Iola’s days of purchasing electricity through the Kansas Power Pool are numbered.
City Administrator Carl Slaugh told the Register Monday that he will recommend to City Council members at their Nov. 14 meeting that the city send a two-year notice to KPP to end its affiliation with the consortium.
Since 2007, Iola has purchased wholesale electricity — which then is sold at a retail rate to its customers — through KPP.
The final straw in the city’s decision to withdraw from the power pool came after a KPP board of directors meeting last week that rejected a number of concerns from Iola, most notably that KPP cannot offer financial considerations for Iola’s ability to generate electricity.
Slaugh said Iola is losing about $300,000 annually because it can no longer “peak shave” in order to secure a better rate for the electricity it purchases.
Peak shaving occurs when a city produces its own electricity in order to reduce the amount of electricity it needs from outside sources in times of high demand.
The problem is that Iola is one of only a handful of cities within the KPP consortium with the capability to generate its own electricity, Slaugh explained. If cities like Iola reduce their peak demand costs, it makes buying electricity more expensive for the other KPP members.
The peak shaving allowance for Iola was restricted by KPP in 2010, Slaugh said.
Other factors, such as the power pool asking for a long-term commitment from its 40-plus member cities — at least 20 years — also left Iola officials wary, Slaugh said.
So the city is now back on the market, so to speak, in its search for a wholesale electricity supplier.
The city joined KPP in 2007 after ending a decades-long agreement with Westar, the state’s largest utility provider. Ironically enough, Iola joined the power pool after Westar indicated it would not grant the city financial considerations for Iola’s ability to produce power, as it had for years previously.
But as Slaugh told city council members at their Oct. 24 meeting, Westar officials have indicated a renewed willingness to grant such provisions to Iola.
The city will look at other sources as well, Slaugh said. “We want to see what’s out there.”
City administrator pushes to leave pool
