED staff indicated the department will bring the formal rate and tariff materials to the board for its May 19 meeting and the full council on June 2 for further review and action.