Dover Council adopts electric rates and opens public hearing on FY26 electric budget

The Dover City Council adopted new electric rates and tariffs and held a public hearing on the city's fiscal year 2026 electric budget, which staff said responds to rising wholesale power prices, aging equipment and higher labor and materials costs.

The budget hearing featured a presentation from Sean Burget, systems operations and engineering superintendent for the City of Dover Electric Department, who told council the FY26 plan concentrates on "high expense purchases and larger projects" including substation transformer replacements, overhead-to-underground conversions and support for new service extensions to accommodate new housing developments. "We have 13 substations, and these transformers have a life expectancy of 40. We have 4 of them that are over the age of 40, and we're planning to replace these," Burget said.

Burget explained that a central driver of the changes is volatility in regional wholesale pricing managed by PJM Interconnection. "For FY25 and 26, Dover is gonna see prices of $269.29 per megawatt day, whereas last year, it was $28.92," he said. He and other staff told council that the city hedges a substantial portion of its power purchase but remains exposed to market fluctuations.

Why it matters: the electric fund is an enterprise that must cover the cost of purchased power, operations, maintenance and capital replacement. Council and staff said short-term budget increases are intended to ensure reliability as equipment ages, to meet bond covenants and to protect the utility's credit rating.

Council and staff emphasized steps intended to limit rate impacts for customers. Controller and Treasurer Patricia Martin told council that wage increases negotiated in collective bargaining and rising health-insurance and paid-family-leave costs are driving portions of the budget's personnel expense. City Manager Dave Hugg said the city uses an outside energy authority to prepare forecasts and repeatedly hedges power purchases: "We're already about 55% hedged for the next energy year," he said, adding that some budget surpluses from previous years were returned to ratepayers in the past.

Public comments during the hearing were sharply critical of possible rate increases. William Faust of 136 Orchard Avenue said, "I heard a lot of talk, but no answers," and urged the council to find alternatives rather than passing costs to households. LaChelle Paul, who spoke remotely, told the council: "People can't continue to afford to pay for these increases. When you were voted into office, people want you to have their best interest at heart." Staff and council members responded during the hearing by describing the multiple cost pressures and pointing to the city's efficiency programs.

Council action: after the presentation and public comment, a motion to adopt the proposed electric rates and tariffs for the 2025-26 billing year was made and seconded. Council approved the rates by voice vote; the meeting record shows the tally as five in favor and two opposed. Staff said the rates and tariffs will take effect July 1, 2025, and that the city will revisit the power-cost adjustment and rate-study analysis in the coming year.

What remains unresolved: staff and council acknowledged the difficulty of forecasting wholesale energy costs, described contingency uses for unexpected charges (for example, when the city's Van Sant generation unit is called into operation or when PJM changes dispatch orders) and said they will return with updated modeling as additional information becomes available.

Next steps: the council's formal adoption of the full FY26 budget is scheduled at the next council meeting during the budget ordinance second reading. Council members and staff also said they will continue outreach about the city's energy-efficiency program and examine whether financial-policy credits or rebates are appropriate if market conditions produce surpluses.