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Odessa board weighs block vs. flat electric rates and a three‑year plan to shore up utility finances
Summary
City staff and an outside consultant presented two electric‑rate structures and a three‑year rate plan; aldermen debated adopting the plan now versus approving rates annually, citing the utility’s long‑term health and a pending large transformer repair.
City staff and an independent consultant pressed the Board of Aldermen on Tuesday to choose between a block and a flat residential rate structure and to clarify whether the board will adopt a three‑year rate plan now or approve each year’s change separately.
The discussion, which followed a technical presentation and model run by consultant David (S11), centered on how to preserve the utility’s financial health while providing opportunities for lower‑use customers to reduce bills. Staff said the city faces major electric‑utility costs — including a transformer repair estimated to cost more than $400,000 — and emphasized the need for reserves and predictable revenue.
David told the board he used the city’s meter data (several years’ worth) to model outcomes for block and flat structures and factored in a small assumed decrease in usage as customers adjust under a block system. “I think it ought to be passed as a whole,” David said, urging adoption of the three‑year plan so the utility meets the engineer’s projections. City staff summarized the mechanics: the proposal creates a PPA (purchase power adjustment) base‑rate calculator and an annual electric operations adjustment; if a new rate is not approved by March 31, an automatic 3.5% increase would apply as a fallback.
Supporters of adopting the three‑year plan now said it signals commitment to the utility’s long‑term stability and follows professional recommendations. One alderman said the plan “requires the 3‑year rate steps to get to the health of the utility we need.” Opponents worried that locking in a multi‑year ordinance risks preventing future boards from adjusting to changed circumstances; others said the board can repeal any ordinance later but preferred to retain an annual approval step and avoid routinely re‑opening the rate study.
Board members generally leaned toward a residential block structure, noting it could protect low‑use customers and provide a pathway to adjust usage. Staff said the billing system will require encoding work to support block tiers; the city will work with its vendor (Encode) to implement the change and test it before going live.
Next steps: staff will reword the annual‑adjustment language to reflect the board’s feedback, prepare formal ordinance language (including a redlined version) and bring a draft for first and second readings at the next meeting. The board indicated it was open to approving both readings at the same meeting if the ordinance is ready.
The board’s choice will determine whether Odessa pursues the engineer’s recommended multi‑year pathway immediately or takes a year‑by‑year approach with an automatic safeguard to limit revenue shortfalls.
