City Administrator Roger Holter is preparing proposals to present to Marion City Council members Monday to raise electric rates.
Holter is presenting four plans to council that would raise rates from the current base of $6 for residential and $7 for commercial and 10.7 cents per kilowatt-hour.
“I’m trying to give them several options to explore and see what would be the best course,” Holter said.
The increase will help the city maintain reserves within the department, which are being depleted because of increased costs passed on to the city by Kansas Power Pool and Westar, and keep the city on budget.
“I’m trying to find the fairest way to get the costs covered so we can still have a reserve fund and money for the city’s operating budget,” Holter said.
However, he said the increase would be noticeable, but he’s trying to keep it under a 15 percent increase, with the city absorbing the rest of the increases.
“When we’re being charged 24 percent more for the power and 28 percent more to get it here, it’s going to take a decent increase to counteract those costs,” Holter said. “Last month I had to spend $22,000 out of our reserve funds to make up for the hikes from higher up.
“I like to have six weeks of operating capital within the reserve account in case of an emergency. If something catastrophic happens that wipes out the grid we need to be able to pay to restore power to our residents.”
Having a certain amount of reserves within each city utility account lowers the interest rate on future bonds and shows the city is financially stable, Holter said.
A large portion of the city’s budget comes from electric payments.
“People think property taxes would make up the majority of our money, but in fact they are only 10 percent,” Holter said.
Holter said small power outages that have been affecting residents over the past month were due to crews switching the city’s main power line.
“Last summer and fall, a better line was strung between Marion and Hillsboro,” he said. “That is our new main line, as opposed to it running along U.S. 77 to Florence like it used to.”
He said he received confirmation last week that crews had completed the process of switching the lines and residents’ power should no longer be affected.