NPPD raises rates, urges conservation

COLUMBUS -- The Nebraska Public Power District Board of Directors approved rate increases Friday for wholesale and retail electric customers, effective Jan. 1.

The rate adjustments are needed to pay for increased expenses associated with rising fuel and operating costs and added investments in infrastructure to meet an increasing demand for electricity.

"We recognize these are tough economic times and, as a public power utility, we are committed to doing what we can to maintain affordable and reliable electric service for our customers," said NPPD President and CEO Ron Asche. "These rate changes were only approved after months of discussion with our Board of Directors and customers and are a result of cost increases we have experienced in generating and delivering electricity to our customers. We also continue to look for ways to cut costs and reduce spending, where possible."

Approximately 63 percent of the power and energy that NPPD generates and transmits is sold at wholesale to 52 municipalities and 25 public power districts and cooperatives in Nebraska. These utilities in turn distribute power to their own end-use customers. Under the Board-approved 2009 rate plan, NPPD wholesale customers can expect an average increase in 2009 rates of 7 percent.

NPPD also provides electric service at retail to 80 communities in Nebraska such as Norfolk and Kearney. Electric customers living in an NPPD retail town pay their electric bill to NPPD directly. NPPD's average overall retail rate increase is 6.4 percent in 2009. This includes an average increase of 5.9 percent for a residential customer (i.e. approximately $5 more a month on an average electric bill), and 3.1 percent for a typical small business customer. The percentages are based on class average results; individual customer impacts will vary depending upon their use of electricity.

"This is the first rate increase for our retail residential and small commercial customers since 2003," said Asche.

NPPD's last wholesale rate increase occurred April 1, 2008. Since the District's retail industrial customers' rates closely model changes in wholesale rates, these customers were also subject to a rate increase in 2008. Despite these rate adjustments, NPPD's overall electric rates remain significantly lower than the national average. Many electric customers on the East or West coast pay two times more than Nebraskans. Even on a regional basis, NPPD's average retail electric rates are generally lower; however, this does not mean NPPD is immune to many of the same cost pressures impacting utilities today.

"The cost of fuel to operate our generating facilities along with spikes in the prices of material and equipment we depend on to run our business have risen dramatically-as much as 80 percent in some cases-in the past five years," said Asche. "We are also seeing growth in the demand for electricity on our system. Investing in our assets to produce and deliver energy to meet this growing demand does not come cheaply."

Customers can help manage their energy bills by choosing to conserve or use energy more wisely. NPPD provides many tips on ways to save energy on its Web site, nppd.com, and on a second Web site -- itsyourpower.org -- launched this summer.

"We have stepped up our implementation of energy efficiency and conservation programs and incentives and are providing customers with more information on ways to save energy and manage their electric bills," said Asche.

NPPD has also revised its summer retail residential and small commercial rates to better reflect the cost of serving customers with high energy usage during the summer months. Under NPPD's current rates, residential customers for example pay a higher rate for the first 750 kilowatt-hours used each month, and a lower rate for usage above 750 kWhs. Starting in 2009, NPPD will begin moving toward the implementation of a flat summer rate-a rate that does not vary regardless of the amount of energy used.

"This change in rate methodology sends a price signal that encourages residential and small commercial customers to use less energy and take advantage of energy efficiency and conservation programs," Asche said.

To help minimize the cost impact of this change on high-use customers, NPPD expects to phase-in the move toward one, constant "flat" summer price. The transition will be reviewed by NPPD's Board on an annual basis and is expected to take at least two years to reach a true "flat" summer rate.