Archive for Wednesday, June 6, 2001

City seeks input on electrical issues

June 6, 2001

Out of eight possible energy options being reviewed by the Baldwin City Council, utility director Terry McKinney is recommending one as a solution to the city's electricity concerns.

"I looked at all the options," McKinney said. "My main motive is finding the most economical and reliable means of providing energy."

All eight options will be presented to the public at a town meeting tonight at 7 at the Baldwin Junior High School auditorium.

The town meeting will begin with McKinney's presentation outlining all of the energy options.

McKinney said even though one option appears to be the best, all of the options will be discussed.

"I need to show everybody that I looked at everything, not just a couple of options," he said.

Following the presentation, the floor will be opened to the public for discussion.

The option McKinney is recommending to the city, option eight in his presentation, is partnering with Western Resources (Kansas Power and Light) on additional generation in or around Baldwin.

Currently the city purchases 3,000 kilowatts of capacity from Grand River Dam Authority from May through October and 2,000 kw of capacity from November through April. Baldwin also receives 2,500 kw of capacity from the Board of Public Utilities. The city power plant generating capability is 4,650 kw.

The total power plant capacity during the summer with BPU and GRDA purchases is 10,150 kw.

Even though there shouldn't be a problem with energy this summer, McKinney said because Baldwin is growing, that won't always be the case.

"The city can't do nothing," he said. "We're running out on our current mode. We're exceeding the capacities of what we have."

McKinney said that's why he is recommending partnering with Western Resources on additional generation.

It would cost between $8.5-10 million to build a new plant.

In the agreement, Western Resources would pay for both debt service and operating costs on the new generation, but Baldwin would own and operate it.

Western Resources would have rights on capacity as well as energy, but each year the city's needs for capacity would be reviewed and determined on 1,000 kw increments.

The current power plant would still be used only when needed.

The agreement would allow Baldwin to grow and not bare all the costs up front, McKinney said.

Electrical rates would not have to be increased with this option, he said, because Baldwin's growth would cover increased costs.

"It's a good option because you've got someone to pay the debt," he said. "You'd be able to build the capacity now to what the city's going to grow into."

One concern with this option, he said, is the taxability of bonds.

But he said this option still seems to be the best for Baldwin.

"This option has the least dollar impact on the city," McKinney said.

Option one is to continue the present mode of operation by utilizing both BPU and GRDA energy.

In order to do that, Baldwin must maintain a 12-percent reserve in capacity over peak demand.

With projected growth, McKinney said the city will most likely run out of reserves in 2002.

Option two is to continue with option one mode of operation but add more generation to meet present and future energy needs.

Baldwin would be self-supporting, but would have to purchase and install 15,000 kw of additional generation at an estimated cost of $10 million. Unlike the preferred option eight, Baldwin would have to bear the entire $10 million cost with no partner.

McKinney said a lot of utilities have added generation due to deregulation and the concern for shortages over the next five to 10 years. This could leave Baldwin vulnerable with inadequate, unaffordable energy, he said.

Even though the power plant would provide enough power to all of the residents, the electrical rates would be raised.

Option three would have Baldwin work out a total requirements agreement with Kansas City Power and Light.

In this option, Baldwin would continue to own the electric utility, the city must decommission and disassemble the power plant at what would be a high cost.

Baldwin would receive all of its energy from KCPL at an estimated 10.33 cents per kilowatt-hour. If the power were to go off, it would be off until KCPL restored it.

Baldwin would also have to sell or get another municipality to take over capacity the city has purchased from BPU and GRDA.

McKinney said at first KCPL wasn't interested in the agreement, but has possibly changed its position in the last few weeks. The city's not sure where KCPL stands right now.

In option four, Baldwin would work out a total requirements agreement with Western Resources.

Western Resources has indicated it isn't interested in a total requirements agreement because it's not in its or Baldwin's best interests.

Option five is to sell the power plant and electrical distribution system to KCPL.

KCPL has shown a little interest in the electrical distribution system, but is not interested in purchasing the power plant.

Baldwin would still have the power plant and distribution system debt.

If the electric utility is sold, the ball field lights, street lights, franchise fees and administration costs would have to go in the general budget causing the mill levy on property taxes to increase.

Option six is to sell the power plant and electrical distribution system to Western Resources.

Western Resources has indicated it is not interested in the purchase.

Option seven is to partner with KCPL on additional generation in or around Baldwin.

KCPL has indicated it is not interested in partnering with the city because it feels Baldwin does not have the resources available for the size unit it would want.

All of these options will be presented more in depth at the town meeting.

"Each one of the options have positives and negative," McKinney said. "There's a lot of pros and cons and that's what we're trying to answer."

Mayor Ken Hayes said the city council would like people to attend the meeting.

"We are faced with a decision that will affect the city for the next 20 years. That's why we have eight options. We're making an informed decision." Hayes said. "But in order to do that we really need feedback from the city."

He said it's a decision that must be decided on this summer.

"We need to tackle it while it's an issue and not a problem," he said.

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