HomeMy WebLinkAbout _ 4.5(b)--Set a Public Hearing for December 5, 2023 regarding REU rate increases
CITY OF REDDING
REPORT TO THE CITY COUNCIL
Recommendation
Approve setting a Public Hearing on December 5, 2023, at 6:00 p.m., in the City Council
Chambers, 777 Cypress Avenue, Redding, California, to consider increases in Redding Electric
Utility (REU) rates (four percent revenue increase per year) effective with the January 2024 and
January 2025 billing cycles, and an increase in the benefit of REU’s Residential Energy Discount
for income-qualified households.
Fiscal Impact
There is no fiscal impact associated with setting the public hearing.
Alternative Action
The City Council (Council) could choose not to set the public hearing as proposed and provide
further direction to staff.
Background/Analysis
REU increased rates in 2022 and 2023 by two percent per year to offset inflationary pressures
and comply with federal and state regulatory requirements. Aging infrastructure replacement,
rising power supply costs, further inflationary pressures, and funding REU’s Senate Bill 901
Wildfire Mitigation Plan drive the need for rate increases. REU has mitigated cost increases as
much as possible, limiting controllable operations and maintenance costs to a less than three
percent annual growth rate despite record-breaking inflation.
REU’s current biennial budget, adopted by the Council on June 20, 2023, included a five-year
financial plan. The financial plan included a four percent revenue increase every year through
2027 and a two percent increase in 2028. Only the four percent rate increases for the years 2024
and 2025 are being proposed at this time.
MEETING DATE: November 7, 2023
ITEM NO. 4.5(b)
FROM:
***APPROVED BY***
nzettel@cityofredding.org
btippin@cityofredding.org
SUBJECT: 4.5(b)--Consider setting a Public Hearing for December 5, 2023 regarding
Redding Electric Utility rate increases.
Nick Zettel, Director of
Redding Electric Utility
Report to Redding City Council October 31, 2023
Re: 4.5(b)--Set a Public Hearing for December 5, 2023 regarding REU rate increases Page 2
The effect of the proposed changes on each customer’s utility bill will depend on several factors,
including how much electricity is used each month. On average, standard residential customers
will see an increase of about $6.75 per month starting in 2024 and an additional $7.75 per month
in 2025. In addition, staff will recommend increasing the Residential Energy Discount (Public
Benefits Program) for all Residential and Residential Multi-Family customers, mitigating a
portion of the rate increase for income-qualified customers.
Commercial customers will experience varying impacts due to differences in their energy usage
and business size. The City of Redding (City) will provide tables and calculators to the public
before the public hearing. These tools will be accessible on the City's website and at public
workshops. They will display estimated changes in bills for different types of customers.
Customers can also enter their own energy usage to see how these changes may affect them.
Staff projections show that REU would remain the lowest electric provider in the area, with
average standard residential bills for REU, Shasta Lake, and PG&E at $160, $166, and $341,
respectively (2025 projected rates).
A panel of five community members representing a cross-section of REU’s customer makeup
participated in a three-part meeting series to discuss the foundations of not-for-profit public
power, evaluate REU’s cost of service, and review the proposed rate plan. The consensus of the
panel was that the proposed rate increases are appropriate, fair, and equitable.
Additional public workshops will be held prior to the public hearing, both in-person and web-
based, to ensure inclusion, and information will be provided directly to community-based
organizations.
Council Priority/City Manager Goals
• Budget and Financial Management – “Achieve balanced and stable 10-year Financial
Plans for all funds.”
• Communication and Transparency – “Improve the quality of communication with the
public and City employees to enhance knowledge and increase transparency to improve
public trust.”