Board endorses five-year rate design, shifting some costs to base charges
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Summary
Hurricane City’s power board recommended a five-year, revenue-neutral rate design that raises monthly base charges modestly (example: residential base +$0.50/month) while lowering per-kWh power rates and implementing a 12-month PCA smoothing mechanism; agricultural and yard-lighting classes face larger base-rate increases.
The Hurricane City Power Board voted to recommend a five-year rate design to the City Council that staff characterized as revenue neutral overall but that shifts a greater share of cost recovery from per-kilowatt-hour power charges into monthly base (distribution) charges.
Presenter (S4) said the proposed plan uses a 12-month rolling average for the Power Cost Adjustment (PCA) to reduce bill volatility and that projected capital needs — including two substations in 2027 — drive the plan’s timing. Using the residential example provided by staff, the base charge would increase by about $0.50 per month in year one and step up by similar increments over subsequent years; per-kWh power rates would decrease by an offsetting amount so the overall revenue target remains neutral.
Board members raised equity questions about relative contributions by commercial and residential customers. Committee member (S7) asked whether commercial rates, which the study showed are over-collecting relative to cost-of-service, could be adjusted so residential customers don’t continue to subsidize commercial accounts. Staff (S4, S2) replied that municipal practice commonly protects residential customers and that the dollar-scale of commercial accounts limits the extent to which residential increases could offset commercial over-recovery.
The board also discussed agricultural and yard-lighting classes, which show larger percentage changes because of the very small number of meters in those classes; staff said the rates must be updated so they cover their cost of service and noted city council may receive constituent feedback from singular, affected customers.
Committee member (S7) moved, and S6 seconded, a recommendation to forward the five-year rate design and corresponding resolution to City Council; the board approved the recommendation on a voice vote. Staff will present the rate design materials to the council next week and said a follow-up cost-of-service review is expected within a few years to recalibrate assumptions.
Next steps: staff will email detailed exhibits to board members, address two minor data holes related to solar credits and three-phase solar rates before the council meeting, and present the package to City Council for final action.