LARNED — Larned utilities customers who make the effort to apply are going to get an unexpected credit against their utilities bill in 2020. That’s because the city was recently refunded over $232,000 from Midwest Energy after an audit uncovered an error in the formula the company used to calculate rates under the new contract the city entered into in March, 2019.
Staff and the city’s energy consultant Mark Wright noticed higher than anticipated charges between March and November of last year, but were assured that they were due to congestion in the system due to the fluctuation of market costs for the fuel used to generate electricity. This turned out to be incorrect.
Monday night, City Manager Brad Eilts asked the city council for guidance on how to reimburse customers. He offered three options which included providing exact refunds to all customers, an average refund to all customers, and a combination of the two where the top 20 highest users would be split from the rest of users, and an average determined for both groups. What seemed at first a simple ask turned into a complicated discussion with many factors considered.
It wasn’t long before the straight average option was eliminated. Council members determined that would have resulted in businesses with the highest consumption being shortchanged while those who used the least would benefit well in excess of their actual use.
Councilman Jason Murray wondered what would happen to the portions of the refund that could not be returned, either because the customer had passed away or moved away without leaving a forwarding address. How to deal with the complication of landlords and tenants was also brought up. Other considerations were how the city would determine what the exact overage each month amounted to in light of the fluctuating market costs.
It was agreed that, based on unspecified ordinances, the city had to do its best to make sure everyone receives the refund that most reflects their actual expense. Councilwoman Sharon McGinnis was in favor of an exact refund, and asked if the overcharge might have created an instance where someone was threatened with having their electricity turned off. It was unlikely, Eilts said.
City Clerk Kara Rath provided input. Each customer’s invoice is available through the city’s digital database. But, electricity use will need to be extracted customer by customer. Determining the exact amount will take time, but it is not impossible, she said.
Mayor William Nusser opened the question up to citizens for comment. Angela Murray addressed the council. She suggested the city designate a recipient for unclaimed refunds, and then inform the public they can apply for an exact refund by a specified date. Those who chose not to ask for the refund would have the peace of mind of knowing the money went to a good cause.
Council considered the option, but opted to put off determining an organization to designate unclaimed refunds to until further research could be done. But they agreed an application process would be the most fair way to ensure customers had the best chance at getting the refund they deserve.
Finally, it was agreed the city would announce customers could apply for their refund up until June 1, and the city would aim at distributing the exact refund by Dec. 31. This would give staff time to process the refunds. The refunds will be in the form of a credit to apply towards their bill. For those who have moved, they will receive a cash refund. The council will determine at a future meeting what will happen to the unclaimed portion.