NPPD to consider proposed rate increase for end-use, retail customers

COLUMNBUS -- The Nebraska Public Power District's Board of Directors is considering a proposed, 5.7 percent average rate increase for its retail customers. Depending upon the type of customer (e.g. residential, commercial, industrial, irrigation, etc.), the respective proposed rate increase will range from 4.7 -- 8.4 percent. Residential customers can expect an average 6.0 percent increase which equates to approximately 20 cents a day or $6 a month.

NPPD's board will vote on the proposal at its November board meeting, with a proposed effective date of Jan. 1, 2010.

NPPD's retail customers live in 80 communities throughout the state, in such cities or towns as Scottsbluff, Norfolk, Kearney, Plattsmouth, and York. NPPD also sells power to wholesale customers, including 52 municipalities and 25 other public power utilities and rural cooperatives that, in turn, deliver the electricity to their end-use customers. The board is considering a rate increase for its wholesale customers, which is a key driver of the retail rate increase. Approximately two-thirds of an average retail customer's bill pays for "wholesale" costs, which includes the cost of producing the energy at our power generation facilities and delivering it across our statewide high-voltage transmission system network.

"NPPD is investing in its power plants and transmission system to increase reliability for customers," explained Ron Asche, NPPD president and CEO. "We want to make sure we have the generation to serve their future energy needs, the power lines needed to carry peak loads, and the transmission infrastructure needed to serve areas with growing electrical load. This is the primary driver for the proposed increase."

In addition, in 2009, revenue NPPD typically gains from selling its excess power to out-of-state utilities was significantly less due to lower market prices resulting from the economic recession. This revenue helps offset a portion of NPPD's operational costs. Sales of energy to NPPD's Nebraska customers was also less than forecasted this summer due to the mild summer weather, which also resulted in reduced revenues.

To help offset the revenue shortfalls and lessen what might have been larger rate increases for both its wholesale and retail customers, NPPD cut its 2010 budget by approximately $32 million. Reductions include a freeze on executive salaries, a deferral of employee salary and benefit increases next year, and a multitude of reductions in materials, supplies, use of outside contractor services, and other programs.

Over the past 20 years, NPPD's average retail rate has increased 13.6 percent or approximately 0.6 percent, per year. In comparison, the Consumer Price Index has seen a 20-year increase of 82.2 percent or 3 percent each year.

"NPPD recognizes this is a difficult economic time," said Asche, "and we are working hard to reduce our daily operational costs without jeopardizing employee safety or reliability. We also encourage our customers to continue utilizing our EnergyWise efficiency program that offers incentives, rebates and energy efficient ideas to control their electric costs."