February 29th, 2024

5 31 18 city workshopBlack Hills Energy External Affairs Manager Monique Pope talks to the Liberal City Commission during a special workshop Thursday morning regarding the franchise agreement with Black Hills Energy. As the agreement is coming up for renewal, a handful of options were presented on how the commission could proceed. L&T photo/Elly GrimmELLY GRIMM
• Leader & Times


The mood was very energetic during a recent special workshop between the Liberal City Commission and Black Hills Energy. 

The two came together for a workshop session Thursday morning to discussion options regarding the Black Hills Energy franchise agreement.

“Our franchise renewal is coming up so we thought it would be a good time to get everyone together and bring everyone up to speed on where we’ve been historically, what we’ve been trying to accomplish with the partnership we have with Liberal, what we’d like to do in the future,” Black Hills Energy representative Dennis Rohrbaugh said.

The presentation given to the commission began with information about what the agreement has been in the past and what the company has been able to do. 

“Black Hills has a tradition of excellent customer service and what we want is to be the energy partner of choice,” Rohrbaugh said. “And we’re not just gas, we also work with electric and coal in eight states including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. It’s interesting to see how everything has grown throughout the years. One really cool thing we’ve worked with recently is Source Gas and that’s a midwestern gas utility in Nebraska, Colorado and Wyoming and they fit really well with what we want. We’ve got more than 113,000 customers in Kansas in 65 communities. We’ve also got 122 employees and we’ve got more than 4,600 miles of gas system infrastructure, so that’s a great footprint for Kansas.”

Rohrbaugh then broke down the picture for Liberal. 

“In Liberal, we’ve gone 1,227 days without any accidents, which means for more than three years, our team in Liberal has been able to work safely and not have any injuries,” Rohrbaugh said. “We’re extremely proud of our safety record in Liberal. We’ve got 18 employees who worked their entire career without injuries and those employees have a combined 277 years accident-free. Like I said earlier we’re always working to improve people’s lives with energy, so how does that tie in to what we want to do today? We’re all facing aging infrastructure, you all know the challenges that come with maintaining infrastructure. Black Hills Energy went to the KCC and we looked at all the risk we have out there with the old bare steel pipe technology and we were thinking about how to improve on that so we can help improve our customers’ lives and provide that energy. So us and the KCC came up with a 17-year replacement plan and in order to replace all that bare steel piping in Kansas in 17 years, we have to spend $18 to $22 million in capital dollars every year and that equates to a $220 million-plus investment throughout the next 17 years.” 

Liberal in particular, Rohrbaugh said, has a large amount of the bare steel piping. 

“We found there’s 34 miles of bare steel piping just in Liberal and there’s also a large amount in Wichita,” Rohrbaugh said. “So Liberal and Wichita are going to see a lot of improvements in the next 17 years so we can get that bare steel technology out of the ground and get the new stuff under the ground.”

“How can we coordinate your line replacement with the city?” Liberal Interim City Manager Calvin Burke asked. “We don’t want to be rebuilding a street for you guys to come in and cut it up to put a new line in. So how can we coordinate all that?”

Rohrbaugh said there was a recent project Black Hills had helped with and said it would indeed be possible for such coordination to happen, with Burke and some of the commissioners bringing up projects that are forthcoming throughout the city. 

“The other thing about this franchise agreement is it provides a solid foundation for us to go off of and it allows us to actually come into the communities and be that energy partner,” Rohrbaugh said. 

Black Hills Energy External Affairs Manager  Monique Pope then went into more detail about the franchise agreement itself. 

“The 20-year agreement currently in place will be expiring in July, and that began in July 1998,” Pope said. “Essentially, the City of Liberal has utilized a volumetric fee in addition to a large-volume customer volumetric fee with a reduced rate of 5 percent of the regular volumetric rate upon exceeding 30,000 mmBTUs. With this unique franchise agreement, it all started when a predecessor identified that unique way to do the franchise agreement. Throughout the years, the fee has increased and will only continue to do so. One of the earlier slides indicated concerns of the structure of the fee causing increases year after year because with that unique structure, it included new footage of main added to Liberal throughout the year. There’s been concern and an unintended consequence of Liberal being the highest in terms of franchise fee and gross receipts.”

“What we found was when that employee came up with that formula, that formula included a per foot cost so as the amount of main increased, the fee increased, which should have been a tit for tat situation,” Rohrbaugh said. “But it didn’t end up like that. We tend to keep franchise fees around 5 percent because that mark has been a reasonable standard for utilities and the industry.”

After some more discussion, the commissioners and Black Hills Energy team talked about the different options that regarding the franchise agreement. The workshop was only meant to give out information to the commission and no vote was taken on which option to accept for the agreement. After several more minutes of discussion and questions, the commission then took a 10-minute break before entering into an executive session regarding personnel matters of non-elected personnel. No action was taken after the executive session.