OSAWATOMIE — The city of Osawatomie has learned it will owe an additional $260,936 to cover a mid-February price spike that occurred during a prolonged cold stretch.
The city of Osawatomie initially received around $700,000 in charges for a two-week period of severe weather in mid-February, which is roughly the cost of six to eight months during a regular year, City Manager Mike Scanlon said in an April interview.
The city is now faced with extending a temporary rate increase it established in April to cover the nearly $261,000 bill.
The City Council on April 8 voted unanimously to increase the city electricity base rate by .008 per kilowatt hour (KWh) for a 36-month period to repay a $700,000 low-interest loan from the state that the city took out to cover its electric costs from that winter storm.
The City Council voted unanimously at its Sept. 23 meeting to extend that 36-month rate increase to 56 months to cover the new bill. The city had two other options, pay the full amount due in one lump sum or spread it over 12 months.
Both options would have required the city to raise its electric rates again — something city staff and the council were not prepared to do.
A third option allowed municipalities to spread the cost over 52 months at 2.5 percent interest. The City Council and city staff determined that extending the temporary increase by 20 months would cover the bill plus interest without requiring a rate increase.
The new bill is part of a domino effect that started in August with the power supplier.
The Grand River Dam Authority (GRDA) board of directors voted Aug. 12 to approve a rate adjustment to recover the “extraordinary power costs caused by the winter storm event,” which GRDA determined to be nearly $102.34 million. Kansas Municipal Energy Authority (KMEA), the electric cooperative of which the city of Osawatomie is a member, learned its share was a little north of $7.3 million.
The city of Osawatomie is contractually obligated to purchase power coming from Grand River Dam Authority through KEMA.
KMEA is dividing its multi-million bill among its municipality members across the state. The municipalities of Garnett and Baldwin City, which are also members of KEMA, were charged the same amount as Osawatomie.
Scanlon plans to seek access to the state’s city utility program to possibly lower the borrowing cost.
The prolonged deep freeze in February caused price spikes in electric and natural gas utilities across the Midwest.