The Oxford Board of Aldermen reviewed the proposed Fiscal Year 2026 budget for Oxford Utilities – Electric Division last week during a public meeting with General Manager Rob Neely.

The proposed budget outlines $26 million in expenses and slightly higher projected revenues.

Unlike other city departments, Oxford Utilities follows a fiscal year that begins on July 1 and ends on June 30. This requires a separate budget approval process before the broader city budget, which covers Oct. 1 through Sept. 30. Mayor Robyn Tannehill and department heads have begun budget preparations for FY2026.

The proposed FY2026 budget includes $26,821,803 in total expenses, matched closely by $26,821,925 in projected revenues. According to Neely, the largest single expense—accounting for about 77% of the budget—is purchased power.

“The greatest challenge when preparing an annual budget is projecting electric sales revenue and purchased power expense,” Neely said.

Operating expenses are expected to increase by 5.4% compared to FY2025, largely due to inflation affecting materials, supplies and employee benefits. However, revenue margins—defined as total revenue less power costs—are projected to decrease slightly by 0.5%, which could limit the funds available for capital projects.

Neely also shared highlights from the current fiscal year and key challenges that shaped the budget planning process:

Reliability Recognition

In April 2025, Oxford Utilities received the American Public Power Association’s Certificate of Excellence in Reliability for the second consecutive year. The award is given to electric utilities in the top quartile nationwide for system reliability, based on the System Average Interruption Duration Index. Oxford Utilities was the only utility in Mississippi and one of just nine in the seven-state TVA region to earn the distinction.

Winter Power Demand

In January and February 2025, extreme cold weather pushed TVA’s power grid to record energy delivery levels. While the grid remained stable, Neely noted ongoing challenges due to increased energy demand and the retirement of older coal-fired generation units. He pointed out that TVA’s ability to expand generation is limited by a $30 billion debt cap set by Congress in the 1970s.

Supply Chain Disruptions

Supply chain issues affected the availability of critical grid equipment in FY2025. Transformers, in particular, faced long lead times and price increases of up to 10 times previous costs, complicating maintenance and expansion projects.

Customer Communication Upgrades

Oxford Utilities implemented a customer text notification system for outage alerts, disconnection notices, and other service updates. As a result, the utility stopped using physical door tags for disconnection notices, eliminating the $25 tag fee and streamlining customer communication.

“That’s been really successful,” Neely said of discontinuing the door tags.

Oxford Utilities absorbed a 5.25% wholesale rate increase from TVA in October 2025, following a 4.5% increase in October 2024.

Neely said TVA is expected to raise wholesale rates again in the coming years, possibly by FY2029.

Despite the rising costs, Oxford Utilities has not raised residential electric rates in over 16 years and currently ranks as the fourth lowest in retail rates among 28 TVA municipal and cooperative utilities.

Neely noted that while a small rate increase may become necessary in the near future, spreading adjustments over time is generally more manageable for customers than larger one-time hikes.

As of March 31, Oxford Utilities served 10,469 electric customers—a 1.4% increase from the previous year. This includes 8,517 residential accounts, 1,647 small commercial customers, and a mix of other classifications such as medium and large commercial, street lighting and electric vehicle infrastructure.

The proposed FY2026 budget will return to the Board of Aldermen for a vote at an upcoming meeting.