Archive for Wednesday, August 7, 2002

Council approves raise in electric rates

August 7, 2002

Everyone knew the electric rates would have to increase, but the Baldwin City Council had a hard time Monday night deciding just how to increase them.

The council took a close look at three options, but finally approved in a 3-1 vote, with Council Member Ted Brecheisen voting against, a $3 monthly base rate increase and 1.7 cent per kilowatt-hour increase effective in October. Council Member George McCrary was absent from the meeting.

City Administrator Larry Paine said a rate increase was needed to build a $400,000 reserve, which is needed to get the bond in place for construction for new electric generation.

"The $400,000 reserve is to show a 2.0, 3.0 bond coverage ratio to help sell the bond in the marketplace," Paine said. "We have a better opportunity to sell the bond in a marketplace with a 2.0, 3.0 spread.

"We can have a $400,000 to $500,000 cash reserve at the end of 2003," he said, "which we could isolate for the future purchase of generation."

The original plan was the $3 base rate and 1.7 cent per kwh increase, but a second option was presented to the council at the meeting that included a $4 base rate and a 1.5 cent per kwh increase.

Utility Director Terry McKinney said the $3 base rate increase option would generate more income in the long run than the $4 base rate increase.

Council Member Todd Cohen said he knew it was time for a rate increase.

"I would agree we need reserves, but it just comes down to whether we do it by base rate or through a kilowatt-hour charge," Cohen said.

Mayor Ken Hayes said he preferred the $3 base rate increase option.

"Instead of it being a flat tax for everyone, they have the ability to control their usage," Hayes said. "That 1.7 is on the energy side. That gives everybody the option to control their usage."

Brecheisen said he didn't see why it was necessary to build a $400,000 reserve in a year.

"For the citizens of this town, business owners or whatever, the utilities are going to go up considerably," he said. "I'd as soon save my money myself then have the city put it in a reserve for me."

Brecheisen made a motion to have a $3 base rate and 1.5 cent per kwh increase to begin in October and then in October 2003, implement a .2 cent per kwh increase.

Council Member Marilyn Pearse said Brecheisen's option wouldn't create a reserve during the first year.

"I have a hard time voting in favor of it because I think we need to start working on our reserve now," she said.

Hayes said he agreed, which is why he liked the $3 base rate increase option.

"It will generate reserves and places it in the rate users' hands to control their usage," he said.

In other business, the council:

Approved in a 4-0 vote a change order for an automatic throw-over switch for $45,050 for the wastewater treatment plant.

The switch would start the auxiliary generator if the plant loses its primary electric service, which would keep it in compliance with Kansas Department of Health and Environment standards.

Approved in a 4-0 vote the re-appointment of Assistant Utility Director Bill Winegar to the Douglas County Emergency Management Board.

Approved in a 4-0 vote the vacation of Summit Street north of College Street to the railroad right of way.

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