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Home > About Us > Company > Board of Directors

December 2009 Board Meeting Minutes


December 17, 2009


The regular meeting of the Board of Directors of the Omaha Public Power District was held in the Board Room on the Atrium Level of Energy Plaza East, on December 17, 2009, at 10:00 a.m.


                        Present were Directors M. J. Cavanaugh, N. P. Dodge Jr., J. K. Green, G. C. Hall,  A. L. McGuire, J. R. Thompson, F. J. Ulrich and D. D. Weber.  Also present were W. G. Gates, President; M. C. Bodammer, Corporate Secretary; and S. G. Olson, General Counsel for the District.  Mr. Ulrich, Board Chair, presided, and Mrs. Bodammer, Corporate Secretary, recorded the minutes.  Other members of Management present were D. J. Bannister, T. J. Burke, E. E. Easterlin, A. J. Minks, D. F. Widoe, G. R. Williams, J. J. Hanson, M. R. Jones, L. L. Kapustka, C. L. Buettner, B. R. Dinwiddie, J. T. Hansen, M. I. Doghman, K. A. Roth, L. E. Ciecior, W. J. Lenagh, J. J. Karnik, J. D. Anderson, J. A. Martin, D. Jacobberger, J. I. Smith, P. T. Cullen, D. K. Petrus, and M. A. Gayoso.  Others present included C. E. Perkins from I.B.E.W. Local #763; D. F. Begley from I.B.E.W. Local #1483; and approximately 15 additional customer-owners and employees of the District.  There were two representatives in attendance from the Heartland Chapter of the American Red Cross (Tina Labellarte-Price – Chief Executive Officer, and Danielle Schlegelmilch).  A complete list of employees, who were requested by Management to attend this meeting to represent employees in their respective areas for the storm restoration efforts following the November 16, 2009 snow storm, is included in these minutes as part of Resolution No. 5805.


                        The Corporate Secretary read the following:


“Notice of the time and place of this meeting was publicized by notifying the area news media; by  publicizing  same in the Omaha World-Herald and Outlets; by  displaying  such  notice on the Arcade Level of Energy Plaza since December 11, 2009; and by mailing such notice to each of the District’s Directors on that same date.


“A copy of the proposed agenda for this meeting has been maintained, on a current basis, and is readily available for public inspection in the office of the District’s Corporate Secretary.


“Additionally, a copy of the Open Meetings Law is available for inspection in the public meeting book located in this meeting room.”


It was moved and seconded that the Board reviewed the October 2009 Comprehensive Financial and Operating Report and that the minutes and the excused absence of Director Thompson for the last meeting be approved.  The vote was recorded as follows:  Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Abstain; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; and Ulrich - Yes.  The motion carried.


                        Thereafter, Board Chair Ulrich called upon President Gates to present a check, on behalf of the employees of Omaha Public Power District, to the Heartland Chapter of the American Red Cross to be used for the Energy Assistance Fund. President Gates commented the District has an active employee organization that collects funds in various ways throughout the year for the Energy Assistance Fund which is managed by the American Red Cross.  He said within the last few years, employees and their families raised over $200,000 for this fund through on-line auctions and other activities.  He invited Tina Labellarte-Price, CEO of the American Red Cross (Heartland Chapter), to accept the District’s employee donation check in the amount of $17,000.  Ms. Labellarte-Price expressed appreciation for OPPD’s partnership with the American Red Cross in providing a community energy assistance program for persons challenged with paying for their energy bills. She acknowledged the District’s employees and retirees, as well as OPPD’s customers who have donated to the program.


Thereafter, the Corporate Secretary read the following:


“Persons wishing to address the Board on a particular item are asked to approach the microphone as that agenda item is discussed.  Comments will be heard following Board discussion of the item and prior to a vote by the Board.”


                        The following resolutions were then read, and upon motion duly seconded, were placed on roll call.  The vote on each resolution is indicated following the description of that resolution.


                        RESOLUTION NO. 5805 recognizes the District’s employees involved with the November 16, 2009 storm restoration efforts within the District’s south subdivision. Board Chair Ulrich called upon President Gates to lead the discussion. Mr. Gates said on November 16, 2009, a significant storm caused a substantial amount of damage to the District’s electric system in the south subdivision.  He commented the snow storm knocked down approximately 230 power poles and damaged nearly 560 more.  More than 200 line fuses were replaced during the restoration effort.  There were approximately 2,200 customers without power.  All available crews were dispatched and they were assisted by crews from Lincoln Electric System, Nebraska Public Power District and L. E. Meyers Company.  Nearly 50 crews helped with the restoration effort with additional inside support personnel working on logistics, call center activities and materials management activities.  Mr. Gates added that extremely muddy road conditions hampered the repair and reconstruction work which was finally completed on November 20, 2009.  Mr. Gates recognized the following employees who were asked to attend the December 17, 2009 Board of Directors meeting to represent the many people who assisted with restoring the electric system: 


Blaine Dinwiddie (Storm Manager) –

                        Division Manager, Transmission and Distribution Operations

            Nitty Gambhir – Customer Care Specialist (Customer Information Systems)

            Greg Hunzeker – Electric Service Designer (Syracuse)

            Don Sands – Manager, Syracuse Center

            Jim Moore – Area Supervisor, Transmission and Distribution (Louisville)

            Brice Lefler – Working Line Crew Leader (Humboldt)

            Dave Brinkman – Line Technician (Papillion)

            Mike Kragskow – Stores Crew Leader (Syracuse)

            Ray Janiak – Supervisor, Facility Services and Space Planning

            Shane Stock – Field Supervisor, Transmission and Construction Equipment

            Jeff Hanson – Manager, Public Information

            Mike Jones – Senior Media Specialist


Thereafter, Board Chair Ulrich also commended the attendees for a job well done and invited them to gather outside the meeting room for a group photograph.  Following the discussion, the vote was recorded as follows:  Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; and Ulrich - Yes.  The motion carried.


                        RESOLUTION NO. 5806 approves the District’s 2010 Corporate Operating and Capital Expenditure Plan.  Director Dodge called upon both President Gates and Vice President Easterlin to present a PowerPoint overview of the plan prior to the vote by the Board.    Mr. Gates said the input received from customers fell into a couple major categories including (1) concern that Management should look further to cut additional expenditures from the budget and (2) concern about rate increases in spite of the fact that customers are responding to OPPD’s advice to conserve energy.  He emphasized that in order to fully understand the District’s budget strategy, it is important that customers understand OPPD’s business model which includes its primary obligation to serve retail customers.  This means OPPD must be prepared at all times to have sufficient generation, transmission and distribution available to accommodate the industrial load as well as the residential load.  He remarked that the electric utility industry is very capital-intensive with a high percentage of fixed costs included in its cost structure.  Mr. Gates explained OPPD borrows for capital infrastructure through tax-exempt financing and indicated the average borrowing rate for its most recent financing was 4.97 percent.  He also described the benefits of off-system sales (system optimization), which is the sale of excess generation to other utilities and application of any profits to offset system expenses and maintain lower rates.  He explained a graph illustrating the load duration curve for the current year which showed the maximum amount of megawatts required to maintain the electric load for OPPD customers.  Mr. Gates remarked that economic factors during 2009 have lowered the retail energy sales projections, including off-system revenues, that had been estimated in 2008.  He pointed out that 65 percent of energy sales come from industrial customers and the decline in the economy has created a significant revenue shortfall resulting in the need for a general rate increase.  Annual off-system revenue margins in recent years (2006, 2007 and 2008) were approximately $68-$82 million $36 million is projected in 2009.  Mr. Gates indicated the reduction in margins is due to increased operational costs and a market decline primarily due to competitive natural gas prices in the area.  He commented 2010 projections for off-system margins are expected to improve. 


Mr. Gates said challenges in the coming year include continued uncertain economic conditions and increased operations and maintenance expenditures including the following: 


(1)  full year of operations and maintenance expenses in 2010 for Nebraska City Station Unit 2, which became operational in May 2009;


(2)  regulatory requirements that did not exist in 2009 including cyber security requirements required by the North America Electric Reliability Corporation (NERC) amounting to about $2 million annually; and the “Fatigue Rule” required by the Nuclear Regulatory Commission which has increased the budget by $2.5 million at the Fort Calhoun Station; and


(3) continued increases in health care costs. 


President Gates emphasized the budget cuts included in the budget will not compromise OPPD’s strategic vision for customers-owners.  He said OPPD’s focus is to become the “ideal utility” with a focus on continued reliable electricity, continued excellent customer service through the maintenance of an engaged work force, and a continued focus on affordable electricity.   


Opportunities in the coming year include the continued sale of off-system generation and implementation of additional process changes within the organization to maximize existing resources by increasing efficiencies to reduce operational costs.   In the area of energy conservation, Mr. Gates explained continued conservation is absolutely necessary to help keep the peak load down which will ultimately delay the need to build new power plants. He said energy conservation efforts will continue to be emphasized to customer-owners. 


Thereafter, Mr. Gates called upon Vice President Easterlin to present the details of the 2010 Corporate Operating and Capital Expenditure Plan followed by the proposed rate adjustments for 2010.  Mr. Easterlin reviewed the major assumptions made in developing these plans which influence projections of retail revenues, off-system sales revenues, and non-operating revenues, as well as financing and expenditures, and certain planned outages.  He said retail revenues include energy sales that are projected based on normal weather conditions.  Also included in the 2010 revenue projection are the proposed general rate adjustment and the fuel and purchased power adjustment effective January 1, 2010.  Off-system sales margins, projected at $51 million in 2010, are included as a source of revenue used to offset expenses.  Operating and non-operating income is incorporated, including interest income which has been declining recently due to reduced funds on hand and lower interest rates.  Also factored in are increased transmission wheeling revenues realized through other utilities using OPPD’s transmission system.  Mr. Easterlin stated $26 million has been factored in from the Debt Retirement Account to help offset the proposed rate adjustment and maintain our financial position.  On the expenditure side, fuel and coal transportation expense costs have been included based on contract amounts.  He commented any costs associated with carbon remediation have not been factored into the budget since it is a complex issue and uncertain at this point.    In addition, any future costs connected with this issue would be an additional cost to this budget.  Capital expenditures including expenses necessary to maintain system reliability and service the existing electric load are included.  The budget includes three significant plant outages scheduled in 2010: 

(1) Nebraska City Station Unit 1 (44 days), (2) Nebraska City Station Unit 2 (16 days for warranty inspection activities) and North Omaha Station Unit 3 (44 days), all of which are normal, scheduled outages.   


Mr. Easterlin added that retail revenues in 2010 are projected at $763 million compared with $702 million projected in 2009.  This $61 million differential is driven by two major components: (1) increased sales growth in the industrial sector due to a deferred industrial load that is expected to come on-line in 2010 and (2) a projection of normal weather patterns which should result in additional energy sales revenue.  Also factored in is the $35.2 million rate adjustment.  Mr. Easterlin reviewed the various proposed adjustments for each rate class.  This information is provided in the PowerPoint slide presentation appended to these proceedings.  The largest differential with regard to sales revenue is due to a revenue shortfall in the industrial sector.  He discussed off-system sales revenue and showed the total revenue realized from those sales.  In 2009, $159 million is being projected which includes the following: $99 million in traditional off-system sales, $17 million in precommercial operational revenue realized at Nebraska City Station Unit 2, and $43 million for reimbursement from the Nebraska City Station Unit 2 Participants (NC2 Participants) that purchase output from that facility.  Projected 2010 off-system revenues are $194 million including both traditional off-system sales and NC2 Participant revenue.  


Mr. Easterlin discussed other operating revenue and non-operating income (excluding transfers from the Debt Retirement Fund).  Trends include (1) an increase in transmission wheeling revenues, (2) a significant decline in investment income over time, which is important because interest income is reinvested to help reduce rates and pay other expenses, something which OPPD continually tries to optimize,  (3) products and services purchased by customers on a voluntary basis the proceeds of which are used to offset expenses and (4) other electric revenues including pole attachment fees and electrical equipment rental revenue.  In 2010, this revenue category is projected at $28 million or slightly above what was projected in 2009 but below what has been realized in prior periods. 


Total operations and maintenance expense is projected at $732 million in 2010 which compares to $659 million in 2009.  Mr. Easterlin reviewed various cost categories concerning fuel, production (cost of operating facilities), administrative and general, transmission and distribution, purchased power and customer accounts.  A total of $23 million was removed from the 2010 Corporate Operating Plan including staffing reductions, restricted hiring, customer service office closings, and other reductions including deferring exempt pay increases and reduced costs of overtime, travel, training, professional and outside services, tree trimming and coal car and train track maintenance.  He said although these budget reductions may not be sustainable, they will help to mitigate the current economic conditions.


Mr. Easterlin reported the total 2010 Capital Expenditure Plan totals $252.5 million.  Approximately 56 percent of these expenses pertain to production expense including the Fort Calhoun Station Extended Power Uprate Project.  Other capital expenditures include transmission and distribution, general plant and construction overhead expenses.  The Capital Expenditure Plan is funded by a combination of long-term debt issues and internally generated funds.  Mr. Easterlin explained that $100 million will be funded in 2010 through the issuance of bonds. 


Thereafter, Mr. Easterlin explained the various Debt Retirement Account withdrawals.  A $27 million transfer is projected in 2009 to help offset the revenue shortfall and maintain the District’s financial position.  In 2010 a total of $26 million is budgeted to be withdrawn to further assist with the projected revenue shortfall which leaves a cushion of $5 million in the Debt Retirement Account.


Mr. Easterlin stated net income in 2010 is currently projected at $44 million and is broken down into two pieces including the $26 million transfer from the Debt Retirement Account and $18 million from the actual revenue and expenses of the organization. 


Key financial measures used as planning tools to maintain the District’s long-term financial position include:


(1)        Debt to Equity Ratio – The target is less than 50% debt.  Mr. Easterlin noted OPPD is slightly over this ratio due primarily to a combination of significant capital investments with certain system needs and revenue shortfalls which have created a need to borrow more than planned.

(2)        Coverage Ratios (Debt Service Ratio and Fixed Charge Ratio) – These measures indicate the number of times an entity is able to pay its annual debt obligations including senior debt obligations.  These figures are very important for the District’s bond holders because they look at this information as industry standard when they assess our financial position.

(3)        Days Cash On Hand – This is a liquidity measure that indicates how many days the electric system may be operated and pay operations and maintenance expenses if revenues are not received.    


It was noted that maintaining these financial measures in a stable manner helps ensure stable financial conditions when unexpected difficult economic situations are encountered. 


Mr. Easterlin stated that R. W. Beck has been retained by the Board of Directors to review the forecasts and budgets prepared by the District to make a determination as to whether the budget is appropriate for the continued operations of OPPD.  Based on their review, they recommend approval of the 2010 Corporate Operating Plan.


Thereafter, Mr. Easterlin presented an overview of the proposed 2010 Electric Rate Action.  The major assumption of the proposed rate adjustment is the inclusion of the Corporate Operating Plan in the Cost of Service rate analysis.  He said the analysis is a very complex assessment that determines the company’s revenue requirements. Based on the District’s Corporate Operating Plan, the gross revenue requirement is $941.7 million for 2010.   This amount includes:  total operating and maintenance, debt service, payment-in-lieu-of-taxes (PILOT) and the Capital Improvement Fund which provides funds for working capital and capital expenditures.  The amount included in the budget achieves the debt service coverage target.



Subtracted from the gross revenue requirement is $182 million which is composed of non-rate revenue, a debt retirement account transfer, and Offutt Air Force Base costs and revenues.  See appended slide presentation for specific amounts.    The resulting net revenue required from the District’s rates and charges to pay all expenses is $759.7 million.  This amounts to a revenue deficiency of $35.2 million which equates to a proposed rate adjustment of 4.9 percent.  He restated the primary drivers for this adjustment include reduced sales and revenues due to current economic conditions, increased expenditures due to the addition of Nebraska City Station Unit 2 and newly imposed regulatory requirements, all of which were partially offset by lower fuel costs and debt service costs.  A total of $99.5 million in reductions has been incorporated into the analysis to reduce the proposed adjustments.  Mr. Easterlin reviewed the estimated monthly customer impact by customer class.  He emphasized that each customer’s bill will vary depending on the individual customer’s usage and the customer’s particular rate schedule.  Also the percentage increase for each customer class also varies due the particular costs of serving each customer class.


Mr. Easterlin reviewed a comparison of OPPD’s rates (including the proposed 4.9% net rate adjustment) with the regional average and the national average for the years 2004 through 2008.  He commented it is too early to calculate the 2009-2010 comparisons.  Additionally, he commented about various other regional rate actions by other local utilities that have taken place which will become effective in the first quarter of 2010.  He remarked there is every indication that utilities nationwide are being confronted with similar rate increase issues.


Thereafter, Mr. Easterlin discussed several miscellaneous service charge adjustments included in the proposed resolution.  These adjustments include two new street lighting options, an update to the existing Consumer Service Charges to reflect the current cost of providing the services, modification of Level Payment Plans to assess late payment fees and discontinue paying interest on these accounts,  modification of late payment fees to include sales tax, and the discontinuation of the Uninterruptible Power Supply rate.


Mr. Easterlin summarized the 2010 rate proposal as follows:


(1)        Increase base rates by an average of 4.9% or $35.2 million or $4.05/month for residential   customers, with increases in other customer classes based on usage and applicable rate         schedules

(2)        Reset the Fuel and Purchased Power Adjustment (FPPA)

(3)        Miscellaneous service charge adjustments


He also summarized the public notice and comment process which included a presentation made by the Public Information Committee on November 10, 2009;  rate proposal information placed on OPPD’s corporate website; and notification to the local media.  He noted that over 60 customer responses were received and answered.  Copies of all comments and responses were provided to the Board for review and consideration.  He commented on four common concerns that were identified by customers including cost control, current economic conditions, weather, and energy conservation. 

It was noted that CH2M HILL has been retained by the Board of Directors to review and comment on the District’s cost of service study and rates analyses and to advise the District on industry-accepted methods for allocating costs to rate classes.  Based on their review, CH2M HILL has determined the proposed rate changes to be fair, reasonable and nondiscriminatory and recommends Board adoption of the District’s proposed rate revisions.  Mr. Easterlin then requested President Gates to provide concluding remarks.


Mr. Gates briefly reviewed highlights of the proposed Corporate Operating and Capital Expenditure Plan and electric service rate adjustment proposal.  He said the Plan maintains safe and reliable services and provides risk-based cost reductions and deferrals considering a less robust economy.  He especially noted that OPPD maintains a bond rating of AA+ and the effect of losing the rating will result in higher interest rates and finance charges. The proposed plan will maintain the financial stability of the District.  Thereafter, he summarized the revenue requirements which include increased operations and maintenance expenditures, decreased fuel and purchased power expenditures and reduced off-system revenue margins and restated the need for a rate adjustment to accommodate the $35 million revenue deficiency.


The 2009 highlights were summarized which included the successful completion of Nebraska City Station Unit 2 on time and under budget, a successful safety accomplishment by completing one full year without a “day away” injury, receipt of the ninth consecutive J.D. Power and Associates award, the projection of $10 million in O&M reductions and over $20 million in capital deferments and reductions, and a bond rating among the highest within the electric utility industry.  He concluded by saying the reason why OPPD’s annual average retail rates have remained among the lowest in the nation is due to the employees’ expertise and commitment to excellence.  He commented on a graph which illustrated that the real cost of electricity, discounted by annual inflation, has actually decreased over time.  Mr. Gates also commented on the high level of volunteerism at OPPD and stated over 23,000 hours were contributed in the past year to the community.  OPPD also has a high level of employee engagement as measured quantitatively by a Gallup University survey.  He said OPPD employees have supported the community in many ways such as contributing $405,000 to the United Way of the Midlands and raising $17,000 for the Energy Assistance Fund.  More recently, OPPD’s Young Professionals will receive an award for attracting, developing and retaining young professionals.  All of these accomplishments have tangible results as demonstrated by consistent, reliable service to OPPD’s customers.  


Director Weber commented he is impressed with the staff’s work with respect to budget reductions and particularly their consideration of safety and reliability issues in their decision making.  Director Cavanaugh remarked on the professionalism of the employees in making very difficult decisions and also mentioned the shortfall in revenue is almost the same as the shortfall in the off-system sales revenue margin created by the economy.  He assured those in attendance that this rate adjustment decision is not being taken for granted.  Director Hall agreed with all the comments and indicated Management has kept the Board fully informed and engaged in the budget process for many months.  He commented it is not an easy decision but it is the correct decision.  Director Green reiterated the decision to increase rates is not based on inclement weather or conservation needs,  but  is  based  on  the  economy.  He said rates have been held down for the past decade due largely to the successful wholesale revenue program currently in place in the Energy Marketing and Trading division at OPPD.  He encouraged customers to continue to conserve because it will delay the need to build new base load units.  Director Thompson applauded the employees whose efforts have contributed to receiving of the J. D. Power and Associates award for so many consecutive years.  Director McGuire reminded the public that the Energy Assistance Fund is available to customers having difficulty paying their bills.


At this time, Board Chair Ulrich invited the public to comment on the issue.  Director Hall suggested to the Chair that persons may speak on either the Corporate Operating Plan or the Rate Adjustment proposal at this time even though they are separate voting items.  Chairman Ulrich concurred.  Thereafter, Chairman Ulrich recognized Mr. Doug Kagan (12320 William Street, Omaha NE  68144).  Mr. Kagan said he represents Nebraska Taxpayers for Freedom.  As a taxpayer group, he said they encourage the boards of directors to continually find new ways to cut costs, improve efficiency and find means to improve service reliability to maintain customer satisfaction.  He commented although his organization is not totally familiar with the OPPD administrative system, they would like to offer several suggestions to the Board for purposes of budget cutting in an effort to lower the 2010 proposed rate increase.  On behalf of Nebraska Taxpayers for Freedom, he provided the following list of suggestions for the Board and Management to consider:   accelerated use of mobile data voice networks to improve productivity; monitor instrumentation and control equipment with intelligent remote terminal units and remotely monitor OPPD’s plant perimeters; fully implement remote meter reading to save labor costs; terminate the wind energy projects because this form of energy requires subsidization and pursue nuclear plant partnerships instead; discontinue the compact fluorescent bulb give-away program, subsidized weatherization and installation of heating and cooling equipment, energy assistance programs, and bilingual services during this recession; tighten rules for service cutoffs and demand larger deposits for restoring service; continue to pursue legislative permission to mail out service cutoff notices via regular mail rather than certified mail; lobby the Legislature to remove the sales tax from the items on customer bills (as MUD is doing) to alleviate the continuing upward pressure on ratepayer bills; further curtail funding for advertising and cooperate in placing ads with MUD; further reduce travel and organizational memberships; investigate implementing interlocal agreements with other utilities or government subdivisions (i.e., street work); Board members should give up health insurance benefits since their duties are not full time; and suspend employee performance and other bonuses from the lowest employee to the highest paid executives.  He concluded by commending the OPPD Board and Management for their present efforts to cut costs, a list of which he found on the corporate website and reported during the presentation today, as well as the cooperative efforts demonstrated with their taxpayer group.


Board Chair Ulrich acknowledged his empathy with Mr. Kagan’s concerns and asked President Gates if he had additional comments to make.  Mr. Gates stated his management team will continue to discuss his concerns and will assist in setting up requested tours of OPPD operations facilities.


Thereafter, Chairman Ulrich recognized Mr. Paul Meyer (14823 Drexel Street, Omaha NE 68137).  Mr. Meyer said he represents his wife, his family and a number of retired people in his neighborhood. He commented there are a number of retired OPPD customers who will be receiving no increase in social security benefits; however, their Medicare Part D insurance premiums have increased.  Mr. Meyer remarked that a $4 monthly increase will make life difficult for certain people on fixed incomes and for many people who have lost their jobs.  He inquired about OPPD salary increases and employee benefits.   He commented the tax on the Fuel and Transportation Cost Adjustment should be separated and he does not believe tax should be charged to consumers for the transportation cost.  In reviewing several previous electric statements, Mr. Meyer said he has discovered discrepancies in the Fuel and Transportation Cost Adjustment percentage charges.  He continued saying at his former business all employees were forced to cut back in all areas including salaries and this he thinks should be considered by OPPD.  He also commented on a faulty heat pump that he installed in 1995 which required a lot of maintenance and repair work and said he is not in favor of heat pumps at this time.  Mr. Gates affirmed a management decision made previously to defer salary increases for all exempt personnel at OPPD until at least October of 2010.  He also said his billing discrepancy will be investigated.


Thereafter, Chairman Ulrich recognized Mark Welsch (5611 Howard Street, Omaha NE 68106).  Mr. Welsch requested the District consider looking at its long-term goals and try to get out of debt.  He commented if OPPD had attempted to get out of debt 20-30 years ago with a “pay as you go” approach, the customers would be paying lower utility bills today by avoiding debt service costs.  In response, Chairman Ulrich remarked the theory is that by borrowing the money using low interest, tax-exempt bond financing, the people who use the facilities are the ones who actually pay for them.  He added this same theory supports stretching the financing over the life of the investment and those people who actually benefit from the investment are contributing to pay for it at a relatively low interest rate because they are tax-exempt bonds with excellent ratings.  Director Green then stated that ever since the District purchased the Nebraska Power Company 63 years ago with 100 percent debt, it has continually upgraded the electric system with base load units and equipment in response to a growing service territory and customer requirements. He commented overall labor costs are approximately 20 percent with the remaining costs (many of which are fixed costs) attributed to expanding and maintaining the entire system. Chairman Ulrich noted the infrastructure requires maintenance all the time.  He affirmed that reliability, capacity and operational safety are essential and cannot be compromised.  Chairman Ulrich closed by congratulating the entire Board on working together through this issue during the past year and in reaching a good conclusion.  He commended them for remaining involved and informed, in the way that public boards should function, during the difficult decision-making process.  Director Thompson made a closing comment suggesting that everyone pay close attention to current legislation affecting the cost of electricity which could significantly impact the electric industry as a whole. 


Following the discussion, the vote was recorded as follows:  Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; and Ulrich - Yes.  The motion carried.


                        RESOLUTION NO. 5807 approves a declaration of the District’s intent to issue tax-exempt debt obligations to reimburse 2010 Corporate Operating Plan capital expenditures.    Director Dodge stated this resolution is required by federal tax regulations and it preserves the right for the District to issue tax-exempt debt for the purpose of reimbursement to the District for a portion of capital improvement expenditures determined to be financially feasible and prudent. 



Following the discussion, the vote was recorded as follows:  Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; and Ulrich - Yes.  The motion carried.


                        RESOLUTION NO. 5808 approves revisions to the District’s Electric Rate Schedules and Service Regulations to implement a general rate increase of 4.9 percent, implement adjustments for certain rate schedules, reset the FPPA base to match the 2010 fuel and purchased power budget,  update  miscellaneous consumer service charges, and make revisions to various rate

Schedules and Service Regulations, effective January 1, 2010.  Director Thompson led the discus-sion stating the details of this resolution were thoroughly addressed as part of Resolution No. 5806, presented and discussed previously, which approved the District’s 2010 Corporate Operating and Capital Expenditure Plan.  Director Weber directed a question to Vice President Easterlin inquiring what the average debt equity ratio is for facilities around the United States.  Mr. Easterlin responded it depends on the type of utility.  He said the debt equity ratio for an investor-owned utility will generally be in the 40-60 percent range.  For public power companies, a debt equity ratio of between 50 percent and 80 percent is common.  He further explained that in order to support the electric service needs of new industrial customers, which is the District’s obligation, the service infrastructure must be in place in advance including all the necessary equipment to serve them.  If the only means of financing these capital expenditures is through cash, then rates will likely increase in order to have money available when capital expenditures become necessary.  Following the discussion, the vote was recorded as follows: Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; and Ulrich - Yes.  The motion carried.


                        Copies of the foregoing resolutions are filed in the District’s Corporate Records file.


There being no further business, the meeting adjourned at 11:35 a.m.







A. J. Minks                                                                  M. C. Bodammer

Assistant Secretary                                                     Corporate Secretary



Board of Directors

bullet Board Mtg Schedule
bullet Board Mtg Minutes
bullet Committee Mtg Material
bullet Rules for Public Participation
bullet Approved Board of Directors Redistricting
bullet Preliminary 2014 Corporate Operating Plan
bullet Sustainablity Update March 20 2014
bullet Energy Assistance Program (EAP)/Common Fund

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