City will have to pay $243,000 more annually
Managing editor
It appears that any way Marion City Council looks at electric rates, it’s going to cost city electrical customers more.
The city’s long-term contract with Westar Energy will end July 1, forcing the city to look at rate increases to cover costs.
At Monday’s meeting, City Administrator David Mayfield spelled it out.
The per kilowatt hour rate has decreased from .018 cents per kilowatt hour to .0179 cents, but the demand rate increased from $6.10 per kilowatt to $16.36.
The way Westar Energy charges the demand rate also has changed. Currently the city pays the monthly demand rate based on the highest demand rate the city experienced in the current year. Under the new contract, the city would pay what was actually used but the demand rate cost per kilowatt has dramatically increased, costing the city and its customers more.
Mayfield used an example that if the city had been charged the demand rate at 5,763 per kilowatt in a month, the city was charged $6.10 per kilowatt for a total of $35,154.30. Even charging the city what was actually used, for example, 3,009 kilowatts, with the new rate of $16.36, the city would pay $49,227.24.
A quick calculation indicates the city would pay an annual increase of nearly $243,000.
And that’s not all.
On top of an increase in demand rate, the city also has been paying an increase in transmission fees since the first of the year. In 2009, the fee was $84,565. In 2010, that fee will be $113,416, an increase of nearly $49,000.
The city will have a 10 percent increase in transmission fees each year following.
To cover these expenses, rate and base increases are mandatory, Mayfield said. He proposed a $2 per month base rate increase and a rate increase from .093 per kilowatt-hour to .1088.
The average residential customer used 2,228 kilowatts of electricity in August, for a total bill of $212. With the proposed increases, the bill would increase to $242 or a little more than $30 for that month, which is typically the highest month because of peak demand. With transmission fees increased 10 percent in 2011, that bill would increase $1.55.
The city has options of signing a contract with Westar Energy for 10, 15, or 20 years. It would be a full-service contract, which means the city cannot use any other form of electrical generation to shave peak demand rates.
“We don’t have funds to go with a power generation plant or a wind farm anyway,” Mayfield said.
The city is a member of Kansas Power Pool. Mayfield said he suspected that the rates from KPP would be similar to these.
The council took the information under advisement.