Garden City electric customers will see their bills increase by about 10 percent starting Feb. 15 as the city passes through two wholesale power increases from Wheatland Electric for 2012 and 2013.
Mike Muirhead, public utilities director, said the increase is probably closer to 9.15 percent depending on the rate class, but in general, a person who pays a $100 utility bill each month will soon be paying about $110 per month.
"We're a nonprofit group. We have no intention of making money, or making more than we have to. But we have to have this increase in order to pay the bills," Muirhead said. "We received two wholesale electric power increases from Wheatland. One was in January 2012, the other went into effect in January 2013."
In December 2011, just as the city finished a comprehensive electric rate analysis and cost of service study and the city commission raised rates for the first time since 1998, Wheatland notified the city that wholesale electric rates would increase 6 percent in January 2012, followed by additional 6 percent increases in 2013 and 2014.
"We had just finished everything up. We had talked about it for months. Everybody knew rates were going to be adjusted," Muirhead said. "Less than two weeks later, we were notified by Wheatland. We thought we were good to go for four or five years."
Muirhead said the city may have been able to draw on reserves to avoid passing through the first wholesale increase, but the city's utility could not cover the second increase.
Wheatland's 2012 6 percent increase costs the city about $1.05 million. The 3.15 percent increase in 2013 costs about $677,000. Combined, the fiscal impact on the city of roughly $1.72 million can't be absorbed within the electric budget and must be passed through to customers.
The base charge for all rate classes will not change. The increase will come from energy and capacity charges in the city's bill, Muirhead said.
The pass through increases are on Tuesday's Garden City Commission agenda. Once approved, the increases will kick in for customers starting Feb. 15.
Muirhead said the reasoning behind beginning the increase right away instead of waiting was to avoid much larger bills when the weather gets hotter and people begin to use their air conditioners.
Wheatland's increases prompted the city to spend 2012 looking for other power suppliers. In December, the city ended its contract with Wheatland and will be contracting with the Kansas Municipal Energy Agency for future power needs starting in 2014.
Muirhead said the city is hopeful the KMEA contract will stabilize electric rates. It's also possible it could lead to lowering rates in the future.
"Based on the projections, our wholesale power cost should drop over the first five years," Muirhead said. "Of course, those are projections. But if things hold true to that, it's certainly our hope rates will stabilize and over the next several years we could possibly have the commission consider a rate reduction."
The city commission will meet at 1 p.m. Tuesday in the commission meeting room on the second floor of the City Administration Center, 301 N. Eighth St.
Also on Tuesday's agenda, the commission will consider adopting a resolution for the preliminary power supply purchase agreement with KMEA; an ordinance annexing the water treatment plant and an adjacent city-owned parcel; a resolution authorizing applications for transportation enhancement funds from the Kansas Department of Transportation; an annexation request of 25 acres near Mary St. and Jenny Barker Road.
The commission will review a memorandum of understanding with Mark Pamplin regarding Pamplin's proposed renovation of the State Theater, and will hear a request from CSS Properties, LLC, to dedicate 12 parking spaces from the public parking lot at 8th and Pine for a project proposed to convert the American Legion building into apartments.
The commission will hear a report by Great Plains Development about the city's economic development revolving loan program; consider approving recommendations from the Alcohol Fund Advisory Committee for distributing 2013 AFAC funds and 2013 community grant funds; and consider approving recommendations from the Arts Grant Selection Committee for distribution of 2013 arts grant funds.