Washington city sees power bill top 2026 forecast, opening $1.7 million utility gap
A Washington city is running into the same kind of power-bill strain many residents have been grappling with — only on a much larger scale. In Lacey, electricity costs rose so sharply that they surpassed the city's projections for 2026, leaving officials to deal with a $1.7 million utility fund shortfall, according to The Olympian .
Here's what to know
Lacey's budget gap shows how utility inflation is reaching city governments as well as residents. As The Olympian reported, most of the deficit stems from higher energy costs.
A dry April increased irrigation demand, Finance Director Troy Woo said, adding to the city's utility usage. Of the $1.7 million gap, he said $1.1 million came from electricity costs and about $600,000 from heavier water, sewer, and stormwater use.
Even with advance planning for higher rates, the city still came up short. Woo said, according to The Olympian, Lacey had budgeted for a 15.7% increase in its street-lighting account, but the final increase was 17%. Streetlights, well water pumps, and lighting at the Regional Athletic Complex are among the city's biggest electrical expenses.
Woo also said that city officials think Puget Sound Energy imposed three rate hikes in 2025. Lacey is already expecting its street-lighting account to rise another 32% in 2027.
More background
The cost surge is landing on public budgets and the services they support, while taxpayers are also facing bigger monthly bills at home.
Residential bills are up about 20% since July 2025, Puget Sound Energy spokesperson Melanie Coon told the outlet. She said both households and local governments are dealing with the same pressures: "rising costs of providing energy, the investments needed to maintain reliability, meet growing demand, and compliance with Washington state's ambitious clean energy requirements."
The city may be able to cover the shortfall because utility tax revenue can be used for that purpose. As The Olympian reported, residents pay a 6% utility tax on electricity and city water services, so people facing higher personal bills are also helping fund the city's rising costs.
What's being done?
City Manager Rick Walk told the council he has been talking with a Puget Sound Energy representative about coming to a council work session focused on the rate increases.
Walk said the utility has shown some reluctance, but he still hopes a "pre-meeting" could happen first and lead to a broader public discussion. "I think that at the end of the day we'll have a work session opportunity with Puget Sound Energy," he said.
A budget amendment is also being prepared to address the gap, and the council is scheduled to vote on it Sept. 1. Woo noted that the electricity utility tax is capped at 6% unless voters approve a higher rate, while the city has more room to adjust its own water utility tax, though no decision has been made.
Council member Lenny Greenstein summed up that concern directly: "Residents feel it twice, right? Because they're getting it in their own personal bills that are going up, but they're also on the hook for all of us, because the money we spend comes from the public, so they're paying it on both ends. So I think it's only fair that PSE sit down in an open meeting."
Where can I learn more?
Each of these stories looks at the same pressures behind Lacey's shortfall, from utility spending and grid upgrades to clean-energy planning that can drive rates higher. They also show how those costs hit both household budgets and public agencies trying to keep basic services running.
• Utilities are drawing scrutiny over how electricity bill money is being spent on transmission lines.
• In California, officials warn ambitious electrification plans could impact residents' power bills.
• In New Jersey, a nearly billion-dollar grid upgrade is reshaping what residents may pay.
Rising power costs are hitting far beyond one Washington city. That pattern helps explain why residents and local governments are asking tougher questions about rates, infrastructure spending, and long-term utility planning.
Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here .
