Council approves a 2% across-the-board water & Light rate increase for FY2026; customer charge rises to $22.44
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Summary
City utilities staff presented a forecast showing the electric fund trending below reserve targets without incremental rate increases. Council approved an ordinance to increase the customer, energy and demand charges by 2% for FY2026.
The Columbia City Council on Sept. 2 approved an amendment to Chapter 27 of city code to increase electric rates by 2% across key rate components: customer charge, energy charge and demand charge. The ordinance was adopted on second/third reading by roll call.
The staff presentation noted the electric system—s fixed customer charge is designed to recover billing, metering and customer-service fixed costs and that the 2023 cost-of-service study calculated a fully cost-based customer charge near $30.19 but that the city was then charging $22.00. Staff proposed a 2% increase in the customer charge (to $22.44) and a 2% increase in the energy and demand charges to provide modest additional fixed revenue and to preserve the utility—s cash position relative to reserve targets.
Why it matters: Utilities staff told council the electric fund—s cash above the reserve target is projected to drop in coming years under the status quo. The proposed 2% increases generate roughly $2.8 million in total additional revenue if applied to energy/demand and customer charge together; the customer-charge portion accounts for about $300,000 of that annual total. Staff said regular incremental increases are preferable to larger, less frequent hikes and anticipated a full cost-of-service update in FY2028.
Council and public discussion: Council members asked whether shifting more recovery to usage (energy) versus the customer charge would better promote conservation and whether the staff recommendation (2%) left the utility behind the fully cost-based customer charge calculated in 2023. Staff said the $300,000 from the 2% customer charge increase is a modest portion of the utility budget and could alternatively be recovered in future usage charges if council preferred; staff emphasized the trade-offs between bill stability for customers and revenue stability for the utility.
The ordinance passed on roll-call vote (all members present voting yes).