Archive for Thursday, December 13, 2007

Baker pays different rate, but not so for Baldwin City schools

December 13, 2007

Baldwin City's high electrical rates are shared by all, with one notable exception. But, it certainly isn't a break.

"Everyone pays the same rate -- 10.3 cents per kilowatt hour," said City Administrator Jeff Dingman. "Except Baker."

Baker University is the city's largest electrical customer, with the Baldwin School District a distant second. The arrangement with Baker benefits the city, however.

"By provision in the City Code (15-212), Baker has been set up as the city's lone 'demand-rate' customer," said Dingman. "They are by far the largest customer and encouraging them to monitor their usage in effect does help keep the cost of energy down for everyone else by keeping the city's overall consumption down.

"How it works is Baker pays $9.90 per kilowatt for the highest demand during the month," he said. "They make that monthly demand payment and then their energy usage is charged at 6.1 cents per kilowatt hour. The peak usage -- which is usually set in August and September -- then impacts what their monthly bill is for the next 12 months. If they start bringing their usage down, then their demand charge might decrease from year to year."

How does that figure out for a bill? Baldwin City residents and the school district are used to paying dearly, but it's doubtful Baker's checks to the city can be touched.

"I don't know what their numbers are, but hypothetically if they use 1,000 kilowatts in a month, their demand charge will be $9,900 plus their energy charge of $610 for a total monthly bill of $10,510," said Dingman. "They will then pay that $9,900 demand charge every single month for at least a year -- or until they set a new peak -- regardless of how much their energy usage might drop.

"If they have a month only using 500 kilowatts, they still pay the $9,900 demand charge, plus an energy charge of $305 for a total monthly bill of $10,005," he said.

The amount of power headed to the oldest university in the state is easily figured.

"We can monitor this by capturing Baker's usage at the old power plant, where we have two feeders that supply power only to Baker," said Dingman. "All of the energy used on those two feeders is attributed to Baker."

The arrangement with Baker is much like the city's contract with KCPL, which supplies most of the power the city uses.

"The city's arrangement with KCPL is also based on a similar demand charge arrangement," he said. "We set a peak load -- we set a new peak of 9.7 megawatts in August -- then use that to determine our monthly demand charge for energy. We then pay an energy charge for the kilowatt house used.

"We, of course, get contract wholesale rates which are further reduced by contract due to the consideration given to us for the amount of hours we allow KCPL to curtail our usage in the summertime when we then generate our own power as KCPL sells our power on the open market," said Dingman. "This is why it is in our best interest to have our largest customer -- Baker is about 12 percent of our annual energy usage -- on a similar demand structure as it assures that they pay attention to their own usage and help keep our overall system demand in check."

While Baker stands alone currently with the demand charge, that could change.

"We also have an industrial rate set up (City Code Section 15-211), but we don't currently have any industrial users that qualify for it," he said. "We incorporated the language for it in the Code in 2006 simply to have it available if a large customer/energy user were to look at Baldwin City."

The Signal requested information and comment from Supt. Paul Dorathy regarding the school district's electrical usage for this story, but as of press time he hadn't provided it.

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