Redding Electric presents five-year plan, proposes rate increases and capital ramp-up

Redding Electric (REU) presented its proposed budgets for fiscal years 2026–27 and a five-year financial plan that anticipates multi-year rate increases, increased capital investment to replace aging distribution infrastructure and continued spending on wildfire mitigation.

REU’s presenter said the utility is focused on four priorities: retail sales growth, power-supply and wildfire mitigation costs, filling vacancies without requesting new positions in this budget cycle, and a significant capital-investment program to address deferred replacements. The presentation said FY26 expenditures are projected at about $192.8 million and FY27 at about $198.7 million, representing roughly a 3% growth assumption driven primarily by power-supply and capital needs.

The utility reported it is not budgeting speculative wholesale-market sales except for contracts already in place; any additional short-term wholesale revenue would be upside and used to offset future rate increases. REU also described a recent bond issuance for infrastructure (approximately $70 million) and said it is maintaining a $25 million line of credit to manage liquidity and target days-of-cash in the 75–180 range. The presenter said the utility is aiming to keep residential bills at or below 2.5% of median household income as an affordability KPI.

Officials told council there are no new staffing requests in the REU budget, and that personnel costs are roughly 25% of REU’s budget (lower than the general fund). REU plans to double capital expenditures compared with FY24 to catch up on the distribution system and fund power-plant infrastructure and telemetry/GIS modernizations.

Council members asked about timing and magnitude of future rate increases. The presenter said the plan assumes continuing rate adjustments (the current schedule included a 4% increase that already went into effect and an anticipated 5% recommendation for a future year) but that the utility hopes to stabilize rate increases if retail load growth materializes. A council motion to accept the REU presentation and “suggest staff continue this direction” passed unanimously.

The presentation highlighted wildfire mitigation and vegetation management costs, the rising cost of insurance for generation assets, and new spending on safety programs and customer-assistance programs that allocate a share of retail revenue to lower-income customer discounts.

Votes at a glance - Motion: Accept REU budget presentation and suggest staff continue working in this direction. Mover: Council member Resner. Outcome: approved unanimously.

Next steps: REU will bring quarterly financial updates to council, refine the five-year financial plan and proceed with the rate-setting process and public outreach when a rate proposal is ready.