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Committee approves PUC's revised contribution policy: 3% of electric retail sales in 2026
Summary
Brainerd's committee voted to approve the PUC's recommendation to change its pilot contribution from cents-per-kilowatt-hour to a 3% contribution based on prior-month retail electric sales starting Jan. 2026; proposed increases to 4% and 5% were deferred pending a 2026 cost-of-service study.
The Brainerd City Personnel and Finance Committee on Dec. 15 approved implementation of a revised contribution methodology recommended by the Public Utilities Commission (PUC) that transitions the electric utility's pilot contribution from a per-kilowatt-hour basis to a percentage of retail electric revenues.
Paul, representing public utilities, told the committee the prior monthly contributions were calculated at $0.045 per kilowatt-hour for retail customers and a separate $0.00025 per kilowatt-hour for medium and large industrial customers. The city council had proposed a phased percentage approach of 3% in 2026, 4% in 2027 and 5% in 2028 to better align contributions with overall utility revenues.
The PUC voted to revise the policy to a 3% contribution based on prior-month retail electric sales starting Jan. 2026 and to apply that percentage across all retail revenue classes, removing the separate industrial rate. The PUC deferred approval of the proposed 4% and 5% increases until a full cost-of-service rate study can be completed in 2026 to assess rate impacts for 2027 and 2028. Staff recommended the council adopt the PUC's revised policy; the committee approved the recommendation by voice vote.
A committee member observed that the national median contribution among public utilities is roughly 5.2% and expressed hope the city could move toward that level after completing the rate study. Staff said the study will inform rate impacts and any future increases.
Next steps: implement the 3% contribution starting Jan. 2026 and complete the 2026 cost-of-service study to guide decisions on future contribution increases.
