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Roseville Electric presents $20 million negative cash flow in FY26 tied to RPP‑2 repower project
Summary
Roseville Electric officials told the City Council the FY26 budget shows a planned $20 million negative cash flow driven by capital spending on the Roseville Power Plant Unit 2 repower. Staff said they expect to seek debt reimbursement during the year and projected about $228–230 million in revenue for FY26, reflecting recent rate increases.
Roseville Electric officials told the City Council on April 16 that the proposed fiscal year 2026 budget will show a planned $20,000,000 net negative cash flow largely because the utility will front capital spending on a repower of Roseville Power Plant Unit 2 (RPP‑2).
City Electric CEO and Director Dan Bean said the city will use existing cash on hand in FY26 to advance the project and is considering a debt issuance during the year to reimburse those funds. “The FY 26 budget reflects a net negative cash flow of $20,000,000. This is largely driven by a major capital investment, specifically the recent approved project to repower Roseville Power Plant Number 2,” Bean said.
The utility projects about $228,000,000–$230,000,000 in revenue for FY26, the highest revenue budget the utility has prepared, staff said. Joanna Cucci, assistant director for finance and customer care, said the revenue increase reflects the full‑year effect of two recent 9% rate increases, in June 2024 and January 2025, and that no additional rate adjustments are planned for FY26.
Why it matters: staff said the repower is intended to make Roseville’s generation fleet more efficient and to reduce market exposure and transmission costs when the city can produce power locally. Bean and staff described long‑term financial and reliability value from upgrading internal generation assets; Bean said earlier estimates project as much as $150,000,000 in value over a 10‑year horizon from increased efficiency and market opportunities.
Details and context: staff characterized the RPP‑2 program as a multi‑year capital plan that contributes to FY26’s higher capital spending. Cucci and Bean reported a range of large projects in the five‑year capital plan, including major investments in RPP‑2 repower (tens of millions), substation rehabilitation and new switchgear. Cucci said projected capital spending for FY26 includes approximately $28,000,000 for the repower and noted that purchase power remains the utility’s largest operating cost, typically about 60% of the operating budget.
Risk management and next steps: staff said they are monitoring natural gas and renewable market risks, and that a contract that reduces natural‑gas transportation costs with PG&E expires in FY27 and will require renegotiation. The city has begun discussions with financial advisers about timing and structure of potential debt issuance; staff said January is often a favorable month for issuing debt but will follow adviser recommendations when final decisions are made.
Public engagement and process: the presentation was information‑only; the council did not take action on rates or debt at the April 16 meeting. Staff said they will continue to update the council as financing options and project milestones develop.
