Mesa staff report lower electric supply costs, request locating hires as fiber rollout increases workload

Scott Boucher, the city’s energy and sustainability director, told the Mesa City Council on April 24 that the Energy Resources Department projects lower electric supply costs for the coming fiscal year after executing new contracts and beginning a power purchase agreement with Salt River Project.

Why it matters: the council received detailed budget and performance briefings that could affect customer bills, reliability and staffing. Staff presented commodity forecasts, performance measures for electric reliability and gas emergency response, and budget requests to support a significant increase in underground utility locating tied in part to the city’s fiber-to-home rollout.

Boucher summarized the department’s public purpose as providing “safe, reliable, affordable and sustainable electric and gas utility services.” He said Mesa’s utility has shown strong reliability compared with peers and highlighted a safety milestone: the utility had recorded 2,443 days without a lost-time accident.

Anthony Cadorn, program manager, presented a four-year comparison of average residential supply costs and told the council that the department now projects its supply costs to be about 0.6% below SRP for the coming year. Cadorn attributed the movement to execution of several market contracts in fall 2024 and a new SRP agreement that began Jan. 1, 2025. Councilmembers asked about contract length; Cadorn and staff said the SRP arrangement includes a 10-year term, with other market contracts typically five years (base) and three years (peak) where suppliers would not offer longer terms.

Staff said a combination of favorable contracts executed last fall and changes to contract terms account for the electric supply forecast. The department also forecasted that electric supply would come in under budget by approximately $2.4 million and that a warm winter and favorable market conditions reduced the gas year-end estimate for FY24-25 to about $14.7 million.

On renewable energy and local generation, Boucher said the current round of city projects adds 2.8 megawatts of solar, and that downtown installations and campus projects will bring the total downtown capacity to roughly 3.6 megawatts.

Budget changes and savings: staff reported targeted reductions of roughly $358,000 and said they achieved about $416,000 of reductions and new revenue. One revenue source cited was development agreements with gas developers that yield about 8% in administrative revenue; staff said those contracts typically total about $3 million per year, producing roughly $240,000 in revenue.

Utility locating and staffing: staff described a large workload increase in locating activity—an approximately 92% increase in annual tickets (2021 to 2024) and a 310% increase in bore monitoring related to fiber and other construction. Staff said about 40% of locating requests are tied to the fiber-to-home program. The locating team currently includes 24 full-time staff and one supervisor plus four temporary and four contract employees. Boucher and staff asked the council to approve one additional supervisor and four locators to keep pace with growth; ongoing costs were presented at about $537,000 and one-time equipment costs at about $511,000.

Staff emphasized that the locating workload is expected to remain elevated for several years and said the department planned to reduce temporary and contract staff first if demand declines.

Gas operations and emergency response: staff said response times for gas-smell calls remained within the department’s target (less than 30 minutes) despite an 11% increase in service calls. The department said it had ramped hiring more than a year earlier and that training takes about a year before new hires respond independently.

Other requests: staff requested a one-time vehicle purchase for the renewable natural gas (RNG) coordinator tied to the flare-to-fuel project: $90,000 one-time and roughly $8,000 ongoing. Boucher said this would be the first dedicated “flare to fuel” vehicle for that role; he noted the city’s solid-waste fleet already includes many CNG vehicles that could receive RNG fuel once the project is operating.

Council questions and clarifications included whether right-of-way fees charged to fiber companies go to the city’s general fund (staff said they do), why commodity supply costs were treated separately from the 2% departmental reduction target, and how long the city is likely to need additional locating staff (staff said forecasts show elevated work into at least 2028). The meeting record shows no formal council vote on the budget items during the April 24 study session; staff left with direction to incorporate these requests into upcoming budget materials for council review.

Ending: staff will incorporate council direction and return with budget materials and further cost details during the council’s formal budget review process.