Iola City Council members took another step in attempting to balance the city’s electric fund Monday by incorporating a new, higher rate structure.
The aim, they agreed, is to bring an additional 4.2 percent into the electric fund in 2018, from a shade over $9.2 million to $9.6 million.
This marks the third consecutive year Council members have raised electric rates, after having left them alone the previous 10 years.
The vote capped a spirited debate amongst Council members following a rate review by Scott Shreve, the city’s energy consultant, and Iola City Administrator Sid Fleming. Councilman Aaron Franklin cast the lone dissenting vote. Councilman Bob Shaughnessy was absent.
The recent rate hikes have helped bring the fund closer to balance, Shreve explained, but a number of factors — including less consumption by Iola customers, added costs to upgrade equipment, and an ongoing reliance of the electric fund to supplement other areas of the city’s budget — still leave it out of whack. The electric reserves were $1.4 million in the red in 2014, and $518,000 in the hole in 2015. The previous two rate increases, and other budgetary maneuvers (including drastically cutting transfers to the General Fund) in 2016 pushed the revenues back over expenses by $142,000. The electric fund is expected to be around $769,000 in the black this year.
That helps, Fleming said, but still leaves the city scrambling in its effort to bring its electric reserve levels to about $3 million within the next five years.
The new rate structure also removes “step rates,” which allowed some customers to purchase electricity at a slightly lower rate if they exceeded certain usage thresholds.
“We averaged those into one rate, regardless if you used 1 kilowatt hour or 10,000,” Shreve said.
The resulting structure means some will pay more than the 4.2 percent average; others less.
For example, residential customers will now pay a $10 meter fee each month, and 8.7 cents per kilowatt hour, compared to the $7.50 meter fee and 15 cents per kilowatt hour for the first block, 9.9 cents for the second and 8.45 cents for the third.
Commercial customers will see their meter charge increase from $17.50 to $20 a month, and their rates go from 8.6 cents per kwh for step one and 7.6 cents per kwh for the second step to a flat rate of 8.45 cents per kwh.
It remains vital for the city to continue to monitor the electric fund, Shreve stressed. He recommended quarterly reviews.
“The rates structured in this proposal are set as low as possible while still achieving the city’s goal of fully funding all current and future obligations,” Shreve wrote. “These fixed rates are designed to collect the ‘fixed’ costs.
COUNCILMAN and mayor-elect Jon Wells called the rate hikes unfortunate but necessary.
“I know none of us likes to raise rates, but we’re stewards and the citizens are our shareholders,” he said. Wells noted recent rate hikes implemented by utility giants KCP&L and Westar dwarf anything the city’s done.
He compared the dividends of using the electric reserves to balance the General Fund by allowing the city to have better parks, roads and police force.
“I appreciate all of the effort to keep increases as low as possible,” Councilwoman Nancy Ford added, noting previous suggestions were the city’s electric rates might need to be raised as much as 10 percent.
“I’m not opposed to increases, but if we need 4.2 percent, is there a small percentage we can find in efficiencies?” countered Franklin. “Why does it always go back to the customers? In two years, this will be the third rate increase. How many water rate increases have we also had? So many, we can’t increase it any more for Gas. What are we getting wrong?”
Part of the lost utility sales can be attributed to residents “thinking green” and buying more energy-efficient appliances, Fleming responded. Another factor was this year’s mild temperatures over the summer and the previous winter. A third is there are fewer residents. And while usage has dropped, the city’s costs have not, Fleming said.
“We still have to pay the same amount,” he said.
COUNCIL members accepted, 7-0, a bid from J&J Contractors, Inc., of Iola to do several sidewalk repairs and replacement and wheelchair ramp installations at or near several of Iola’s schools.
The $82,329 J&J bid was the lowest of five. Coupled with $54,2000 in engineering costs — likely elevated because of the different job sites, Assistant City Administrator Corey Schinstock said – the entire project’s cost comes to $136,529. The project is 80 percent funded by the Kansas Department of Transportation through its “Safe Routes To Schools” grant. Iola’s 20-percent share, about $28,000, will come from its capital improvements fund.
AN ANONYMOUS benefactor has stepped forward and will purchase $637 worth of timers for the Christmas light displays erected for the holidays by Humanity House and other volunteers on the Allen County Courthouse lawn.
As is, the lights are on 24 hours a day, because turning them off and on would require a multitude of hands-on tasks. A request from volunteers who assisted with the project to have the county buy the timers was rejected last week by county commissioners.
Franklin, who announced the anonymous donation, noted the cost of keeping the lights on 24-7 in 2016 cost Iola about $770.
Without the timers, the cost to city was expected to be significantly higher, Franklin noted, because this year’s display is larger.
