OSAWATOMIE — The city of Osawatomie will adjust the base rate of its electric utility to repay a $700,000, low-interest loan from the state.
City Council members voted unanimously at their Thursday, April 8, meeting to increase the city’s electricity utility base rate by .008 per kilowatt hour (KWh) for a 36-month period to cover the state loan.
Osawatomie was one of more than 50 communities across Kansas to receive a low-interest loan from a state program to address a spike in the city’s electric utility costs incurred during a mid-February cold snap.
The prolonged deep freeze caused price spikes in electric and natural gas utilities across the Midwest.
The city of Osawatomie received around $700,000 in charges for a two-week period of severe weather, which is roughly the cost of six to eight months during a regular year, City Manager Mike Scanlon said in a recent interview.
“We think, in theory, we could collect what we need over a 36-month period by just adjusting the base rate by eight/tenths of one cent,” Scanlon told the City Council at its April 8 meeting.
The city staff will notify customers of their payment options, according to the city. Those options include a customer paying a one-time charge upfront to avoid having the .008 (KWh) rate increase added to their monthly bill over the 36-month period.
Scanlon said this rate adjustment comes at the end of a long, two-month period that started around Feb. 16.
“I’m going to call it the Kirk Wright solution,” Scanlon said, giving credit to Council member Wright for coming up with a solution that’s equitable for everyone after staff presented several options.
“Kirk said, ‘We just adjust the base rate. Wouldn’t that make it a lot simpler to apply and get to the same dollar amount we’re trying to collect?’” Scanlon said.
The base rate allows the collection to occur each month, regardless if a tenant moves out and another person moves in, for example.
“Kirk had a much better idea than the staff,” Scanlon said. “We banged our head for three weeks trying to come up with it, and Kirk came up with it in about five minutes.
“So the next time I get in a jam, I’ll just call Kirk,” Scanlon said, to laughter from the audience.
Council member Karen LaDuex pointed out the .008 KWh adjustment would end when the debt is paid off. Scanlon said that’s correct.
“We would pay off this debt that we incurred just as if we bought a piece of equipment (for example),” LaDuex said to the audience.