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Council directs staff to draft two-year electric rate ordinance; agrees on notification and demand-rule changes
Summary
After hours of questions about an electrical rate study, the council voted to have staff return a rewritten ordinance covering two years of rate changes and to change customer notification thresholds for demand charges.
The City Council directed staff to draft a two-year ordinance to adjust electric rates and return to the council for further readings, after a prolonged discussion of a draft rate study and demand-charge rules.
Council members and staff debated how the study's proposed revenue increases translate into customer charges. Josh Hanson, assistant city manager, said the study was framed as an overall revenue target rather than a flat percentage increase to every rate line: “When we break that down … the customer charge per month would actually be a 15% increase from $20 to $23 going into October 2025,” Hanson said. He added the overall average residential increase in the first two years would be roughly 10.53% when meter charge and tiered kilowatt-hour bands are combined.
The nut graf: The council focused on how demand charges and notification procedures would affect customers and businesses and whether to adopt a multi-year schedule. After debate over alternatives — a one‑year approach versus a two‑year phased increase — the council voted to have staff prepare the two‑year plan and bring back ordinance language, and asked staff to change the notification threshold for demand warnings.
In the body: Council members pressed staff for the math behind the consultant's revenue projections, fixed-cost and per‑meter cost calculations, and how demand billing (peak demand charges) would ripple across customers. Staff reported an estimate that the cost to maintain a residential meter is roughly $27.50 per month (cost-per-meter estimate presented in the study materials) and that an overall residential rate increase in the first year would approximate 10.53% (including meter charge, the first 600 kWh block and additional kWh blocks).
Discussion concentrated on the demand charge rules: staff proposed notifying customers whose measured demand approaches the 50 kW demand threshold (originally set to trigger after repeated monthly hits) and giving a single forgiveness/warning instead of multiple strikes. Council asked staff to widen early warning outreach (change notices for customers between 40 and 50 kW) and to send advance notices during likely high-demand months.
Staff also recommended keeping the separate "all-electric" winter incentive aligned with system goals; some council members said they preferred keeping incentives to encourage winter electric use to leverage existing generation.
The council agreed to have staff prepare two-year ordinance language (keeping the revised demand-notification language and the 40–50 kW early-warning approach) and to return the ordinance for formal readings and vote. The council asked staff to provide the underlying spreadsheets and the per‑meter cost math before final readings so members can evaluate alternatives and year‑by‑year effects.
Ending: Staff will bring back a rewritten ordinance and supporting spreadsheets at a future meeting; the council voted to proceed with a two-year plan rather than a one-year package.
