Utilities staff recommends 9% rate increase in FY26; board briefed on time‑of‑use and residential demand options

Los Alamos County utilities staff on Feb. 5 recommended a near‑term rate adjustment and longer‑term rate‑design changes intended to restore electric distribution cash reserves, fund planned capital and position the utility for increased load from electrification, board members were told.

Staff presentation and recommendation Karen (presenting as electric distribution lead) told the board the adopted fiscal‑year 2025 budget already assumed a 9% rate increase; staff recommends implementing that increase for FY26 (effective July 1, 2025) to improve the utility’s cash position. Staff also proposed a second, smaller increase in FY27 (a 5% placeholder in the packet) and recommended developing a residential time‑of‑use (TOU) rate with a residential demand component on an opt‑out basis, to be considered for implementation in FY27 after billing software and meter upgrades are in place.

Why it matters: staff said electric distribution ended 2024 with a $1.4 million operating shortfall and a negative unrestricted cash balance in the absence of a restricted settlement fund that had previously been used to meet reserve targets. Without action, staff warned, the utility would defer major capital projects or use one‑time restricted funds to preserve cash.

Key figures and mechanics presented - Cash and reserves: staff reported restricted settlement funds had been earmarked to re‑establish reserves, but the distribution subfund’s unrestricted cash was negative roughly $5.1 million and total cash and investments excluding the restricted settlement amount was about $6.0 million. The presentation said that using $7.0 million of restricted funds in FY26 was modeled as one option to restore a positive unrestricted balance and move reserves toward policy targets. - Rate and bill examples: Using current consumption assumptions, staff illustrated that a 9% increase would raise a typical 500 kWh residential bill from about $83.25 to $90.75 (an example in the packet). Staff compared that projected increase to CPI changes since 2015 and to neighboring providers’ typical bills. - Metering and billing changes: Staff said the vendor for the county’s existing billing system (Tyler Munis) has added a TOU module and the utility will coordinate with its AMI meter vendor (Ferguson) to enable hourly data exchange. Staff is budgeting roughly $250,000 in FY26 for software updates, meter firmware updates and bill redesign tied to implementing TOU and other changes. - TOU and demand proposals: Using the utility’s load data and consultant guidance, staff sketched an example residential TOU structure with two periods (on‑peak 5 p.m.–11 p.m., off‑peak all other hours), a higher monthly fixed service charge (example $18/month in the TOU model), a small per‑kW monthly demand charge, and on‑peak/off‑peak energy charges that together would produce approximately the same revenue target as a straight commodity increase. Staff recommended an opt‑out approach so customers would be enrolled by default but could keep a conventional rate on request.

Board discussion and concerns Board members asked about: the equity effects on customers with high single‑hour loads (e.g., homes with electric water heaters or EV charging), the size of the monthly service charge needed to reflect underlying infrastructure costs, the timing and cost of the billing implementation, and how electrification and the Foxtail Flats solar project will affect load patterns. Staff acknowledged demand charge design raises distributional issues and recommended careful customer outreach and pilot analysis; staff also urged building billing capability now rather than retrofitting later because system deployment and testing take months and cost more if done twice.

Next steps and schedule Staff plans to present a budget on Feb. 19, return with a recommended ordinance and a BPU resolution on March 19 and proceed to council hearings in April–June with the goal of making any rate change effective July 1, 2025 if adopted. Staff asked the board to confirm the near‑term revenue target and to authorize work to implement TOU and meter/billing upgrades so an opt‑out TOU with a demand element can be available for FY27 consideration.

Speakers - Karen (presenter; electric distribution lead, Los Alamos County Utilities) (government) - Philo (Utilities administration/finance; role discussed in presentation) (government) - Chairman Gibson (Chair, Los Alamos Board of Public Utilities) (government) - Board member Eric (Board member, Los Alamos Board of Public Utilities) (government) - Board member Matt (Board member, Los Alamos Board of Public Utilities) (government)

Authorities - {"type":"policy","name":"FY25 budget (includes 9% electric increase placeholder)","citation":"Los Alamos County FY25 adopted budget","referenced_by":["electric-rate-design-proposal"]}

Clarifying details - {"category":"proposed_rate_change","detail":"Staff recommended a near‑term 9% increase (modeled for FY26) and a placeholder 5% for FY27; the final ordinance amount may shift slightly when staff returns with the budget","source_speaker":"Karen"} - {"category":"service_charge_example","detail":"Example residential service charge shown at $18/month in the TOU model; current residential service charge noted at approximately $12.60/month","source_speaker":"Karen"} - {"category":"billing_implementation_cost","detail":"Staff budgeted approximately $250,000 in FY26 for billing system updates, meter firmware and bill redesign to support TOU implementation","source_speaker":"Karen"}

Discussion_decision":{"discussion_points":["Scale and timing of FY26 rate increase and FY27 rate design changes","Implementation costs and vendor coordination for TOU metering and billing","Equity and opt‑out policy for residential customers"],"directions":["Staff to include 9% (approx.) in the FY26 budget materials and to return with ordinance language and technical plan for TOU/meters"],"decisions":[]},"searchable_tags":["electric rates","time of use","demand charge","billing system","Los Alamos"],"provenance":{},