Utility Advisory Committee

Agenda Utility Advisory Committee Meeting Tuesday, July 14, 2026 Richland City Hall ~ Council Chambers 625 Swift Boulevard Regular Meeting - 3:00 p.m. Call to Order/Attendance Approval of Agenda (Approved by Motion) Approval of Minutes (Approved by Motion) 1. May 12, 2026 Utility Advisory Committee Meeting Minutes - Carly Kirkpatrick, Administrative Assistant II Public Comments Items of Business 2. Status of Each Utility (10 Minutes) - Randy Aust, Fire Chief Carlo D'Alessandro, Public Works Director Clint Whitney, Energy Services Director 3. Planning Ahead: Future Infrastructure Costs and Capital Investment (30 Minutes) - Carlo D'Alessandro, Public Works Director 4. Public Works Board Loan Application — Wastewater Treatment Plant Anaerobic Digester Improvements Project and the Wastewater Treatment Plant Grit Works Rehabilitation Project (15 Minutes) - Carlo D'Alessandro, Public Works Director 5. 2026 Draft Cost of Service Analysis (COSA) Update (15 Minutes) - Clint Whitney, Energy Services Director Reports and Comments 6. 2026 Capital Work Plan - Energy Services - Clint Whitney, Energy Services Director 7. Forward Agenda - Clint Whitney, Energy Services Director Adjournment Richland City Hall is ADA accessible. Any individual who has difficulty attending the meeting in-person may request to provide comments remotely. (RCW Ch. 42.30) Requests for sign interpreters, audio equipment, and/or other special services must be received 48 hours prior to the meeting by calling the City Clerk’s Office at 509-942-7389.  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Approval of Minutes Prepared By: Carly Kirkpatrick, Administrative Assistant II Subject May 12, 2026 Utility Advisory Committee Meeting Minutes Department Energy Services Recommended Motion Approve the May 12, 2026 Utility Advisory Committee Meeting Minutes as presented. Summary The May 12, 2026 Utility Advisory Committee Meeting Minutes are attached for review and consideration. Fiscal Impact None. Attachments 1. 2026.05.12 UAC Meeting Minutes - Draft  MINUTES DRAFT Utility Advisory Committee Regular Meeting Tuesday, May 12, 2026 Richland City Hall ~ Council Chambers 625 Swift Boulevard _____________________________________________________________________________________ Utility Advisory Committee Regular Meeting - 3:00 p.m. Chair Staven called the meeting to order at 3:00 p.m. Welcome and Roll Call Attendance: Chair Staven Present Vice-Chair Hyson Present Member Larkin Present Member Porter Present Member Richmond Present Member Wallin Absent Also present were Staff Liaison and Energy Services Director Whitney, Fire Chief Aust, Public Works Director D’Alessandro, and Administrative Assistant II Kirkpatrick. Approval of Agenda COMMITTEE MEMBER PORTER MOVED AND VICE-CHAIR HYSON SECONDED THE MOTION TO APPROVE THE AGENDA AS PUBLISHED. THE MOTION CARRIED 5-0. Minutes 1. Approval of the March 10, 2026 Utility Advisory Committee Meeting Minutes COMMITTEE MEMBER PORTER MOVED AND VICE-CHAIR HYSON SECONDED THE MOTION TO APPROVE THE MARCH 10, 2026 MEETING MINUTES AS PRESENTED. THE MOTION CARRIED 5-0. Public Comments None. Items of Business 2. Status of Each Utility (10 Minutes Utility Advisory Committee Regular Meeting Page 1 of 3 May 12, 2026 Fire Chief Aust, Public Works Director DAlessandro and Energy Services Director Whitney each provided a brief update regarding their respective utilities. 3. Energy Services Reliability Data Update Energy Services Director Whitney introduced Trevor Wilkerson, Electrical Systems Manager, who presented an update on Energy Services’ electrical reliability data. He reported that system reliability continues to improve, with Richland customers experiencing fewer outages than the average utility customer. Noting that restoration times can be slightly longer due to the City’s predominantly underground electrical system. Reliability data will continue to guide future capital planning efforts for 2027. Detailed information can be found in the PowerPoint presentation included with the agenda packet. Following the presentation, Committee members engaged in a question-and-answer session with staff. 4. Cascade Advanced Energy Facility Project Update Ken Langdon, Energy Northwest Project Director and Vice President for Nuclear Development, provided an update on the Cascade Advanced Energy Facility Project. Mr. Langdon discussed the company’s ongoing reorganization and optimization efforts in establishing a robust supply chain to support future energy initiatives. Following the presentation, Committee members engaged in a question-and-answer session with Mr. Langdon. 5. Horn Rapids Solar Power Purchase Agreement Scott Russell, Senior Advisor with Energy West, provided an update on the proposed Horn Rapids Solar expansion project and associated Power Purchase Agreement (PPA). Discussion included project deposits and recovery provisions if power is not delivered, as well as BPA interconnection costs, with the developer requested to cover the deposit. Mr. Russell also noted the project would support the City’s renewable energy requirements while reducing transfer charges through a local power source. Following the presentation, Committee members engaged in a question-and-answer session with staff and Mr. Russell. COMMITTEE MEMBER LARKIN MOVED AND COMMITTEE MEMBER RICHMOND SECONDED THE MOTION TO SUPPORT THE PROPOSED FRAMEWORK FOR THE HORN RAPIDS SOLAR POWER PURCHASE AGREEMENT (PPA) AND RECOMMEND THAT THE CITY COUNCIL CONSIDER APPROVAL OF THE FINAL AGREEMENTS UPON COMPLETION OF LEGAL REVIEW AND NEGOTIATIONS. THE MOTION CARRIED 5-0. Utility Advisory Committee Regular Meeting Page 2 of 3 May 12, 2026 6. Richland Energy Services Financial Quarterly Report – 4Q25 Energy Services Director Whitney provided an overview of the 4Q25 financial report, noting that the Energy Services department remains financially stable despite continued increases in wholesale power and transmission costs from Bonneville Power Administration. Members discussed the recent 8.5% retail electricity rate increase that went into effect in January, which is expected to help offset rising costs and support future capital needs. Mr. Whitney also noted that a significant accounts receivable correction is scheduled to be settled in 2026, which is expected to have a positive financial impact. 7. 2026 Capital Work Plan – Energy Services (Skipped due to time constraints) 8. Forward Agenda Discussion between Committee members and staff regarding water and wastewater facilities that rely on low-interest loans with the need to explore strategies to reduce dependence on those funding sources if such loans become more limited. The Committee requested to review the rate policy and develop a long-term strategy during a future workshop. Chair Staven moved to request a special workshop at 2:00 p.m. before the next meeting to review these topics in greater detail. The Committee was supportive of the request. Adjournment Chair Staven adjourned the meeting at 4:55 pm. Prepared by:___________________________ Carly Kirkpatrick, Administrative Assistant II Approved by: __________________________ Harry Staven, Chair DATE APPROVED: ____________ DATE PUBLISHED: ____________ Utility Advisory Committee Regular Meeting Page 3 of 3 May 12, 2026  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Items of Business Prepared By: Randy Aust, Fire Chief, Carlo D'Alessandro, Public Works Director, Clint Whitney, Energy Services Director Subject Status of Each Utility (10 Minutes) Department/Office Document Type Energy Services Utility Advisory Committee Item Recommended Motion This item is informational only. Summary Fiscal Impact None. Attachments  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Items of Business Prepared By: Carlo D'Alessandro, Public Works Director Subject Planning Ahead: Future Infrastructure Costs and Capital Investment (30 Minutes) Department/Office Document Type Public Works Utility Advisory Committee Item Recommended Motion Discussion only. Summary The presentation provides an overview of City of Richland Public Works' current utility rate-setting policies, evaluation practices, revenue conditions, and strategic considerations for future rate adjustments. The workshop aims to review the existing rate-setting policy, outline the procedures used to evaluate utility rates, and discuss how often rate changes should occur. The presentation is meant to help lead discussion about recommendations for future rate setting based on operations and maintenance cost escalation and future capital improvement financing. Fiscal Impact Attachments 1. Rate Strategy Workshop - Utility Advisory Committee - 20260714 2. Utility Financial Operating Policy Approved by Council 9.19.06 Utility Rate Planning and Strategy Utility Advisory Committee 7/14/2026 Purpose • Discuss current rate setting policy • Procedure for rate setting evaluation • Frequency of rate changes Existing Rate Setting Policy • September 2006 council adopted policy • Major stipulations on rate setting for Public Works utilities: 1. Maintain a 45-day operating reserve. 2. Min. annual debt service coverage ratio of 1.25. 3. Analyze rates based on cost of service. Current Process for Rate Evaluation • Quarterly review of utility fund balances and committed funds • Annual review of utility fund health and check of rate model assumptions • 10-year Utility Management Plan updates • Updated utility modeling • Updated capital facilities plans • Updated rate forecasts • Intermittent review based on growth and land use assumption changes or new large user demands Effect of Current Process • Annual review, but delays rate changes until necessary. • Rate increases will be larger percentage than an annual basis. • 2026 will see first rate increases for stormwater and wastewater since 2009. • Wastewater: 6% annual increases 2026, 2027 and 2028. • Stormwater: 35% increase in 2026. 1% increases in 2027 and 2028. • Solid waste rates have not been updated since 2013. Currently evaluating rates. • Water rates were decreased in 2022 by 10%.  Current Rate Evaluation Practice Reserve Targets Sewer/Water: 45 days of OpEx + Forecast Basis 1% of Assets Customer Growth Annual Rate Revenue Stormwater: 45 days of OpEx + Study Period: 10 years $100k 1.21% Growth Rate Based on previous year actuals + Solid Waste: 45 days of OpEx + ~340 equivalent residential growth Rate Setting Period: 3 years landfill closure cost customers per year New Debt Operating & Maintenance Conservative Assumption: Capital Plan (10-year Costs Expense Inflation Revenue Bonds forecast) 20-year term Based on current year budget 3.0-5.0% inflationary factors 5.25% interest rate Total Escalated Project Costs plus inflation Based on last 3 years of actuals 1% issuance cost Utility Revenue Sources Water • Facilities Fees and Frontage Charges • Utility Rates – min. daily charge + consumption • Irrigation utility rate – based on acreage Wastewater • Facilities Fees and Frontage Charges • Utility Rates – min. daily charge + consumption (commercial) • Pretreatment Permit Fees Solid Waste • Utility Rates – refuse/yard waste + recycling • Landfill Fees • Roll-off Rates Stormwater • Utility Rate (based on ERU) Revenue Strategies Besides Rate Setting • Lower costs debt or no debt options • Bonds, PWB loans, grants, legislative/congressional directed spending • Ensuring that enterprise funds adequately recoup costs • Accurate inter-departmental billing • Evaluation of customer accounts (ex. AMI implementation) • Regulatory fines or fees • Solid Waste Specific • Renewable Natural Gas contract land lease and royalties • Compost • Elimination of high-cost/zero-revenue programs (Sundays, drop boxes, glass recycling) • Condemned RV disposal for Kennewick Rate Evaluation Discussion • Forecast basis • 3, 5, or 10-year outlook? • Rate Setting Period • Annual, 3, 5, or 10-year? • Annual rate escalation tied to CPI with opt-out? • Schedule for full cost of service rate analysis? • Reserve targets that accommodate more than 45-day OpEx • Establish reserve targets for maintaining higher bond ratings, % of asset or replacement costs • Cost of debt assumptions • Setting rates based on debt financing or rate funding capital improvements • Market comparisons  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Items of Business Prepared By: Carlo D'Alessandro, Public Works Director Subject Public Works Board Loan Application — Wastewater Treatment Plant Anaerobic Digester Improvements Project and the Wastewater Treatment Plant Grit Works Rehabilitation Project (15 Minutes) Department/Office Document Type Energy Services Utility Advisory Committee Item Recommended Motion Support the recommendation to submit an application for a loan through the Public Works Board to finance the Wastewater Treatment Plant Grit Works Rehabilitation and Anaerobic Digester Improvements projects. Summary The 2025-2030 Capital Improvement Plan includes two projects entitled Wastewater Treatment Plant (WWTP) Grit Works Rehabilitation and Wastewater Treatment Plant Anaerobic Digester Improvements. The WWTP grit works system is one of multiple processes within the WWTP that remove solids from the wastewater stream. It is critical to prevent large and oversize pieces of debris from continuing through the rest of the treatment process. This current grit works system reliability and efficiency are low due to the age of critical system components. Upgrades to the grit works will allow it to work more efficiently and effectively with fewer maintenance issues. The project for the Anaerobic Digesters will focus on replacing end-of-life components and implementing current best practice technologies to improve reliability, digester performance, and energy efficiency. Upgrades include: digester tank rehabilitation, new steel gasholder cover, new mechanical mixing equipment, mechanical piping improvements, gas handling piping and equipment replacement, and new electrical / automated controls. The Grit Works project has been defined via a process and equipment analysis study completed by the City's consultant, RH2. The estimated construction budget is based on that study and will be refined once a full design is complete. The total project value is estimated at $3.5 million. Staff seeks to pursue funding through a low- interest loan from the Department of Commerce Public Works Board (PWB). Staff was not successful in securing funds for the project in 2025. Staff recommends an application to the PWB for $300,000 to fund the design phase of the project for the 2027 fiscal year. The Anaerobic Digester project has been defined via a process and equipment analysis study completed by the City's consultant, RH2. The estimated construction budget is based on that study and will be refined once a full design is complete. The total project value is estimated at $11.3 million. Staff seeks to pursue funding through a low-interest loan from the Department of Commerce Public Works Board (PWB). The City was successful in securing a $500,000 preconstruction loan in 2025 to fund the design phase. Staff recommends an application to the PWB for $9,000,000 to fund the construction phase of the project for the 2027 fiscal year. Fiscal Impact Fiscal impacts of loan debt will be analyzed if awarded Public Works Board loan. Attachments  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Items of Business Prepared By: Clint Whitney, Energy Services Director Subject 2026 Draft Cost of Service Analysis (COSA) Update (15 Minutes) Department/Office Document Type Energy Services Utility Advisory Committee Item Recommended Motion This item is informational for discussion. Summary City of Richland Energy Services (RES) department uses a forward retail rate program to provide City Council and customers with five-year financial projections. This program assists in long-range planning and rate stability. Significant factors, such as bond issuances, wholesale power rate adjustments, capital improvements, and annual financial results, necessitate periodic evaluation of assumptions used in the City's Cost of Service Analysis (COSA). RES' consultant, FCS/Bowman Group, and RES staff regularly update the COSA model to reflect current financial inputs and market conditions. RES staff then reviews the projected cash flows and utility fund performance to develop recommendations for future rate adjustments and bond issuances which are discussed with the Utility Advisory Committee (UAC) prior to City Council consideration and actions. Significant drivers to COSA impacts include: • A bond issue was completed January 2026 for projected capital expenses through 2027. • Wholesale power costs account for roughly 60% of total utility expenses. There are no imminent financial policy triggers from BPA Power or Transmission business lines through September 2026. • RES' Capital Improvement Plan (CIP) accounts for approximately 15% of total utility expenses. The draft COSA indicates a 5.5% rate increase in 2027. However, the CIP expenses for 2027 and 2028 will be adjusted down closer to the $12M-$14M historical levels to reduce the need for a rate increase. Consideration should also be made for a lower increase that occurs more often than in previous years. CPI-U for electricity nationwide indicates a 4.6% annual rate increase through May 2026, while data specific to the CPI-U electricity for Seattle-Tacoma-Bellevue does not appear available yet. Overall CPI-U for Seattle-Tacoma-Bellevue is 4.9% through April 2026. Staff's initial recommendation is to continue analysis for a smaller rate increase in 2Q2027 to reduce the 2028 rate increase. Fiscal Impact There is no impact from this discussion item. Attachments 1. 2026 Draft COSA Summary Dashboard 2. 2026 Draft COSA Summary GPOC Chart 3. May 2026 CPI-U 4. April 2026  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Reports and Comments Prepared By: Clint Whitney, Energy Services Director Subject 2026 Capital Work Plan - Energy Services Department Energy Services Recommended Motion Informational only. Summary Attached is a summary of planned Energy Services capital work through May 2026. The budgeted 2026 annual capital expenditures are $12.4M with year to date (YTD) expenses of $4.1M. The 2026 capital work budget includes projected expenses of: • Line extensions - $1.778M budgeted with YTD expenses of $1.3M • System Improvements - $784k budgeted with YTD expenses of $402k • Renewal and Replacement - $4.223M budgeted with YTD expenses of $865k • Substation Improvements - $2.923M budgeted with YTD expenses of $1.4M • Dallas Rd Substation - $2.735M budgeted with YTD expenses of $121k The City's contractors are actively working. One is working on the renewal and replacement projects with work currently occurring at Hills Mobile Home Park and the new Rachel Road distribution feeder. Another contractor is just starting the Thayer Substation rebuild work. Both contractors are on schedule with work planned to be completed by the end of the year. Fiscal Impact None. Attachments 1. RES CWP REPORT-June 2026 (002) Richland Energy Services Capital Work Plan June 2026 CWP Costs through June Cost Performance YTD: $4,108,867 Cost Performance remaining: $7,909,420 YTD % Complete 32% CWP Monthly Spend Vs. Actuals CWP Cost Types CWP Project Costs for June  UTILITY ADVISORY COMMITTEE AGENDA ITEM STAFF REPORT Meeting Date: 7/14/2026 Agenda Category: Reports and Comments Prepared By: Clint Whitney, Energy Services Director Subject Forward Agenda Department Energy Services Recommended Motion Informational only. Summary The forward agenda includes these items: Sept - Ruby Flats Solar Potential 10MW PPA (RES) Sept - AMI Time of Use (TOU) and Demand Rate Discussion (RES) Sept - Energy Density Rate Recommendation (RES) Nov - Key Performance Indicators (RES) Nov - Indexed Electric Rates Discussion (RES) Nov - Proposed 2027 Capital Work Plan (RES) Fiscal Impact None. Attachments