Coffeyville staff, UFS outline power-cost adjustment, present three electric-rate scenarios

City Manager Ben Brubaker, Director of Electric Services Chris Weiner and UFS consultant Jill Jurczyk on March 11 reviewed a revised power cost adjustment and three multi-year electric-rate scenarios for Coffeyville’s municipal utility. The presentation was for discussion only; Brubaker told commissioners, “it is just a discussion item. So to be very clear, there's no decisions that we're asking for tonight.”

The discussion focused on correcting how the city calculates its PCA — the monthly charge that passes wholesale power-cost changes through to retail customers. Jurczyk said the tariff requires an annual calculation of the loss-adjustment factor that accounts for unbilled units (city usage and lighting). “Historically … we’ve just used a 7% adjustment. But the tariff specifies that this adjustment factor should be calculated every year,” she said, adding that Coffeyville’s correct loss factor for the year should be 14% under the model.

Why it matters: the PCA smoothing methodology and correct loss factor materially change projected revenues. UFS and city staff said undercollections in prior years were large: had the corrected PCA been used, 2024 revenues would have been roughly $1.0–$1.2 million higher and 2023 roughly $2.3 million higher. Weiner warned those shortfalls have left the utility effectively subsidizing customers and that a corrected PCA will shift costs to ratepayers over time.

How the change would be phased: Jurczyk described a 6-month rolling average calculation to damp month-to-month volatility. She said the rolling average will phase in higher PCA months as zero-PCA months drop off; staff estimated the rolling average would produce roughly a 1¢ per kilowatt-hour (¢/kWh) average PCA over time, with higher individual months possible. Weiner said one month’s recalculation showed about a 2¢ PCA.

Rate-track scenarios: UFS presented three scenarios that incorporate the corrected PCA and differing rate paths and financing approaches: (1) a three-year series of 4.5% adjustments plus a $3 million bond to help fund a substation replacement (engineer estimate for the substation ~ $4 million). That track showed about a $5/month average increase on a typical residential bill, and, factoring in the PCA phase-in, worst-case household impacts of roughly $7–$8/month in some months; (2) the same 4.5% increases for three years but without bonding, which produced similar monthly impacts but slower cash recovery; and (3) a front-loaded approach with 7% increases in years 1–2 (no bond), which reaches roughly the same long-run revenue but accelerates cash rebuilding. Staff stressed the end-state customer-bill impact across scenarios is similar; the main differences are timing of cash recovery and borrowing.

Other drivers and context: staff noted that wholesale power costs to Coffeyville (Grand River Dam Authority or GRDA) increased 4% in October and staff expect another 4% rise following the upcoming October (and again the following October), increasing upward pressure on retail rates. Jurczyk also said an earlier city decision to lower the mill levy effectively shifts more of the city revenue burden toward the utility unless other budget cuts or revenue offsets are adopted.

Next steps: staff and UFS will refine the recommendation, provide more detailed modeling and return with a proposed rate decision at an upcoming meeting. Brubaker asked commissioners to submit follow-up questions over the next two weeks. No formal action or vote took place on March 11.

Ending: Commissioners asked for clearer public messaging about the phase-in and historical undercollection; staff agreed to prepare materials and a formal recommendation to present at the next meeting for a decision.