Debunking the myths
There are a lot of myths about public power which can make it difficult for citizens to truly understand the options we have for getting our electricity.
Investor owned utilities tend to oppose public power because it reduces their revenue, and because they are investor owned, they are reliant on the profits they make from communities like ours.
Local citizens have received misleading information on this topic so we want to debunk some of the common myths about public power.
The City’s goal in studying public power is to determine whether we can provide less expensive rates and minimize future rate hikes for all residents and businesses in our community. We believe that our electric rates will be less expensive with a public power utility – residential customers of public power across the U.S. pay an average of 14% less. However, if we find that public power isn’t less expensive, it will no longer be an option we explore for Pittsburg.
Why is public power less expensive?
The electric industry has changed. The cost of natural gas and renewable energy is now competitive with coal and nuclear. This provides an opportunity for the City to purchase power on the open market from a less expensive power supplier and have the flexibility to control power purchase agreements.
As we are a not-for-profit we don’t need to pay income tax or make a financial return for any investors. This means our community won’t need to cover that cost any longer, resulting in a direct saving for households and businesses on their electricity bills.
Delivering safe, reliable electricity to our residents is a top priority. A Pittsburg public power utility would deal with major power outages in exactly the same way Evergy does today. An experienced response team would provide support and resources to manage the outage, and they will be on hand 24/7/365 to get our power back up and running as quickly as possible.
All electric utilities, including Evergy and including public power utilities, have structured mutual aid contracts in place in the event of a more serious natural disaster. This means that the state government and municipalities across the country would provide any extra aid we may need. These contracts would be put in place by a team of energy experts familiar with these country-wide operations.
Experienced, knowledgeable professionals who are paid market-rate salaries would operate our public power. This includes skilled linemen, electrical engineers, electrical technicians, and a management team who are experts in the electric industry.
The reality is that Pittsburg residents won’t notice a change in how major power outages or natural disasters are handled. They can be confident it will be dealt with quickly, efficiently, and effectively.
The City is currently studying the viability of public power and the actual cost of creating a public power utility has not yet been determined. However, industry experts estimate the cost to purchase and begin operation is significantly less than $50 million.
If a public power utility was to cost the City $150 million, it would not be economically viable and we would look at other energy options. The City is examining the option of public power and the process it involves in a way that is fiscally responsible and would bring financial benefits to our community.
Right now, Evergy pays property taxes to the school district, the County, and the City. These tax dollars fund different aspects of our community. As the City is tax-exempt, it means that we would not pay this property tax – but we will not take these “tax dollars” out of our community.
Neither our school district nor the County will lose any funding. This is because in the business model the City has created for a public power utility, a portion of the profits will be given back to the school district and the County. The City would be in a position to make a payment in lieu of taxes so there’s no loss in funding, and we can still make a positive revenue flow.
In fact, as the electricity rates will likely be cheaper for the school district and the County, they will realize savings.
Myth 5: The City has no experience in running an electric utility and couldn’t do it better than the private sector
It’s true that the City’s team doesn’t personally have experience in running an electric utility. However, we would not be the people who run it.
We have a team of energy consultants on board who can establish Pittsburg’s public power utility according to industry best practices.
Experienced, knowledgeable professionals who are paid market-rate salaries will then operate our public power. This includes skilled linemen, electrical engineers, electrical technicians, and a management team who are experts in the electric industry.
America’s electric utilities are about 60% public power, and they serve around 49 million people.
118 communities in Kansas like ours are already successfully powered by a public power utility. Public power utilities are statistically more reliable than investor-owned utilities, and public power customers experience less than half the national average of power outages.
It is the City’s goal to have the best electric utility in the state of Kansas in terms of quality, reliability, and cost.