Hastings Utilities lays out budget, says rate increases and city 'dividend' will shore up cash; generation options flagged

Hastings Utilities staff presented a budget and multi‑year financial forecast to the Utility Board on July 24, outlining planned rate increases from recent cost‑of‑service studies, a proposal to convert the utility’s payment‑in‑lieu of taxes (PILOT) into a separate city “dividend” fee, major capital work and options for future generation.

Derek (utilities staff) framed the budget around cash‑management goals, saying the utility’s target is to hold about 50% of annual operating expenses in unencumbered cash for rate stability and to finance future investments. "Our target for unencumbered cash, for rates and rate stabilization combined is to have about 50% of our total expenses," Derek said.

Staff described the steps embedded in current ordinances derived from prior cost‑of‑service studies: an approximate 5% consolidated increase for electric revenue, a 6.3% step for gas, and the final year of a 5% infrastructure fee increase for water. Staff told the board those steps are intended to restore cash used for recent capital investments and to smooth possible larger increases later.

On the revenue pass‑through for the city, staff proposed converting the amount now collected inside utility rates (referred to in the meeting as the pilot or PILOT) into a separate city dividend fee that would be collected and…