Commission tables proposal to change pilot payment to percentage-of-revenue pending legal and financial analysis

The Brainerd Public Utilities Commission on Sept. 30 voted to table a council request to convert the city's pilot payment from a per-kilowatt-hour charge to a percent-of-revenue basis, citing unresolved legal and fiscal questions.

Staff framed the council proposal: the current pilot is calculated on kilowatt-hour sales (0.0045¢/kWh for most customers, 0.0025¢ for industrial loads); the council asked the pilot be changed to 3% of revenue in 2026, 4% in 2027 and 5% in 2028. Staff estimated a pilot payment in the current year of about $750,000 and said a 3% revenue basis would add roughly $53,000 in the first year, with higher increases in subsequent years.

Commissioners sought a clear legal interpretation of charter authority (whether the council can set the pilot and whether the commission's vote is advisory) and step-by-step financial analysis showing how increasing the pilot would affect utility rates and whether city entities would effectively be shifting money between funds. Commissioner Mike and others asked staff to show the math for scenarios that include the city as a large utility ratepayer and potential offsets caused by rate changes.

City Administrator Nick said the charter language indicates the payment is set by BPU policy and approved by council; his attorney's interpretation, shared in the packet, said the council retains final approval even if the commission provides policy input.

The commission passed a motion to table the proposal and requested written legal guidance and detailed financial modeling to be considered by the finance committee before the commission takes any formal action.