Residents of Marion will see an increase in their electric bills beginning in May. Marion City Council members voted unanimously to increase electric rates to $8 base rate for residential and $10 base for commercial customers and to .1175 cents per kilowatt-hour, with a monthly variable cost to cover fuel costs from Kansas Power Pool.
“I feel it will interfere with residents budgets and they won’t know what they’ll pay each month,” Mayor Mary Olson said, but voted in favor in order to keep the city from spending down on current electrical reserves.
The variable costs could result in a charge to customers, or a credit depending on the month. City administrator Roger Holter said KPP shows there will be credits during low production months, but they have yet to be correct with their monthly estimates this year.
“KPP have not estimated the budget for energy right so far and has been off by as much as 50 percent the last two months,” Holter said. “It’s their best guess so we don’t know what charges or credits will be passed onto customers, but they do estimate credits this summer.”
However, Holter said it was hard for him to recommend a fixed kilowatt-hour rate because fuel charges passed to the city from KPP are so variable.
“It doesn’t seem fair to pass such a large increase and then during the summer month when we’re getting credits, to not be able to pass those on to residents,” Holter said.
Holter is confident current billing software can handle the variable billing, but said it will come with a sizable increase of workload office staff.
“I know the burden it puts on everyone but this is a business and we have to run it as such or we will spend our reserves by the end of 2014 if we keep with the adopted budget and don’t raise rates,” Holter said. “By the end of April we will be down to 22 days of operating capital in the reserve budget and our city bylaws say we have to have 90 days.”
A sizeable amount of money from utilities is used to supplement different city operations. According to Holter the following amounts are transferred from utilities to supplement the 2014 adopted budget: $448,702 to cover the costs of the police, fire, emergency responders, street and ally projects, and other departments; $263,997 for debt payments; $120,000 into the equipment fund; $122,000 into the special highway fund; and $304,3654 into capital outlay.
“Our debt payments for the year total $557,000,” Holter said. “Only $405,000 is budgeted for this year so we’re going to have to amend the budget to cover the remaining debts as it is, but if we don’t increase rates the number we have to cut to make up will be substantially higher.”
Council member Todd Heitschmidt said he was not a fan of the whole process but thought the variable rate was the city’s best option.
“The pro of the variable rate is if things move in the city’s favor then it will also move in the favor of residents where that wouldn’t be the case with the other,” he said.
After agreeing, they were stuck between a rock and a hard place, council voted to adopted the increase with a variable rate.
“I don’t have anything to add,” council member Jerry Kline said. “Let’s just vote and get this over with.”
In other business:
- The council approved to extend a lease until 2017 between the city and Alan and Ashley Vogel for backup water wells.
- The council approved an ordinance that bans parking on the east side of Elm St. from 8 a.m. to 1 p.m. Sundays between Main and Lawrence Sts.
- The council agreed to research other plans for general liability and workers compensation.
- The council met in executive session for 10 minutes with Holter to discuss personnel. No action was taken upon returning to open session.
- The council met in executive session for 15 minutes with Holter and office staff Becky Makovec and Tiffany Jeffrey. Upon returning to open session, the council voted to extend a bonus package, with the amount to be decided upon at a later date for extra duties performed while without a city clerk.