RPU proposes 6% electricity rate increase after customer survey results

ROCHESTER, Minn. (KTTC) – Rochester Public Utilities (RPU) brought its future energy plans to the city council Monday. RPU plans to end its power agreement with Southern Minnesota Municipal Power Agency (SMMPA) by 2030, begin to generate its own electricity, and hit the state’s 100% clean energy mandate by 2040 with a 6% electricity rate increase for customers.

From Aug. 11 to Sept. 15, the cost-based utility company asked customers if they preferred a 6% electricity rate increase to reach 100% renewable energy by 2030, or a 4% rate hike to get there by 2040. Based on customer feedback from the survey results and rising costs, RPU is now proposing a 6% electricity rate hike for its customers at a slower pace than previously projected.

RPU General Manager Tim McCollough stated out of 47,000 surveys sent, about 2,000 people responded.

“About 70% of our customers believe 100% renewable electricity goal by 2030 is an important goal,” McCollough said. “When it comes down to the question of pacing and cost, about 60% said go a little bit slower, try and mitigate some of the cost impacts.”

McCollough said the slower plan with a 4% increase no longer works because of inflated construction costs, new regulations, and tariffs pushing prices up.

“Our survey said it should be a 4% rate trajectory. Since we published the survey, tariff impacts have hit, some of the market risks have hit, and the cost for the slower plan has gone up,” McCollough said. “What was a 4% or 6% conversation really turned into a 6% or 8% conversation.”

Ward 1’s Patrick Keane mentioned the plan looks very different than it did just months ago.

“It’s a different plan than we had nine months ago or two years ago,” Keane stated. “When you make commitments in 2019 for 2030, the landscape is going to change as you move through it, and that’s what’s happened to us.”

Keane said he was surprised by the survey results and is pushing RPU to keep rates as low as possible.

“We want to be sensitive to rates as we go into these important times of converting from the SMMPA contracts to doing our own energy supply,” Keane stated.

So far, RPU has secured enough renewable power generation to meet two-thirds of its 2040 goal, and McCollough said he is looking into contracting with other agencies to cover the rest.

“We have about 100 megawatts of capacity that we still need to secure before 2030,” McCollough said. “We’re seeking to do that through a contract with outside agencies.”

RPU’s long-term projections of using 100% renewable energy do show low-cost electricity for customers.

On Tuesday, RPU board members will look to submit the 6% electric and 9% water rate increases, pending the city council’s approval in the coming months.

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