Fiscally challenged city of Radford hopes new power contract will give it more diversity and control

The city of Radford, currently operating under a state-designated "fiscal distress" status, has moved to a new wholesale power agreement with CMS Energy Resource Management in a bid to gain greater control over its energy supply and diversify its power options.

The new contract, which runs through December 31, 2028, took effect on June 1, 2026. It was secured through a joint request for proposals conducted via the Blue Ridge Power Agency, in partnership with the city of Salem, Virginia Tech Electrical Services, and the Craig-Botetourt Electrical Cooperative. CMS Energy offered the lowest price among five bidders.

Under the previous long-term contract with Appalachian Power Company (AEP), the city had limited flexibility to incorporate renewable sources like long-term solar. The city also fell months behind on electricity payments to AEP, accruing $6.5 million in arrears — a key driver of its fiscal distress designation.

The new agreement uses a "fixed load shape product" that covers roughly 80 percent of the city’s energy needs at a predetermined price, with any additional demand purchased at wholesale market rates. Specific pricing details remain largely redacted, with the city citing competitive and proprietary market concerns.

To address its broader financial challenges, the Radford City Council has implemented three consecutive years of tax and rate hikes. In April 2026, the council approved a 2-cent increase in the real estate tax rate, a $3 increase per 1,000 gallons of water, and a 5 percent increase in electric rates. City officials have indicated that additional tax increases may be necessary in future years to end the reliance on enterprise fund transfers that long masked the city’s structural deficit.