Kansas lawmakers look to help cities with huge energy costs

Source: By John Hanna, Associated Press • Posted: Thursday, March 4, 2021

The House approved, 124-0, a bill that would allow the state to loan out $100 million of its idle funds immediately to cities that operate their own electric and natural gas utilities, to cover “extraordinary” energy costs last month. Cities would have up to 10 years to pay off the loans.

House members acted less than two hours after the measure cleared one of its committees. The bill was introduced only Tuesday, and lawmakers in both parties see it as an urgent first step toward dealing with tens of millions of dollars in extra energy costs faced by cities, businesses and residential customers.

Subzero temperatures in mid-February led to a big spike in demand for natural gas, and other problems, such as freezing equipment, made gas hard to obtain, causing prices to jump. That left dozens of cities in Kansas with big energy bills that are coming due, and advocates of the bill said some could face bankruptcy without help.

The city of Denison, with about 190 residents 40 miles north of Topeka, has been billed about $241,000 for gas in February, when its bill last year was about $4,100, City Clerk Yvonne Hamer told the House committee in written testimony. She said that without help, the city will “go under” after 134 years.

“Now I am fearful that I will have to close my doors if the city has to pass on the outrageous gas prices which were incurred in February,” Samantha Correll, who purchased the Finer Than a Frog Hair Bar & Grill in Denison, said in a statement to the committee.

Lawmakers were concentrating first on helping cities operating their own utilities because they’ve already received one round of bills from the cold snap and have another round coming due. Kimberly Gencur Svaty, a lobbyist for municipal utilities, said many of those cities tapped out available funds to cover the first round.

Fifty-three cities provide natural gas to their residents for heat, and 118 operate their own electric utilities — some of which also use natural gas to generate power. Svaty said that within a week, gas prices spiked at as much as 200 times what cities had been paying.

She said cities operating their own utilities face “an immediate financial crisis” because Great Depression-era laws aimed at stabilizing their finances greatly limit their ability to borrow money. Without help, she and other supporters said, those cities face imposing huge, short-term increases in customers’ bills, when loans would allow them to “smooth out” the extra costs over time.

Svaty also said that if cities can’t pay their gas bills, they risk being excluded from the market, which would leave some of them unable to supply their residents.

“This is something you can do right here, right now that will literally make a difference in the lives of people in the next week to 10 days,” Svaty said.

In Argonia, a town of around 500 people about 50 miles southwest of Wichita, the city expects a bill of more than $500,000 from February, when its typical monthly cost is $9,000, according to City Clerk Tara Pierce.

“This extreme cost could break us,” she said in testimony to the House committee.

The only House member to raise questions about the bill was Democratic Rep. Henry Helgerson, of Wichita, who worried that the state could be on the hook if a city defaults on a loan. He did not oppose the measure, however.