City of Holton looking at possible electric rate increase

It’s been about 17 years since the City of Holton has increased its municipal electric rates, and now a Kansas Municipal Energy Agency study is recommending that the city raise those rates in order to ensure it has enough money to keep the utility financially viable for the rest of the decade.

During the Holton City Commission’s regular meeting on Feb. 17 — held a day later than normal due to the Presidents Day holiday on Monday — commissioners reviewed an electric rate study put together by Darren Prince, KMEA regulatory and rates manager, regarding the near future of the city’s electric utility — and how the utility could be operating more than $2 million in the hole by 2029 without rate increases.

Commissioners took no immediate action on the KMEA study, which proposed an increase of about 10 percent for the current year and increases of six to seven percent for the next few years afterward, but the proposal had some commissioners voicing some regret that a rate increase had not been approved sooner, even though city power customers had enjoyed a low rate for 17 years.

City Manager Teresa Riley said the KMEA study was approved by commissioners at a meeting last July, when it was noted that the city’s last increase, less than half a cent to the city’s municipal power rate, was approved in April 2009. Since then, basic use charges have been 8.495 cents per kilowatt hour (kWh) for residential customers in the city limits and 8.755 cents per kWh for customers outside the city limits.

Those base rates have remained unchanged over the past 17 years, although city power customers’ electric bills have been subject to a monthly fuel cost adjustment fee on bills that has been determined by market fuel prices and by power use for a number of years, commissioners noted.

At the Feb. 17 meeting, commissioners noted the study projected increases in both base customer charges — the charge to have an electric meter in place at a residence or business — and use charges, all told, of about 10 percent for 2026, followed by base and use charges amounting to between six and seven percent over the next few years after that.

The study noted that if the base rates were to remain unchanged, while any forecasted increase in total revenue would largely be due to projected fuel cost adjustment increases and non-operating revenues, increases in personnel, contractual and commodity expenses would play a role in the utility not meeting revenue requirements through 2029, and all utility funds are likely to be depleted by 2027.

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