City to weigh electricity options
Commission gives Wheatland notice on power contract.
BY SCOTT AUST
After next year, the city of Garden City could be getting its power from a new supplier after the Garden City Commission decided Tuesday to end its power supply contract with Wheatland Electric Cooperative.
The city will continue to buy electricity from Wheatland, which buys its electricity from Sunflower Electric, through 2013. But the city commission had to notify the company by the end of this year that the city would not renew its contract for another five years starting in 2014.
However, Wheatland is not entirely out of the picture for Garden City's future power needs. The commission also decided to continue to negotiate with Wheatland and another potential power supplier, the Kansas Municipal Energy Agency, through the end of this year.
"I think they're looking for bottom line numbers from both entities," Mike Muirhead, Garden City public utilities director, said after the meeting.
Muirhead said a plan of action hadn't been determined yet, but he did not expect it to take very long for both entities to provide additional information to the city's third-party power supply consultant to make sure the city is getting an accurate "apples to apples" cost comparison.
"All the numbers are fresh in everybody's minds, so I don't think it's going to take that long. I may be mistaken. But more than likely, whatever information we have by the Jan. 2 commission meeting, we'll report whether we have any proposals or not and they'll have to give us more direction," Muirhead said.
Garden City's search for a cheaper alternative to provide its power needs began more than a year ago when Wheatland indicated it would pass on 6 percent rate increases annually over the next few years. After several months of study, the city identified a potential new partner in the KMEA, which would involve buying excess power generated by other KMEA member cities and also for Garden City to generate some of its own power using a couple of 28-megawatt natural gas-fired generators.
Two weeks ago, Wheatland and Sunflower provided new cost estimates that indicated rate increases would be between 3.15 percent and 4.15 percent over the next three years. The impact on future customer rates hasn't been determined, but when the city increased rates due to a roughly 6 percent wholesale power increase it resulted in an increase in the base monthly residential charge from $7.50 to $22.50.
In a memo, the city's consultant indicated the KMEA proposal would cost the city $37 million to $40 million less over 15 years than staying with the current Wheatland contract or entering a new 15-year deal with Wheatland.
Wheatland representatives on Tuesday questioned the accuracy of the projections, saying it is difficult to project with certainty what costs will be beyond about five years. Wheatland and Sunflower wanted more time to sit down with the city to more closely examine the details behind the projections.
"These are projections," Commissioner Dan Fankhauser said. "None of these figures (for either proposal) are exact. They're a 'guestimate.'"
Muirhead said every power company has to make cost projections based on market rates.
"Our consultant believes the projections reflect that very well," he said.
In other business Tuesday:
* The commission received notice from Wheatland Electric about a 3.15 percent rate increase in wholesale power from Sunflower Electric for 2013, which translates into about a $675,000 wholesale increase to Garden City. Muirhead said the 6 percent increase the city received in February was $1 million, which caused the city to adjust rates. Due to the additional increase, city staff will need to take another look at rates, Muirhead said, which more than likely will mean a pass-through rate increase for Garden City customers.
* Mayor David Crase announced he will not seek reelection in 2013 because he may be moving out of the city and into rural Finney County.
* The commission voted to renew its general liability and property insurance package for 2013, which has a $247,916 premium, a 9.2 percent increase from 2012.
* The commission authorized the creation of an Arts grant program and will appoint a three-member board in the near future to hear requests. About 10 years ago, the commission created a community grant program that devoted 3/8 of a mill, roughly $60,000 in the 2013 budget, under a line item called social funding. Essentially, up to $40,000 will be devoted to community grant purposes, and $20,000 would be for arts grants for public art projects. The criteria for what constitutes an art project have not been determined.
* Commissioners could not agree on whether to allow most city employees to take off Dec. 24, as an additional paid holiday this year. The commission split 2-2 on whether to allow it.
* The commission recognized city employees for reaching employment milestones. Marsha Rupp, systems manager with the police department, was recognized for 30 years of service. Howard Lehman, solid waste supervisor, and Sam Curran, public works director, were recognized for 20 years. And the following individuals were recognized for 10 years of service: Ed Borgman, wastewater superintendent; Robert Phillips, computer systems analyst; Matt Allen, city manager; Paula Nevin, records clerk; Tami Sauseda, crime analyst; Gred Bordewick, zoo; Stephanie Fontenot, zoo; Gabe Calvillo, police; Omar Mora, police; Jason Bennett, fire; Rosario Ibarra, clerk cashier supervisor; and Raelene Stoecklein, office clerk.