Rochester, MN (KROC-AM News) - Rochester Public Utilities General Manager Tim McCollough discusses what some have described as a “perfect storm” of circumstances impacting power utilities nationwide, which are expected to push electric rates significantly higher in Rochester in the coming years.

McCollough recently appeared with Andy Brownell on the Rochester Today show on News-Talk 1340 KROC-AM and 96.9 FM to explain how those circumstances are driving up the cost of generating and purchasing power. They include the phaseout of tax credits for wind and solar power generation facilities, inflationary increases in the costs of raw materials used in the industry, the impact of tariffs, and a surge in power demand driven by the artificial intelligence industry and the massive data centers required to support it.

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The situation for Rochester Public Utilities is further complicated by a decision made years ago to pull out of a long-term partnership with the Rochester-based Southern Minnesota Municipal Power Agency (SMMPA). SMMPA has served as Rochester’s wholesale electricity supplier for decades, but that arrangement will end in 2030, requiring RPU to develop new sources to meet the city’s power needs in the near future.

READ MORE: 30% RPU Electric Rate Hike Over 5 Years Tied to Clean Energy Goal

In 2019, Rochester Public Utilities and the Rochester City Council endorsed a goal of meeting those needs with renewable energy sources by 2030. With the expiration of the tax credits enacted during the Biden administration, the estimated costs associated with achieving that goal have risen sharply compared to just a year ago. Combined with other inflationary pressures, RPU is now looking at a budget plan that calls for electric rate increases of 6% annually over the next five years.