Wellington City Manager explains winter storm impact to city utility bills
Sumner Newscow report — The following is a press release by Wellington City Manager Shane Shields concerning the winter storm impact on the city utility bills
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The Winter Storm of February with its arctic blast resulted in an extreme impact to electric power providers and natural gas retailers. While the City does not provide natural gas, it is an electric power provider. The City is a member of the Kansas Power Pool and purchases power through the KPP.
From Saturday, February 13 through Friday, February 19, the KPP incurred approximately 20 million dollars in extraordinary costs due to the weather event. The KPP Board of Directors took action on March 12 that drastically reduced the immediate impact of the situation to KPP member cities.
The Board approved accessing the KPP Emergency Stabilization Fund to address the immediate extraordinary costs. The Board deferred most of the energy purchase costs related to the storm to member cities and will establish a repayment plan that will be consistent between all 24 members. For the February, March, and April KPP bill’s the City will pay a “Storm Surcharge” of 1 cent per kWh purchased. The Board determined on March 18 that the target period of repayment will continue for 24 months.
The City’s portion of the extraordinary costs incurred by the KPP is approximately 2.1 million dollars. The Governing Body of the City has authorized using 1 million dollars of the City’s Utility Reserve Fund towards the Storm Surcharge to mitigate the impact on the City’s utility customers.
The 1 million will be used in equal monthly installments over the period of time that the Storm Surcharge is in place. The 1 cent surcharge for the City’s February billing amounts to $79,489.97 based on the kWhs used. The City’s installment from the Utility Reserve Fund reduces the amount to $37,822.97, which will be calculated into the Energy Cost on City utility bills. The first customer bills that will be impacted will be mailed March 31.
For the month of March and future billings, the surcharge will be included in the Energy Cost. For each billing, the Energy Cost or PSMCA (Power Supply Monthly Cost Adjustment) will increase by .01 per kWh from the typical PSMCA. The City’s contribution will reduce the surcharge impact to the customer by about .0048 per kWh. The result is an additional .052 or $5.20 for every 1,000 kWhs used rather than a $10.00 amount. The Energy Cost from KPP and the kilowatts used by the customer per billing cycle will cause the impact of the surcharge to fluctuate each month. The percentage of increase each month will be the same for all utility service types of residential, commercial and industrial.
The ability of the KPP to address the immediate impact of this situation for its member cities allows the City not to have to request a loan from the state. The City’s use of utility reserve funds mitigates the impact to customers through the term of repayment. The financial impact of this storm and the energy crisis it caused is unfortunate for all municipalities and utility customers.
