Garden City Commission declares financial emergency

Meghan Flynn
Garden City Telegram
Digital electric meters run for a group of Garden City residences. Electric rates could see an increase from the latest extreme cold snap.

The Garden City Commission declared a financial emergency at its regular meeting Tuesday.

Melinda Hitz, Garden City finance director, said the cash balance of the electric fund is low, sitting around $100,000, when typically the balance is between $4 million and $5 million.

There is a reserve fund that has a little over $4 million, but the operating fund is concerning, Hitz said.

Mike Muirhead, Public Utilities director, said the fund is low for several reasons.

First, retail and commercial sales are down approximately $1.75 million from projected utility costs due to the COVID-19 pandemic.

Second, there were two planned events: an asset purchase agreement and a terminated contract.

However, the event that brought the electric fund to where it is today is the extreme cold weather, Muirhead said. It brought about an emergency situation with energy deficiencies in the Southwest Power Pool's region.

Natural gas prices and electric costs have increased significantly due to the event, Muirhead said. The cost of natural gas has increased from $2 MMBtu to over $600, and electric costs have increased from an average of $40 to $50 per megawatt hour to as high as $3,000 per megawatt hour.

The emergency situation allows the supplier to charge more, even if there are contracts, Muirhead said.

"For the past five days, we're probably going to somewhere in the neighborhood of $7 million for power supply," he said.

Additionally, Jameson Energy Center is not being run because there is a natural gas shortage, Muirhead said. There's no gas to run it.

Muirhead said they could get some natural gas, but it would be extremely expensive and if something happened and they didn't use all of the gas, there would be a huge penalty for not using it because someone else could have used it and been generating electricity.

"That wasn't a viable option; there was too much risk for that event to occur," he said. "In the future, absolutely we consider running Jameson, we run it quite often as a matter of fact when it's more economical to do so, but during this event it was not."

Declaring a financial emergency is the right step to take in this situation, Muirhead said, as if the city becomes eligible for some relief from the federal government or elsewhere, everything is in place.

In other business:

• Matt Bayer was reappointed to the Garden City Parks and Recreation Advisory Board.

• Holly Karhoff was approved to fill the vacant term on the Parks and Tree Board.

• Rochelle Powell, Garden City Regional Airport director of aviation, presented the airport's 2020 annual report to the commission.

• The commission approved the distribution of the first portion of the $50,000 of the AFAC funds for a total of $31,884.70. The six agencies to receive funds are: Big Brothers and Big Sisters, Real Men Real Leaders, Spirit of the Plains CASA, Seeds of Hope Ministry, FICO Department of Corrections and Compass Behavioral Health.

• The commission approved the distribution of the second portion of the $50,000 AFAC funds as recommended by the LiveWell Finney County Board for a total of $17,000. The agencies to receive the funds are Big Brothers and Big Sisters and Real Men Real Leaders.

• Distribution of Community Grant Funds as recommended by the Community Health Advisory Board for a total of $16,872.30 was approved by the commission. The agencies to receive the funds are: Community Day Care Center, St. Catherine Hospital Development Foundation, Russel Child Development Center, Miles of Smiles, Church of the Nazarene and Kansas Children's Service League.

• Staff was approved by the commission to resubmit a 2023-24 application for the geometric improvements on Kansas Avenue for the widening project, CCLIP, to the Kansas Department of Transportation.