By Tim Linscott
Midwest Electric officials recently asked Grant city leaders to re-examine their policy on new electrical hook-ups, as the company felt it may be inhibiting economic development and future growth of the municipality.
The city agreed to re-examine the policy to double check if it stood for the best interest of all parties.
The current city policy dictates that the party wanting the electrical hook-up, either commercial or residential, pays for the hooking of electricity into the local system up to 100 percent. Prior to the current policy, the city paid 100 percent of the electrical hook-up fees.
Council member Tim Pofahl relayed to Grant Mayor Mike Wyatt and his fellow council members at the Jan. 14 regular city board meeting that, in his eyes, the current policy was warranted.
“Our current policy, is probably not all that bad,” Pofahl said.
By doing the hook-up charges with the current policy, the city can avoid a payback period of 50 years, as would have been the case with the previous policy, according to city officials.
Mayor Wyatt was still perplexed what the term ‘overhead’ meant in talking with Midwest Electric representatives in recent months. The term ‘overhead’ was used by Midwest Electric representatives in explaining costs involved with electric hook-ups.
“Our policy is in the right direction,” Pofahl said.
Figuring costs, according to Dana Harris, city administrator, is done by taking the price of power paid by a municipality, what the municipality charges for power, taking an average residence kilowatt hour over a year. The margin of profit the city is clearing on electricity, before any salaries or upgrades on the system, equals $38 a month per residence. That cost, however, is for one aspect of the rate structure and does not reflect all rates for consumers.
The average 200 amp service hook-up is $2,000.
“We are making $38 and giving away $2,000 in service hook-ups, it will take a while to pay it back,” Harris said. “Thirty-eight dollars isn’t much, and that is just on the cost of power, that doesn’t take into account expenses. It is a surprising number. That doesn’t give you much room.”
The city is not making a profit for the sake of profit off of electricity, Harris pointed out.
Over the past five years she noted there have been several electrical projects paid for by the city, including one home that had a price tag to the city of $6,000. A sub-division south of Grant, outside of the city limits, had a $10,000 price tag for the municipality. Before arriving in Grant, Harris said the city paid $14,000 for electrical hook-ups on a project.
“There is no way the city will make back its money in a reasonable amount of time relying solely on the electrical rate,” Harris said, explaining that if the project was done outside of the city limits, the city would only see money coming back from each month’s electrical bill, not from taxes.
She felt the current policy implemented by the city is a fair representation to taxpayers.
“I don’t think it is fair that the electrical patrons in town have to subsidize projects out of town,” Harris said.
The policy will remain as it is and Harris and Ryan Potts, the new board of public works chairman, will be working with Midwest Electric on figuring out billing issues so that the proper entities are billed for specific projects.
The two will be working with Midwest Electric in the next month on the issue.