Many expect sticker shock after deep freeze drives demand
Utility bills are on everyone’s minds after a seven-day arctic blast in February drove temperatures so low — and demand for power so high — that utility rates skyrocketed and providers instituted rolling outages.
Marion city council on Monday voted to have city manager Roger Holter apply for a low-interest state loan to offset expected high electricity costs.
The city expects the cost of electricity during the extreme cold to be $1.78 million, but only budgets $1,366,454 a year for energy costs.
Council members passed a resolution to apply for a loan of up to $561,000.
Holter told council members that the arctic blast will use up all unencumbered cash reserves to pay the Kansas Power Pool, the city’s electricity supplier.
“Our community has over 30% of the population on Social Security who already face monthly decisions between medication, groceries, or utilities,” Holter said in a memo to the state.
Council hears from Kansas Power Pool executive
Mark Chesney, Kansas Power Pool CEO, talked to councilmen during Monday’s meeting.
“I know what’s on your mind,” Chesney began.
Chesney said the power pool has been in contact with utility providers all over the Southwest Power Pool.
“To say natural gas prices have spiked, that’s a very inadequate statement,” Chesney said.
Kansas Power Pool’s cost for electricity over the last month was $4 million, he said.
“To give a comparison, we spent a little over $3 million in the last year,” he said.
Chesney said the city is used to paying about $75 per megawatt for electricity.
“Fortunately, we’ve got some pretty good cash reserves, and we’re going to use them,” Chesney said.
Chesney said it’s likely that every Marion customer used more electricity during February 2021 than they did in February 2020.
“I don’t believe it’s going to be more than two-and-a-half times normal,” he said.
Kansas Power Pool’s board of directors will discuss the increased energy prices during a Friday meeting, Chesney said.
Reserve funds will need to be replenished.
Hillsboro city administrator Matt Stiles said the city has not made a decision whether it will apply for a loan through the state program.
He’s been watching developments to see what the Kansas Power Pool announces after Friday’s meeting.
Stiles also said the city has cash reserves that he expects will carry the city through the emergency.
Kansas Corporation Commission investigates
The Kansas Corporation Commission Tuesday opened investigations into seven utility companies.
The investigations will examine each utility’s proposal to minimize the financial impact of February’s weather emergency on customers.
High demand, along with generation issues, created supply shortages and extraordinarily high prices, KCC said in a press release.
“An emergency order issued by the commission on Feb. 15 ordered regulated utilities to defer those costs for review and present a plan to minimize ratepayer impact over a reasonable timeframe,” the release said.
The investigations will look at the cause of reduced supplies, high prices, supply and demand problems in the Southwest Power Pool, and what steps need to be taken to ensure utilities are better prepared for extreme weather events in the future.
Evergy and Atmos Energy, which serve customers in Marion County, are among the seven utility companies being investigated.