Iola City Council members will continue to look at potential rate hikes to ensure its electric fund remains solvent. SHREVE illustrated how adjustments in meter charges and electric rates would affect consumers of all types. A $5 per-meter charge would bring in about $220,000 annually. Adjusting the rates could also be done across-the-board or for specific customers.
Council members were given an “electric rates 101” lesson Monday by energy consultant Scott Shreve of EMG. Shreve broke down how increases in electric rates, meter charges or other funds would affect monthly bills for residential or industrial consumers.
Among Shreve’s notes:
— Iola customers paid about $1 million less for electricity in 2014 through the city’s new consortium, the Southwind Energy Group, than it would have had it remained a member of the Kansas Power Pool. Before switching from KPP, Iolans paid on average 7.5 cents per kilowatt hour. With Southwind, the price fluctuated between 6.8 and 6.9 cents.
— Iolans also pay less per kilowatt hour than do retail customers with Westar or Heartland Electric.
— While the city has brought in about the same amount annually since 2006, costs for such things as salaries and equipment have continued to rise. Meanwhile, the city transferred more than $3.4 million in utility funds — including from its gas and water reserves — to supplement its general fund. The city also had to cover shortages for its ambulance service and to install catalytic converters on its Wartsila generators at the Iola Power Plant.
— The city has about $1.8 million in its electric reserves, equal to about 14 percent of its electric budget. The city’s purchasing policy suggests a reserve fund equal to 25 to 50 percent of its annual budget.
— If the utility fund transfers were not directed to the general fund, a property tax hike of about 115 mills would be required to make up the difference, City Administrator Carl Slaugh noted.
Councilman Bob Shaughnessy said he favored adjustments over a wide swath, so no one segment bore the brunt of the hikes.
Council members Beverly Franklin and Gene Myrick agreed.
Councilman Steve French noted the importance of keeping the electric fund solvent.
“Would you rather pay a little more in utilities or a lot more in property taxes?” he asked.
Council members directed Shreve and Slaugh to bring back a number of rate and meter charge options before they decide which to implement.
Utility surpluses critical to general fund
