Dalton Utilities has officially adopted its 2026 budget, revealing a significant projected increase of 27.9% in healthcare costs, up from an earlier estimate of 20%. This change marks the only major adjustment made to the budget before its final approval this week. During a meeting following the budget’s initial unveiling in November, CEO John Thomas indicated that the utility is facing similar health insurance cost pressures as many other employers across the country.
“Our understanding is that entities all over the country are experiencing noticeable increases in healthcare costs,” Thomas said, reflecting a broader trend identified by the Business Group on Health. A recent survey by the organization forecasts an average increase of 10% in healthcare expenses among large employers for the coming year, with some anticipating even larger hikes.
Details of the Approved Budget
The 2026 budget, unanimously approved by the board, includes a 5% increase in electricity rates for residential, commercial, and industrial customers. This adjustment is expected to add approximately $9.25 to the monthly bill of an average residential customer. Additionally, residential and industrial water and wastewater customers will see similar increases, adding an average $1.67 to water bills and $2.12 for wastewater bills within the city of Dalton. Customers outside the city will experience average increases of $2.01 for water bills and $2.37 for wastewater bills.
While the budget incorporates notable increases in water and wastewater rates for commercial customers, the rates for natural gas and OptiLink cable services will remain unchanged. Specifically, the budget outlines a 6.73% increase in water rates and a 7.96% increase in wastewater rates for commercial customers inside Dalton, with even higher increases projected for those outside the city.
Justifications for Rate Increases
Utility officials attribute these rate increases to rising operational costs. “All sectors have unique influences, but in general, costs associated with materials, contract labor, and equipment are increasing,” Thomas explained. He further highlighted that these adjustments are necessary not only to cover operating costs but also to support infrastructure improvements carried out by contractors.
Looking to the future, Thomas noted that substantial increases in the cost of purchased electric capacity are anticipated beginning in 2028. He emphasized that implementing nominal rate adjustments now will better position the utility to manage these anticipated costs. The largest wholesale electricity contracts for Dalton Utilities are set to expire in 2028, necessitating renegotiations to adapt to an expected surge in electric load growth across Georgia.
The budget projects an operating revenue of $326.714 million, an increase from $294.208 million in 2025. Operating expenses are anticipated to rise to $278 million, up from $266.684 million in the previous year. The forecasted operating margin stands at $47.714 million, a decrease from the $989,576 margin estimated in November.
Funds generated from operations are allocated for three primary purposes: maintaining and expanding facilities, covering debt service obligations, and fulfilling transfer payment obligations to the city’s general fund. Each year, the city requires the utility to pay the greater of $10 million or 5% of its revenue.
As Dalton Utilities navigates these financial pressures, the adjustments in the budget reflect both the challenges and the strategies being employed to ensure continued service reliability and operational sustainability.
