Baldwin City reviews midyear electric rate options as staff projects budget shortfall

At a Baldwin City finance committee meeting, staff presented an electric‑fund forecast showing a projected expense budget of about $6.08 million for 2025 and a revenue shortfall under the current net rate.

Staff member (Speaker 4) said the model assumes roughly 38,000,000 kilowatt‑hours and that, under current assumptions, the net rate would need to be about $0.655 per kilowatt‑hour to meet expenses; the net rate in place at the start of the year was roughly $0.539. "We need to be charging 0.655 in a net rate," Speaker 4 said, framing the size of the gap the council must address.

The presentation showed staff estimates that a 25% reserve target (a staff/committee scenario discussed earlier) would produce an ending cash balance near $345,000 in 2025 if all adjustments are phased in a particular way; Speaker 1 cautioned that figure "is probably on the low side." Staff also noted a bond payment scheduled to drop off in 2027 that would free about $400,000 annually and improve the fund’s long‑term position.

Councilmembers and committee members debated how aggressively to act. One idea discussed was pausing or reducing the 6% franchise transfer that appears on utility bills and is moved monthly to the general fund; Speaker 3 said similar transfers have been paused for other utilities in past years to reduce customer impacts. "If we can afford to do it, then it limits the impact to our citizens now," Speaker 3 said.

Several members argued for translating proposals into real dollar impacts for customers rather than only percentages. Speaker 5 urged staff to show what a 10% or 20% change would mean in dollars on an average bill so residents can more easily understand the effect.

Staff and members also discussed whether purchase‑power contracts should be treated as part of the base expense when computing reserves. Staff referenced KMEA guidance that purchase‑power contract obligations can be sold on the market but noted there is execution risk and potential price loss; that uncertainty factored into whether to include purchase power in the reserve calculation.

Numbers presented differed modestly between staff models: Speaker 4’s projections suggested a lower required increase (roughly mid‑teens percent) while staff member Ben’s model showed a higher need (near 20 percent) to reach the same reserve target. Councilmembers asked staff to return with a set of scenarios that map specific reserve targets (for example, reaching 15% by year‑end or phasing to 25% by 2027) to explicit rate paths, and to show the effect of pausing or partially reducing the franchise transfer.

Staff emphasized operational constraints: monthly and seasonal expense spikes (including a large debt payment in February) and the need not to let the utility go negative on reserves, which would require borrowing from general funds. Sales tax receipts were noted as trending up this year, producing additional general‑fund capacity that could influence decisions about transfers.

Next steps: staff will prepare multiple rate scenarios tied to reserve targets, include dollar‑impact illustrations for customers, and return to the finance committee (and then the council) with ordinance language and the recommended timing for any midyear rate change.

No formal motion or vote was recorded in the transcript; the meeting closed with a plan for staff to provide updated scenarios prior to the ordinance step.