LAHARPE Electricity is about to become more expensive for LaHarpe residents.
And theres not much the city or its residents can do about it.
LaHarpe City Council members peppered a Westar representative at a special meeting Tuesday with questions about a hike in transmission rates, courtesy of a new load station facility south of town.
The load station replaces an electric substation that was destroyed in a March 2017 tornado.
The issue, explained Westars Justin Campbell, is that the old substation was valued at about $85,000.
The new facility is worth more than $310,000.
That means LaHarpe will pay about $3,800 a month to use the new facility, compared to the $1,200 a month the city paid when the old substation was in place.
Those costs will be borne by the citys customers. Councilman Danny Ware Jr. estimated each customer will pay about $15 a month extra for the higher transmission costs.
CAMPBELL explained the process and the reasoning behind the charge, which has been in place since 2010. Thats when the Federal Energy Regulatory Commission approved Westars request for municipalities to pay for access to substations and load centers. It should be noted none of the LaHarpe Council members were aware of the charge before this summer.
Its Westars asset, he explained. Youre paying a charge to use it.
The load station provides electricity both to LaHarpe and to Westar customers throughout southern Allen County, Campbell said.
Because roughly three-quarters of the electricity coming from the station goes to LaHarpe, that sets the figure.
That said, LaHarpe has another option.
Campbell noted some municipalities have begun inquiring about building their own substations.
Whats the cost benefit? Do I want to spend $300,000? he asked, and then be responsible for insuring and maintaining the facility.
The advantage would be the city could cease paying the monthly charge once the facility was paid for.
Using the Westar station eliminates concerns about maintaining and insuring the substation, but the city will be on the hook for the monthly fee for perpetuity.
Ware noted the $3,800 equates to $45,600 a year and $456,000 in a decade well more than the cost of a $310,000 load station.
We have to justify explaining to 500 people in town about their sudden hike in their electric bills. He noted the increase is tacked on to meter hikes and higher rates the Council approved two years ago to precipitate a pending upgrade in LaHarpes electric grid.
Tacking on the looming charge means some customers are paying roughly $40 more a month than what they paid about two years ago, Ware noted.
Youd be upset too, Ware told Campbell.
City Attorney Fred Works who participated in the meeting via speaker phone asked Campbell to provide documentation of the monthly surcharge, plus an amortization rate for the load station. As it decreases in value, the citys monthly fee will drop, likely by a few percentage points a year.
WHILE Campbell was relegated to the bad cop at Tuesdays session, William Birnel, a regulatory specialist with Westar, ended Tuesdays meeting with some better news.
He noted LaHarpes 10-year electric service contract with Westar was scheduled to end in 2020.
Because of increased competition, he was prepared to offer the city a newer, cheaper pact.
If the city were to renew with Westar in two years, the electric rates charged to the city would drop about 25 percent, Birnel said, from about 8.1 cents to 5.2 cents per kilowatt hour.
He promised savings of about 20 percent if the city were to tear up its existing contract today and renew with Westar for seven years.
The lower rate would no longer include demand charges in high usage months.
It would simply be a flat fee, based on the amount of energy you use, Birnel said.
He estimated the lowest rate would equate to about $4,000 a month or more in savings vs. what the city pays today, although the contract does not include transmission costs, the other part of the equation.
Transmission costs tend to be stable, Birnel said.
Council members asked Works to look over the proposal.