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HomeMy WebLinkAbout _ 9.5(b)--Set Public Hearing regarding REU rate increases GI �" Y C� F � � �- ' � ° � � i � CITY OF REDDING �� REPORT TO THE CITY COUNCIL MEETING DATE: February 17, 2026 FROM: Nick Zettel, Director of ITEM NO. 9.5(b) Redding Electric Utility ***APPROVED BY*** �` � � ,� �k et e �rcctor�i9' e in r tric�Llt'rtity �13t2��G � ibl�T,Pers�n�lel T7ig�ctar � ?I�0/2426 nzettel@cityofredding.org kkibler@cityofredding.gov SUBJECT: 9.5(b)--Consider setting a Public Hearing for March 3, 2026, regarding Redding Electric Utilit rate increases. Recommendation Approve setting a Public Hearing on March 3, 2026, at 6:00 p.m., in the City Council Chambers, 777 Cypress Avenue, Redding, California, to consider increases in Redding Electric Utility rates (four and one-half percent increase per year) effective beginning with the April 1, 2026, billing cycle and continuing with the January 1, 2027, January l, 2028, and January 1, 2029, billing cycles, along with an increase to the Residential Energy Discount benefit for income-qualifed households. Fiscal Impact There is no fiscal impact associated with setting the public hearing. AZteNnative Action The City Council (Council) could choose not to set the public hearing as proposed and provide further direction to staff. Backg�ound/Analysis Redding Electric Utility (REU) increased rates in 2024 and 2025 by four percent per year to address aging infrastructure,rising power supply costs, inflationary pressures, and to fund REU's Senate Bill 901 Wildfire Mitigation Plan. Continued infrastructure replacement and associated debt service, along with rising power supply costs driven by California's clean energy mandates, the phaseout o�tax credits, and tariffs on clean energy technologies, continue to drive the need for additional rate increases. REU has mitigated these cost pressures to the extent possible by identifying personnel savings, reducing eapital expenditures, and capping controllable operations and maintenance cost growth below inflation through reductions in discretionary spending. REU's current biennial budget, adopted by the Council on J�une 17, 2025, included a five-year Report to Redding City Council February 9,2026 Re: 9.5(b)--Set Public Hearing regarding REU rate increases Page 2 fmancial plan. The financial plan included a five percent rate increase every year through 2030. After several months of analysis, which resulted in operational, capital, and administrative savings both realized and anticipated, staff has modified their proposal to four and one-half percent increases through 2029, with a two percent increase projected in 2030. The effect of the proposed changes on each customer's utility bill wi11 depend on several factors, including how much electricity is used each month. On average, standard residential customers are expected to see an increase of approximately $7 per month in 2026 and 2027, and approximately $8 per month in 2028 and 2029. In addition, staff wi11 recommend increasing the Residential Energy Discount(Public Benefits Prograln) for all Residential and Residential Multi- Family customers, mitigating a portion of the rate increase for income-qualified customers funded by the State mandated public benefits charge (approximately $500,000 of additional funds will be made available to participants in the program on an annual basis). Commercial customers will experience varying impacts due to differences in their energy usage and business size. REU will provide tables and calculators to the public before the public hearing. These tools will be accessible on the City's website and at two separate 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 standard residential bills for REU, Shasta Lake, and PG&E currently at $160, $188, and $344, respectively and all utilities projecting rate increases annually through 2029. Following their participation in the development of REU's 2030 Strategic Plan, five community members from the original nine-person panel, representing a cross-section of REU's customer base, continued their involvement through a two-part meeting series to review REU's budget, financial plan, cost-of-service study, and proposed rate plan. The panel reached consensus that the proposed rate increases are appropriate, fair, and equitable, and provide the best balance of affordability, rate stability, and long-term financial health of the Utility. 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. Environmental Review This action is not a project as de�ned under the California Environmental Quality Act, and no further action is required. Council Pr�ioNity/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."