Dalton Utilities Approves 2026 Budget with Significant Cost Increases
Dalton Utilities has finalized its budget for 2026, revealing a projected increase in healthcare costs of 27.9%, a significant rise from the previously anticipated 20%. This adjustment was the only major change made before the budget was unanimously approved by the board this week.
During the November budget unveiling, CEO John Thomas highlighted that Dalton Utilities is facing the same healthcare cost pressures affecting many employers across the United States. “Our understanding is that entities all over the country are experiencing noticeable increases in healthcare costs,” he stated. This sentiment is echoed by a recent survey from the Business Group on Health, which indicates that large employers nationwide are forecasting an average growth of 10% in healthcare costs for the coming year, with some predicting even larger hikes.
The approved budget includes a 5% increase in electricity rates for residential, commercial, and industrial customers. This adjustment will add an average of $9.25 to the monthly bill for residential customers. Additionally, water and wastewater rates for residential customers will rise by an average of $1.67 and $2.12 per month, respectively, in the city of Dalton. For customers outside the city, these increases will average $2.01 for water and $2.37 for wastewater.
Operational and Infrastructure Costs Drive Rate Adjustments
The budget does not propose any increases for natural gas or OptiLink cable services. For commercial customers, the adjustments are steeper, with water rates rising by 6.73% and wastewater rates by 7.96% within the city. Outside of Dalton, these figures are 11.32% and 8.38% for water and wastewater, respectively. According to utility officials, these increases are necessary to cover rising operational costs, which are driven by increases in materials, contract labor, and equipment.
“Our internal operations, as well as the costs associated with infrastructure improvements completed by contractors, are increasing,” Thomas explained. He also noted that the electric sector is facing substantial cost increases in purchased electric capacity, which are expected to take effect in 2028. “Implementing nominal rate adjustments between now and that time will help us be prepared to fund those increased costs when they hit,” he added.
Thomas pointed out that the largest wholesale electricity contracts for Dalton Utilities are set to expire in 2028, necessitating renegotiations. The anticipated growth in electric demand in Georgia is expected to drive up supply costs in the wholesale market in subsequent years.
Budget Overview and Financial Projections
The budget forecasts $326.714 million in operating revenue for 2026, an increase from $294.208 million in 2025. Operating expenses are projected at $278 million, up from $266.684 million in the previous year. This results in an anticipated operating margin of $47.714 million, a decrease from the $989,576 margin indicated in the preliminary budget released in November.
Utility officials clarified that the revenue generated from operations serves three primary purposes: maintaining and expanding facility operations, funding debt service obligations, and meeting transfer payment obligations to the city’s general fund. Dalton is required to pay the greater of $10 million or 5% of its revenue each year to the city.
As Dalton Utilities moves forward with its 2026 budget, the challenges posed by rising healthcare and operational costs will continue to shape its financial strategies and customer service offerings.
