Electric Rate Adjustment
Answer
Why is the City of Neodesha able to dial back electric rates?
The City has made several structural financial improvements that reduced pressure on the Electric Fund. Most notably, we brought major costs under control and reduced how much money had to be transferred from electric revenues to support other city services. As a result, the Electric Fund is in a healthier position and can return savings to ratepayers.
What changed that made this possible?
The largest change was the City entering into an inter-local agreement with Labette Health for EMS services. This agreement capped EMS-related costs and provided predictability in one of the City’s most expensive service areas. That cost control had a direct and positive impact on the City’s overall budget.
How does EMS spending affect electric rates?
When General Fund expenses increase — particularly for services like EMS — the City has historically relied on transfers from the Electric and Gas Funds to keep property taxes as low as possible.
By stabilizing EMS costs, the General Fund no longer requires the same level of support from utility funds, allowing electric revenues to stay within the electric system instead of being redirected elsewhere.
How much was the City relying on utility fund transfers in the past?
In 2025:
- The property tax mill rate was 63.611 mills
- Transfers from other funds were equivalent to an additional 182.8153 mills
- Total scheduled transfers to the General Fund were $2 million
When the Gas Fund was unable to meet its budgeted transfer, the Electric Fund stepped in and contributed $600,000 to cover the shortfall.
What does the 2026 budget look like by comparison?
For 2026:
- The approved mill rate is 65.640 mills
- Transfers from other funds dropped to the equivalent of 132.9459 mills
- Scheduled transfers to the General Fund were reduced to $1.510 million
- Transfers are now split more evenly: 45% Electric / 55% Gas
This reflects a more balanced and sustainable budget structure.
Does this mean electric rates were previously subsidizing other services?
Yes. In prior years, electric revenues were used to help offset General Fund costs in order to keep property taxes lower. With improved cost controls and reduced transfer requirements, electric revenues can now be focused more directly on electric operations and customers.
Is lowering electric rates a short-term decision?
No. This adjustment is based on long-term financial planning, improved cost control, and a healthier balance between city funds. The City will continue to monitor utility finances to ensure reliability, infrastructure investment, and fiscal responsibility.
How does this benefit residents?
Residents benefit in two ways:
- Lower electric rates, reflecting reduced financial strain on the Electric Fund
- Continued fiscal responsibility, ensuring city services remain funded without overburdening utility customers or property taxpayers