City staff and a consultant presented a proposal to require developers and large customers to share more of the upfront cost when new electric, water or gas lines must be extended to serve development.

Advisory board members and staff framed the topic as a balance between protecting existing ratepayers and remaining competitive for new housing and business development.

Utility staff said Hastings currently pays most line-extension costs and that the typical per-lot investment by ratepayers is substantial. Kyle (staff member) told the board, “Currently, it costs, the rate payers of the utilities $7,500 on average per lot to, to to place that infrastructure to provide that power.” Staff and JK Energy Consulting recommended several methods — a percentage-based contribution, an allowable investment limit per lot and different treatments for residential, irrigation, general service (commercial) and large-power customers.

Under the percentage approach, staff showed how different developer contribution levels change payback time to the utility. At present, the average simple payback to Hastings’ ratepayers is about 19.9 years; a 25% developer contribution would reduce that payback and shift some of the cost off existing customers. Staff noted other utilities use a range of practices—NPPD uses a 50% residential cost share in some places, while some cities use fixed per-lot caps.

For commercial and smaller industrial service, the consultant recommended an allowable investment limit (AIL) tied to projected power usage and a short payback term so the credit issued to the customer reflects expected revenue. Staff presented sample AIL numbers and payback windows (one-and-a-half to two-and-a-half years) and invited board guidance on the appropriate payback period for Hastings.

Board members repeatedly emphasized the tradeoffs between protecting ratepayers and not discouraging economic development. One board member summed up the trade-off: “It is a balancing act.” Jeanette DeWalt, Board member, urged a pragmatic approach: “My opinion, residential 25% and commercial 2 years, but everyone might have a different opinion but that's mine.”

Staff said they will return a formal draft policy to the board and council after incorporating feedback and asked for direction about which approach to model in the final proposal.

Discussion points
- A baseline residential per-lot cost to ratepayers of about $7,500 was presented; current simple payback to utilities is about 19.9 years absent developer contributions.
- Options presented: percentage-based residential contributions (percentage of actual cost), per-lot allowable investment limits (AIL) and a usage-based AIL for commercial customers with short paybacks.
- Irrigation customers are few, but staff proposed a horsepower-based charge ($70.74/house horsepower) to reduce seasonal volatility for ratepayers.
- Large-power customers (over 1 MW) would be handled case-by-case; staff requested flexibility to negotiate with council approval.

Direction and next steps
- Staff will ask the JK Energy consultant to produce a final draft policy reflecting board preferences (the board signaled interest in a percentage-based residential approach and a short AIL-based commercial credit). The draft will be presented during the budget process and brought back for board review prior to any council consideration.

Ending
Board members asked staff to test draft numbers against recent and projected developments to show likely revenue impacts and to keep economic development partners (Hastings Economic Development Corporation) in the loop so policy changes do not create a practical barrier to attracting new industry or housing.