SILOAM SPRINGS -- In his administrator's report, City Administrator Phillip Patterson informed the directors during the city board meeting July 20 he received notification from the Grand River Dam Authority (GRDA) that Siloam Springs' share for electric services used during the severe winter storm from February has been determined.
Siloam Springs' portion of the cost to keep the lights on is $3,855,728, which is 3.77% of the total cost GRDA owes, which is over $102 million, Patterson said. This total is based on the amount of kilowatt hours used by the city during the winter storm in February, Patterson said.
The winter storm hit a large portion of the country, which caused gas wells that provide electricity to freeze. This and the high usage of electricity during that period led to the power grid being severely taxed.
Southwest Power Pool (SPP), which manages the grid for several electric providers including GRDA, fluctuated in emergency levels and asked those electrical providers to ask their customers to institute rolling blackouts to help sustain the grid.
Siloam Springs lost power for approximately 45 minutes during the storm, Patterson said.
GRDA has mapped out three different ways for customers to pay their balances, Patterson said. The city administrator said the three ways are to pay the balance in full, pay the balance over 12 months or pay the balance over 10 years.
The first two options do not have a carrying cost; however, the third option will have a carrying cost of $500,000, Patterson said.
A carrying cost is how much it costs a company to hold their inventory, which includes warehouse costs, salaries of warehouse employees, shrinkage and insurance costs, according to capital.com. Carrying costs are normally associated with retail operations, but in this case it is being applied to the amount of time GRDA is holding the debt.
GRDA is requesting a decision by September so they can apply for a 10-year low-interest loan from the state so repayments can begin in 2022, Patterson said. If no response is given to GRDA, they will roll over the city's amount into the 10-year payment window, Patterson said.
In two weeks, Patterson said he hopes to have a proposal for the board to look at. An answer for how the city should proceed to pay this cost is not expected during the first city board meeting of August but will be required during the second meeting, Patterson said.
The city administrator also told the board that while Siloam Springs' total was high, other cities had higher totals. Patterson cited the cities of Hope, Paragould and Piggott, which had varying totals. Hope has 7,000 meters, and their share of the cost is $5.2 million, Patterson said.
Paragould has 14,000 meters, and their bill is $8.5 million. Piggott has 2,000 meters, and their amount is $2 million, Patterson said. Siloam Springs has 8,000 meters.
"So relatively speaking the $3.8 million is not a bad number for what we went through compared to what other cities have experienced," Patterson said.
Three city directors told Patterson how they would like to proceed. Director David Allen said he liked the 12-month option while Directors Brad Burns and Lesa Rissler said they would just like to pay it in full. None of the directors who addressed the issue favored the 10-year option.
In other business, city directors also approved:
• The sale of the Niley Church Hangar at the Siloam Springs Municipal Airport to KSLG HGR.
• Placing Ordinance 21-14 regarding the annexation of 37.44 acres at the 15000 block of AR 59 Highway on its second reading.
• Placing Ordinance 21-15 concerning an ADA (American Disabilities Act) fishing pier and adaptive kayak launch on its first and only reading, then taking a separate vote to adopt the ordinance.