ROCHESTER — Maintaining a 6% electric rate increase for 2026 is being proposed following a Rochester Public Utilities customer survey.

“Customer research indicates strong support for the 100% renewable energy goal and a preference for a measured, phased approach that maintains reliability and reasonable rates,” RPU General Manager Tim McCollough wrote in a report to the city’s utility board.

The board plans to review recent customer research results during its 4 p.m. meeting Tuesday in the Rochester Public Utilities community room, 4000 East River Road NE.

The board members will also be asked to reaffirm their commitment to a 100% net renewable energy target by 2030, with the proposed 6% annual rate increases being used to stabilize rates and reduce short-term financial risks.

As a city-owned utility, RPU’s electric rates are set based on periodic reviews to recoup costs related to generating and supplying energy. The costs can reflect anticipated future expenses, which include the transition from an energy contract expiring in 2030.

In August, McCollough told the RPU board members the 6% increase
could be reduced to 4% for 2026,
but the lower rate would reduce confidence in establishing and maintaining renewable energy goals beyond 2030.

In a report ahead of Tuesday’s board meeting, he pointed out the reduced rate could also result in steeper increases to future utility bills in order to cover expenses in upcoming years.

“A 6% annual trajectory in 2026–2027 smooths entry into this higher-cost period, allowing costs to be incorporated into base rates, avoiding sudden Power Cost Adjustment spikes,” he said.

The smoother trajectory would be inline with reported survey results.

The proposed 6% rate increase is expected to spur a $5.78 monthly utility bill increase for the average residential customer in 2026, followed by a projected $6.12 monthly increase in 2027.

McCollough reports the anticipated revenue difference between the 4% and 6% increases is roughly $10 million, providing RPU the ability to continue to secure renewable energy contracts before 2030 and reduce risks amid a period of market volatility, related to federal tariffs and potential loss of tax credits.

The Rochester City Council recently authorized the city to
enter into a new wind-energy agreement, and two more are in the works,
according to Bill Bullock, RPU’s director of power resources.

Ahead of Tuesday’s Public Utilities Board meeting, McCollough is slated to provide the Rochester City Council with an update regarding RPU’s progress of the Power Supply Resource Plan. The update will be part of the council’s study session at 3:30 p.m. Monday in RPU’s community room.

Meetings scheduled to be held during the week of Sept. 29 include:

Rochester

• City Council study session, 3:30 p.m. Monday in the Rochester Public Utilities community room, 4000 East River Road NE. The meeting will be livestreamed and recorded on the
city’s YouTube channel,
with recordings also available the next day at
rochestermn.gov/meetings/council-meetings.

• Public Utility Board, 4 p.m. Tuesday in the Rochester Public Utilities community room, 4000 East River Road NE.