City reluctant to give power pool monthly advancements
Hillsboro City Council was a little leery May 6 about forking over an advancement of $64,000 to Kansas Power Pool, so it tabled a decision until more information could be obtained.
The KPP, of which the City of Hillsboro is a member with 19 other cities, asked the council for an advancement to cover electricity purchases.
An agreement had not yet been reached between KPP and Westar Energy to purchase power for the member cities. In the interim, KPP is paying for last month's power and pre-purchasing the coming month's power which requires additional funds in the organization's treasury.
When Hillsboro signed on with the power pool program, it did not provide funds when the organization was initially started. Therefore KPP is asking those cities to provide funds for a total of $580,000.
City administrator Larry Paine explained that the cities would provide cash for KPP to use as letters of credit for purchasing power.
When the city is charged for its electricity in May, the $64,000 advancement will be subtracted from the total bill. The city then would be required to pay $64,000 each month until an agreement is reached.
"Is this situation sending a message of concern?" councilman Bob Watson asked. Paine said the situation does need to be watched. In a memo to the council, he said since KPP does not have sufficient funds to make this transition, Paine will closely watch the organization's finances. Paine also noted that he had talked with Westar Energy and Kansas Municipal Energy Agency (KMEA) about power supply.
"I'm not comfortable in paying in advance for a commodity," Paine said, but recommended the council approve the agreement.
The city had signed a 20-year power supply agreement with KPP but could withdraw membership with a 24-month notice.
The council agreed that more information was needed and if necessary could meet before the KPP deadline of May 15.