LARNED — This year, the City of Larned has faced storms both literal and figurative in providing electrical service to its residents. At its Monday meeting, the Larned City Council took steps to address both of those issues to maintain seamless and cost-effective electrical service for its residents

First, the council ratified a six-month contract with Midwest Energy to provide boots-on-the-ground electrical service to the City of Larned and its customers. The service contract includes all day-to-day operations, with Midwest Energy agreeing to handle all construction, operations and maintenance support for the city’s electrical systems, as well as emergency support for outages.

The change comes in the wake of an internal investigation into the city’s electrical department in mid-July. Though the city is not releasing details of the investigation, which is still ongoing, it did lead the city to dismiss all five of the city’s electrical department employees, and involve law enforcement in the process. As a municipal utility provider, this left the city with a void to fill in regard to electrical service and maintenance.

City Manager Bradley Eilts said this will also include direct customer support, with Midwest Energy agreeing to handle all electrical point-of-service issues for the city’s residents, as well.

Eilts said Midwest Energy was chosen to fill this void, primarily because of its current role as the city’s wholesale energy provider. 

“I wanted (the transition) to be as seamless as possible, I felt we had an obligation to the customer base to do that,” Eilts said.

While many options were considered to provide this seamless transition, the council felt Midwest Energy, as the city’s current provider, had the most capacity and ability to fill that void.

Aside from being the city’s current wholesale provider, the council also took into consideration Midwest Energy’s close proximity to the city. With its offices in Great Bend, Eilts and the council felt this would be ideal in the event of electrical emergencies, to have a provider in close proximity. The company also has personnel currently residing in Larned who previously worked for the city, which the city felt gave the company better knowledge of, and experience with, the city’s electrical systems.

Though the initial contract is for six months, Eilts expects Midwest Energy will likely fill this role for a longer period of time.

Fred Taylor, Vice President of Operations for Midwest Energy, and other Midwest Energy representatives, were in attendance at Monday’s meeting and discussed the long-term future of the partnership with the council. It is expected the contract will likely be renewed at the conclusion of the six-month term.

One concern Eilts had was about difficulties finding line employees to fill the staffing void. The consensus of the council was to revisit the issue toward the end of the initial contract, when the city can better address the efficacy of the current arrangements, as well as the feasibility of recruiting a new team, and evaluating other alternative long-term solutions.

Addressing Polar Vortex issues

Also at Monday’s meeting, the council took steps to address the customer cost impact related to February’s winter storm.

The council agreed to an up-front payment of $173,000 from the city’s reserve fund to the Grand River Dam Authority to cover the city’s portion of energy cost spikes that resulted from the intense cold of February’s storm.

As a municipal electric provider, the city purchases electricity from the Kansas Municipal Energy Agency through the Grand River Dam Authority. According to Eilts, in recent correspondence from KMEA, the GRDA determined it had incurred costs exceeding $100 million as a result of February’s cold snap. The KMEA, one of the organizations provides power to, is responsible for bearing 7%, or $7 million, of this cost.

KMEA-member municipal energy providers are sharing that portion of the cost burden, with Larned’s responsibility being $173,000. 

One option the city had to defray this cost was to pay an additional $3,500 per month over a 52-month period from January 2022 through April 2026. 

With the amount of power the city purchases, this would result in a 7% increase to the city’s monthly electrical expenses, from just over $50,000 a month, to $53,622 per month for that time period. This would amount to an increase of roughly $2.15 for the average Larned electrical customer.

However, Eilts and the city council did not feel it was fair to the city’s electrical customers to bear the brunt of what Eilts called, “a blip in the market,” that customers had no control over.

“If you just moved to Larned, why should you have to pay for something that happened before you got here?” Eilts said.

So, the council decided instead to pay the cost up front from the city’s electrical reserve, or “rainy day” fund, meaning Larned’s electrical customers will not feel any additional cost bite from February’s storm.

“It’s a positive for our customers,” Eilts said.