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Utility Advisory Committee backs Option 2 to accelerate reserve replenishment and send 5% rate path to council
Summary
The Utility Advisory Committee voted unanimously to recommend Option 2 — a 5% across-the-board rate increase path through FY29 — to City Council, a choice intended to replenish the rate-stabilization reserve sooner while preserving utility operating reserves; consultants said cost-of-service adjustments and rate-design work will follow.
The Utility Advisory Committee recommended that City Council adopt Option 2: a 5% across-the-board series of adjustments through fiscal year 2029 intended to speed repayment of the rate stabilization reserve and maintain adequate operating and capital reserves. The committee voted unanimously to forward the recommendation after a motion by a committee member and a second; the chair called the voice vote and recorded unanimous assent.
George Khan introduced the item and described the timeline for council action: FCS will provide a draft report to council on Aug. 25, and council could return recommended edits for staff to incorporate before finalization. Staff noted that the proposed rates would be effective Oct. 1, 2026, if council adopts the revenue-requirement resolution.
The committee'level debate focused on which classes should carry higher increases and how quickly to replenish the rate-stabilization reserve. Presenters noted two elements common to both options: a $3,000,000 conditional transfer from the rate-stabilization reserve to fund capital (to be replenished beginning in FY28) and a $2,150,000 interfund loan from water to electric with repayment beginning in 2032.
Angie Hamrick of the consulting team emphasized the revenue estimates underpinning the choices: for FY27 the additional revenue under the proposed increases was estimated at roughly $1.458 million, with electric producing the largest share. Committee members said they wanted clearer year-by-year deltas and stressed the importance of reviewing the draft council materials before final adoption.
A committee member moved to recommend Option 2 with the change to set the planning horizon as FY29; another member seconded the motion. "The motion on the table is to, approve, or advise for option number 2 with the change of it going until '29, fiscal year 29," said George Khan before taking the voice vote. The motion passed unanimously.
Next steps: staff and consultants will deliver the FCS draft report to City Council, staff will prepare the formal resolution(s) based on the committee'level recommendation, and the UAC will continue reviewing cost-of-service and rate-design items over the coming year. The committee discussed consumer outreach (mailers and notices) to inform customers before an October effective date for revenue changes.
