Electrical rates could be increasing 6 to 12 percent
A possible electrical rate increase of 6 to 12 percent was discussed by the Baldwin City Council during a work session at its regular meeting Monday.
The rate increase has been the elephant in the room since the council approved the 2010 budget in August based on an electrical increase. But the subject wasn’t raised until Monday. It brought a two-hour discussion, but no action.
“We’re not going to have any action tonight and I don’t think anyone thought we would,” said Mayor Ken Wagner, who asked City Administrator Jeff Dingman what he needed from the council to proceed.
“We need a road map, sooner rather than later,” said Dingman. “From my perspective, I’m ready to be bringing a resolution out for the next meeting for an increase.”
But Council President Ted Brecheisen Jr., who also chairs the utility committee, said he wanted his group to go through the utility budget line by line to see if reductions can be made first. He asked for 30 days to do that.
“I think we need to do that first before we come and say we need a 6 percent or 12 percent increase,” said Brecheisen.
Wagner agreed to the closer look, but added he’d be surprised if much savings could be found.
“You guys work it out,” said Wagner. “Let’s see if we can bring this back for the last meeting in May for more discussion.”
During Monday’s discussion, the council learned the bottom-line number for why the increase is needed. Last year, the electric department operated in the red. Expenses outpaced revenue by $170,000.
There were two major causes for that. The first was a cooler summer than expected, which resulted in revenues at only 90 percent of what had been budgeted. The other was increased cost of buying power. Power purchase had been budgeted at $1.65 million, but $1.8 million was spent, said Dingman.
Wagner thought it would be worse.
“I’m a little surprised,” said Wagner. “I expected a larger loss. I was expecting a quarter of a million dollars.”
The electrical loss last year was the first in some time. In 2008, the department was $2,532 in the black. The council, which consists of first-year members, other than Brecheisen and the mayor, also learned that there hasn’t been an electrical rate increase since the 15-16 percent rise is 2002. The council also decreased the rate slightly in 2005.
After hearing much of the discussion, Council Member Bonnie Plumberg asked if residents had ever been informed or could be informed regarding misconceptions about the city’s electricity, such as the majority of the power comes from KCPL and other sources, rather than the city’s power plants. Those plants are only used during peak usage months in the summer and in emergency situations during the winter.
Wagner pointed to a series of stories that were printed in the Signal in 2007 outlining the city’s power situation and history. The series, which won first place in the Kansas Press Association contest that year, is available in the Signal’s archives at baldwincity.com. Use the keyword “Price of Power” for the search.
Complicating the situation, the council was told, was the need to add breakers that will cost $290,000 at the substation. That would enable the city’s power to be brought back up quicker during outages because not all users would be brought back up at once.
Regardless of that, an increase is needed to avoid operating in the red again, said Dingman.
“We’ve got to do something,” he said. “Twelve percent is what we need; we can do it 6 percent at a time.”
It wasn’t all bad electrical news Monday, however. For the sixth year in a row, the city will again sell excess capacity – not power – to the city of Gardner. That has brought $25,000 to $33,000 to the city over the years.
In other business, on final reading, the council approved changes to zoning and subdivision regulations that had been discussed for months.