HOISINGTON — The Hoisington Utility Task Force met Tuesday with Joe Herz and DeAnn Dotson of Sawvel and Associates to discuss electrical rates and questions that the board had for the consultants.
The first question asked was about the franchise fee of five percent, and was it normal for a city to charge that. Herz, vice president of Sawvel, said that some cities do have that and others don’t, but that he recently had seen a survey indicating that 13 percent had a franchise fee.
In regard to electrical rates,“Kansas as a whole is higher than neighboring states,” said Herz. “Western Kansas is higher than state average due to demographics and less industry. Costs are higher.” He said that they will gather information on electrical costs in neighboring areas.
Herz explained that Hoisington had a contract with Aquila prior to 2008 that had very good rates. Aquila ended that contract in 2008.
“2008 was the absolute worst year,” for replacing municipal electrical contracts, he said. “2008 was a seller’s market. The environment is better now.”
Part of the issue, Herz explained, was limited transmission lines and that getting electricity to this area is time consuming.
Hoisington entered into contracts with the Kansas Municipal Energy Agency in 2008 and several other entities. Since that time, rates have increased upward.
The consultant said that one of Hoisington’s contracts end in 2018, and there is no way to get out of any of them now. The city can line up other resources in 2019 after the contract terminates.
Task Force member Rush Blaz asked about wind energy and said that he wanted 21st century energy in the community, not 20th century energy.
“This is a choice you may want to make in planning for new resources,” said Herz.
Blaz said that he wanted to capitalize on the location of Cheyenne Bottoms and have Hoisington be the “Greenway to the Wetlands. I’m in favor of exploring alternative energy sources.”
“It’s quite a responsibility to make decisions that affect the utility bills of everyone in the community,” said Herz.
Task Force Member Randy Deutsch asked why if the cost to the city was seven cents per kwh, than why was he charged 17 cents per kwh.
“The purpose of our trip is to meet with staff here. We’ve got some questions,” said Herz. “It’s an opportunity to interview folks as well as look at numbers.”
Dotson said that they would look at expense reductions in the distribution system and administration. “We’ll look at rate structures,” she said. She also suggested looking into demand charges which more accurately reflect usage and demand placed upon the system.
Task Force member Brian Wilson said that part of this process is education. “Everybody has a responsibility for economy.”
The city is currently selling some of its excess capacity to other municipalities.
The next meeting will be at 10 a.m. on Aug. 28.