Staff recommends that the City Council introduce an ordinance for first reading, approving amendments to Sections 14.24.040, 14.24.050, 14.24.051, 14.24.055, 14.24.077, and 14.24.079 of Chapter 14.24 of the Roseville Municipal Code. These amendments reflect the recommended rate actions by Roseville Electric Utility and includes adopting the previous temporary 8% energy surcharge as an increase to base rates on January 1, 2025, as well as implementing two 9% base rate increases across all customer types, with one on June 1, 2024, and the other on January 1, 2025.

Roseville Electric Utility’s mission is to deliver safe, reliable electricity at competitive rates with exceptional service. This mission shapes how the electric utility conducts its day-to-day business operations and impacts the electric service provided to over 68,000 business and residential customers in the City of Roseville. This mission is balanced with the electric utility’s ability to align operating costs with expected revenues so that the utility remains in a position of financial strength to service the community in the future. Reviewing and recommending adjustments to electric rates is essential in delivering on the utility’s mission.

Rate Proposal

In recent years, Roseville Electric Utility, like many other utilities across the country, has faced unprecedented increases in energy costs. Over the last three years, energy market prices have surged by 200% to 300%. While the utility has employed various financial and risk management tools to mitigate the impact of these price fluctuations on customers, the rapid and substantial nature of these changes, combined with rising equipment and labor costs, has created significant challenges. As a result, the utility finds itself unable to maintain a balance between its revenues and expenses with the current rates in place. Without taking action on rates, the utility's projected net cash flow stands to be negative $30.5 million in FY2024-25 and negative $48 million in FY2025-26. Additionally, there is a need to re-build the rate stabilization fund to ensure the financial stability of the utility.

Projected power supply and generation expenses, which are expected to rise by 27% between FY2023-24 and FY2027-28, constitute 55% of the utility's budget. These substantial increases cannot be accommodated within current revenue expectations. Consequently, Roseville Electric Utility is proposing the following rate adjustments: implementing the previous temporary 8% energy surcharge as a permanent base rate increase effective January 1, 2025, along with two consecutive 9% base rate increases across all customer categories. The initial 9% rate increase would occur on June 1, 2024, followed by the second increase on January 1, 2025, subject to council approval. The proposed rate increases are expected to ensure the financial solvency of the utility until FY2025-26, with a projected improvement in its financial position in FY2026-27 and FY2027-28.

The utility acknowledges that this proposal would disproportionately impact low-income customers. To address this concern, the rate proposal increases the current low-income program, offering a 20% discount on all electric charges. Additionally, it introduces a new permanent $15 per month reduction to the base charge for all customers enrolled in the low-income and medical support programs. The approximate cost of implementing these programs is estimated at $800,000 per year, which will be covered by State-mandated public benefits funds designated specifically for energy efficiency, research and development, and low-income programs.

The proposed rate increases are detailed below.

June 1, 2024:

January 1, 2025:

·       Permanent adoption of the 8% energy surcharge

PUBLIC OUTREACH AND CUSTOMER FEEDBACK

Roseville Electric Utility's rate increase proposal involved extensive public outreach efforts. As a community-owned utility, fostering collaboration with customers is a fundamental aspect of our approach. We provided numerous opportunities for engagement, ensuring that customer feedback played a central role in shaping the proposed rate changes. Key outreach events and communication channels included:

·       Public Workshops (3)

·       Roseville Coalition of Neighborhood Associations (RCONA)

·       Roseville Chamber of Commerce

·       Largest Electric Customers / Key Accounts

·       Roseville Electric Utility webpage

·       Social media (Facebook and Nextdoor)

Throughout our public outreach, customer feedback centered on a few common concerns:

·       General cost increase throughout the economy.

·       Appreciation of Roseville’s reliability.

·       Questions regarding long term energy increases.

The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment, or is otherwise not considered a project as defined by CEQA Statute §21065 and CEQA State Guidelines §15060(c)(3) and §15378. Approval of amendments to the Roseville Municipal Code meet the above criteria and are not subject to CEQA. No additional environmental review is required.

Goal A - Remain fiscally responsible in a changing world

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Dominick Casey, City Manager