Marion OKs debt for power upgrade
It took four members of Marion City Council less than 20 minutes Monday to unanimously approve, without a referendum, up to $4.2 million in borrowing to pay for efforts to stabilize Marion’s antiquated power grid.
If the city had issued its own bonds, the project might have required a referendum.
By instead borrowing from Kansas Power Pool, the city not only will avoid a referendum but also will take advantage of the consortium’s “investment grade” bond rating, KPP executive director Mark Chesney told the council.
“Perhaps more attractively, it allows the city to manage an asset of the city without having to show the debt of the asset on the city’s balance sheet,” Chesney said. “Some people, particularly city finance directors, think that’s a very attractive thing.”
Technically, KPP will own the city’s power grid until the debt is repaid with interest 20 years from now.
“It’s important for the city to understand this,” Chesney said. “However, to be sure, the city manages the asset; the city maintains the asset; the city has full operation oversight of the asset. So, on the surface, the fact that KPP has ownership until the debt is paid is really an invisible aspect of the transaction.”
Principal and interest will show up as a line item on the city’s monthly bill from KPP for supplying electricity.
Bonds are expected to be issued in June. The project is expected to be completed within two years after that, with contractors facing penalties should work drag on.
“Kansas Power Poll passes along the interest rate without any mark-up,” Chesney said. “In fact, Kansas Power Pool doesn’t earn or realize any margin associated with this transaction.
“Not only is that true. There’s a cost associated with putting together a bond transaction . . . a little more than $100,000 . . . and that cost is spread equally over all 24 Kansas Power Pool members.”
The project, begun years ago by city crews, will be completed almost entirely by outside contractors, city administrator Roger Holter said.
“City crews won’t actively be involved,” he said.
To date, city workers have managed to complete only the first of 22 phases of the project, as identified by the city’s outside engineering consultants.
A second phase may or may not be completed before contractors arrive, Holter said.
The project involves increasing the voltage of power lines serving neighborhoods. By going with 7,200-volt lines instead of the 2,400-volt lines that now serve large portions of the city, Marion hopes to lessen fluctuations and reduce how big of an area might be impacted by any power failure.
The 7,200-volt lines will be fed by three 12,500-volt loops through the city. If any one of the three fails, power can flow back from one or the other of the remaining circuits, restoring service “in a matter of minutes,” Mayor David Mayfield said.
Unrelated but happening almost simultaneously is an upgrade to the Evergy Kansas transfer station at 190th and Remington Rds., where power from KPP arrives.
Council members unanimously voted Monday, with council member Jerry Kline absent, to approve a permanent easement that will allow overhead power lines from the station to the city’s grid to be buried.
They also approved a $500-a-month lease for up to six months for Evergy to use a city lot just north of the county’s waste transfer station to store materials related to the project.