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Lakeland Electric has kicked off a six-month base rate study that could shape what customers pay for electricity starting in late 2026.
Officials stressed that the study doesn’t automatically mean higher rates — it means taking a fresh look at how Lakeland Electric pays its bills, plans for the future, and balances costs across its customer base.
Lakeland Electric typically does a base rate study every four years. The last one wrapped up in 2022, and utility officials say a lot has changed since then — from inflation and interest rates to electric vehicles, work-from-home habits, and new technologies that are reshaping how and when people use power.
“We look at the data and let the data tell us what we need to do,” said Willem Strauss, Lakeland Electric’s assistant general manager of fiscal operations.
The study will also account for major system investments and long-term financial stability, including storm recovery costs and funding for future capital projects.
“The goal is to set rates that generate enough revenue to be sustainable,” Strauss said. “This is a bit of an art to get it into that space where every customer class picks up their fair share of the cost.”
About the study
Company leaders walked commissioners and Utility Committee members through the process on Jan. 30, outlining how they will determine whether current base rates cover the real cost of operating the electric system — and how those costs should be fairly divided among residential, commercial, and industrial customers.
Base rates account for about 55% of the average residential bill and cover day-to-day operations, customer service, capital investments, and debt — but not fuel costs, environmental charges, or taxes.
The study will have three phases:
- Phase 1: Revenue requirement — The utility will calculate how much revenue it needs to operate, projecting costs over five years. This will include major system investments, storm recovery costs, and funding for future capital projects.
- Phase 2: Cost-of-service allocation — They will look at how costs are divided among residential, commercial, and industrial customers. The goal is for each customer class to pay roughly what it costs to serve them, generally within a 95–105% range, while avoiding large swings between groups.
- Phase 3: Rate design — Finally, the study will recommend an updated rate structure, including customer charges, energy rates, demand charges, and potential time-of-use options, while considering policy goals such as protecting low-income customers and encouraging off-peak charging for electric vehicles.
What comes next
Lakeland Electric will present updates along the way, with key milestones scheduled for late February and early May. Final recommendations are expected to be presented on June 12, with an ordinance submitted to the City Commission for a first reading on July 6 and a vote on July 20.
If commissioners approve changes, new rates would take effect Oct. 1, 2026, at the start of the city’s next fiscal year.
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