Exposed: Redding's Backdoor Tax Grab – Utility Rate Hikes Shoved Down Citizens' Throats After Sales Tax Rejection

Opinion Piece

In a brazen display of fiscal maneuvering, the City of Redding is poised to ram through an 18% cumulative electric rate increase over the next 3.5 years via the Redding Electric Utility (REU)—just months after voters decisively rejected a proposed 1% sales tax hike in the November 2025 election. Measure A, which aimed to boost the city's sales tax from 7.25% to 8.25% and generate an estimated $30 million annually, was shot down by a resounding 63-64% of voters, signaling a clear "no" to additional taxation amid economic pressures. Unable to secure public approval for direct revenue boosts, city officials appear to be pivoting to a less scrutinized avenue: inflating utility bills to shore up budget shortfalls tied to years of alleged mismanagement under former City Manager Barry Tippin. This exposé uncovers how REU's proposed hikes—set for debate at tonight's 6:00 p.m. City Council hearing—serve as a covert mechanism to extract funds from ratepayers, bypassing the democratic will expressed at the ballot box.

krcrtv.com

Redding residents face proposed utility rate hike: Your protest could make a difference

The Sales Tax Fiasco: Voters Say No, City Plots Alternatives

Measure A was no grassroots effort; it was backed by a citizen-led initiative but fueled by significant donations, including a controversial $49,500 from Advance Redding, the nonprofit operating the Civic Auditorium, which stood to gain 6% of the new revenue for facility upgrades. Promoted as essential for public safety, infrastructure, and community projects, the measure promised allocations like $1.8 million annually for the auditorium. Yet Redding residents, weary of inflation and rising living costs, rejected it outright in early vote counts that held firm through final tallies. Vice Mayor Mike Littau downplayed the defeat, insisting the city's 2025-26 budget remains balanced. But whispers of deeper deficits loom, exacerbated by Tippin's tenure, marked by disputed financial reporting, council infighting, and a failed push for revenue measures that critics label as corrupt or incompetent.

cityofredding.gov

Redding City Manager Barry Tippin retired in October. Redding City Council Appointed Steve Bade as Interim City Manager

With direct taxation off the table, attention turns to REU's enterprise fund. As a municipal utility, REU funnels millions annually to the city's general fund through Payments In Lieu Of Taxes (PILOT)—around $6 million in recent years, ostensibly for city services rendered to the utility. But in a city grappling with a projected $5 million-plus shortfall for upcoming cycles, these transfers could swell if REU's profits are artificially boosted via rate hikes. The proposal: four 4.5% annual increases starting April 1, 2026, adding $7-8 monthly to average bills initially, escalating to compound impacts by 2029. Officials cite surging power costs ($20 million annually), infrastructure needs, and clean energy mandates—but skeptics see a thinly veiled tax grab, forcing citizens to foot the bill for the city's fiscal follies without a vote.

Councilmember Tenessa Audette, a vocal critic of Tippin's legacy, dissented 4-1 against even scheduling tonight's hearing, decrying unchecked overtime and a refusal to trim internal fat before hitting ratepayers. Public workshops echoed outrage from fixed-income retirees facing "hardships" with bills already 60% above national averages ($260 monthly or $0.30/kWh).

REU's Inefficiencies Laid Bare: A Tale of Two Utilities

To expose the mismanagement, compare REU to Roseville Electric Utility, a fellow vertically integrated municipal powerhouse in California. Both own generation assets—REU's 183 MW Redding Power Plant versus Roseville's 160 MW facility—handling everything from power production to distribution for local control and RPS compliance (REU at 54% carbon-free, Roseville at 63.2%). They grapple with identical pressures: wholesale market volatility, wildfire mitigation, and state renewables targets, prompting similar rate tweaks (Roseville's two 9% bumps in 2024-2025).

But here's where the cracks show: REU's operations scream inefficiency, potentially inflating costs to justify hikes that pad city coffers. The following table highlights the disparities:

Metric	REU (Redding, FY 2024)	Roseville Electric (FY 2024)	Key Insights
Vertical Integration	Yes (generation, transmission, distribution; owns 183 MW gas plant, hydro, renewables contracts)	Yes (generation, transmission, distribution; owns 160 MW gas plant, hydro, solar/wind contracts)	Shared model should promote efficiency, but REU's bloat suggests funds are siphoned for city bailouts.
Customers Served	~45,000	~68,400	Roseville's scale yields savings REU lacks, hinting at poor resource allocation.
Annual Energy Sales (GWh)	1.0-1.2	1.162	Similar loads, yet REU's costs spiral higher amid alleged mismanagement.
Total Operating Revenue	$172.6M	$213.0M	Roseville's growth fuels reserves; REU's may feed city shortfalls.
Total Operating Expenses	$155.6M	$186.9M	REU's per-customer bloat ($2,267 vs. $1,800) exposes waste.
Operating Income	~$13.6M	$26.1M	Roseville doubles REU's profit—funds that could boost PILOT transfers in Redding.
Staffing Levels	199 employees (4.42 per 1,000 customers)	179 employees (2.62 per 1,000 customers)	REU's 40% higher ratio defies APPA benchmarks (2.5-3.0), fueling overtime scandals.
Carbon-Free Energy Mix	54%	63.2%	Roseville advances greener, cheaper; REU lags, excusing hikes.
Recent Rate Increases	4.5% annual for 4 years (cumulative 18%)	Two 9% increases (2024-2025)	Post-sales tax flop, REU's hikes smell of desperation.
O&M Expense per Customer (excl. Power Supply)	~$2,267	~$1,800	REU's excess tied to staffing; perfect for inflating profits to city.

REU's staffing ratio—4.42 employees per 1,000 customers—towers over Roseville's 2.62 and APPA medians, inflating expenses without productivity gains. Critics point to this as a symptom of Tippin's era, when personnel costs "climbed sharply" amid budget disputes. Roseville, by contrast, leverages training and scale for leaner operations, yielding double the operating income despite comparable per-kWh rates.

The Smoking Gun: Utility Profits as City Slush Fund

This isn't just inefficiency—it's a scheme. With Measure A dead, REU's hikes could boost operating income, enabling larger PILOT transfers to plug citywide holes without voter oversight. Tippin, who retired amid Audette's accusations of mismanagement and fiscal sleight-of-hand, left a legacy of contentious budgeting that now burdens ratepayers. As one Reddit commenter noted, voters' rejection stemmed from distrust: "They were not inclined to vote yes" on more taxes. Tonight's hearing is ground zero—Redding citizens must tell the City Council it will not allow a backdoor tax.

Demand answers: Scrutinize staffing, cap PILOTs, and require REU to streamline its own operations if the goal is to deliver more revenue to the City.