Osawatomie City Hall

OSAWATOMIE — The Osawatomie City Council on April 8 is expected to approve a finalized repayment calendar for a $700,000, low-interest loan from the state to address a spike in costs the city’s electric utility 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.

The $700,000 state loan covers the city’s spike electric bills of $195,531.77 and $498,163.32 — totaling $693,695.09 plus other minor associated costs, according to the release.

The issue has been a primary topic of concern at recent council meetings.

City officials said they were glad to receive a $700,000 “ultra-low-interest” loan from the state’s newly introduced City Utility Low-Interest Loan Program that allowed the city to pay off $400,000 in higher interest no-fund warrants (NFW) originally issued for the first portion of the charges due, and the state loan enabled the city to stretch out repayment up to 10 years as compared to the one-year repayment for the NFW, according to a news release.

In total, 53 communities applied for the low-interest state loans at a total of just over $69.5 million, or 69.52 percent, of the $100 million program, according to a report from the Kansas State Treasurer’s Office.

Scanlon said in a recent interview the state loan allows the city to keep the monthly impact to consumers as low as possible.

The loan also keeps the city from having to siphon its reserves.

“It allows us to get through the price spike without draining all of our reserves out of our utility funds,” Scanlon said in a recent interview.

After a presentation by Scanlon and much discussion — including feedback from residents in attendance — the City Council voted March 25 to approve a proposed 36-month framework for calculating collection of the spike charges.

A final calendar and calculations will be presented at the April 8 meeting for discussion and approval before staff will begin implementing payment options, according to a city news release.

Once a plan has been established and approved by the council, the city will notify customers of their payment options, according to the city.

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