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 November 15, 2012, at 10:00 a.m.
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 the same in the Omaha World-Herald and Outlets; by displaying such notice on the Arcade Level of Energy Plaza since November 9, 2012; 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 September 2012 Comprehensive Financial and Operating Report and approval of the minutes for the last meeting be approved. The vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
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. Persons wishing to address the Board on all other matters will have an opportunity before the close of the meeting."
The following resolutions were then read, and upon motion duly seconded, were then placed on roll call. The vote on each resolution is indicated following the description of that resolution.
RESOLUTION NO. 5928 authorization to rescind Resolution No. 4814 (October 15, 1998) approving the Energy Production and Marketing Risk Management Policy. Committee Chair Cavanaugh reported that this item is to rescind Resolution No. 4814, adopted in 1998 to address risk management related to energy trading and fuels, because risk management of those functions has been integrated into the District's overall Enterprise Risk Management (ERM) program. The District’s Energy Production & Marketing Risk Management Policy, adopted by the Board of Directors in 1999, provides energy trading and fuels oversight. The District’s overall Enterprise Risk Management (ERM) program assists the organization in identifying, assessing, managing and mitigating District risk exposures, including risks related to energy trading and fuels. The ERM program specifies that risk related policies are to be approved by the District’s Executive Enterprise Risk Management Committee. Because the Energy Production & Marketing Risk Management Policy has been integrated into the District’s ERM program, it is necessary for the Board to rescind Resolution No. 4814. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5929 authorization to award a contract for catalyst replacement installation and labor on Unit No. 2 at the Nebraska City Station. Committee Chair McGuire reported this contract is to remove spent first & second layer SCR Catalyst Modules and Seals for the Nebraska City Station Unit 2 SCR System. Two layers of catalyst were installed during the original construction with a third layer installed two years later. Performance indicators have determined the need to replace the original two layers. This replacement will ensure continued compliance with nitrous oxide (“NOx”) levels in the NC2 air permit. Three bids were received. The three bids are legally and technically responsive. The Engineer’s Estimate at the time of bid opening was $1,050,000. Ms. McGuire asked the Board to authorize the award of a contract to PIC Group, Inc. in the amount of $969,159 for the Nebraska City Station Unit 2 Catalyst Layers 1 & 2 removal/installation of new modules and seals. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5930 authorization for management to negotiate and enter into a contract for repair of the engine and power turbine for Unit No. 5B at Sarpy County. Committee Chair McGuire stated that the engine for Sarpy County Station Unit 5B was forced out of service on July 15, 2012 due to high vibration. The 5B engine and power turbine were found to be damaged. The repair work involved is proprietary and only the original equipment manufacturer, Pratt & Whitney, is known to have the tooling, parts, and expertise to perform the necessary repairs. Compliance with sealed bidding provisions of the Nebraska Revised Statutes Sections 70-637 through 70-639, as amended, would be impractical and not in the public interest. Total repair costs are estimated at $1,520,000. Ms. McGuire asked the Board to approve the Engineer’s Certification and authorization for management to issue a contract to Pratt & Whitney for the repair of Sarpy County Station Unit 5B engine and power turbine. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5931 authorization for management to negotiate and enter into a contract for air preheater cleaning at the North Omaha and Nebraska City Stations. Committee Chair McGuire stated that this contract is for air preheater cleaning services at the North Omaha and Nebraska City Stations. Three bids were received. This contract covers the calendar years of 2013, 2014, and 2015, with the option to extend for years 2016 and 2017. The evaluated low cost of the contract for the three year base period is $1,115,655 submitted by Meylan Enterprises, Inc. The Engineer’s Estimate for the three year contract is $1,147,033. Expenditures for 2013 are estimated to be $284,291. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5932 authorization for management to negotiate and enter into a contract for repair of the failed coil(s) on Unit No. 5 at the North Omaha Station. Committee Chair McGuire stated that this item is for authorization for management to negotiate and enter into a contract for the repair of the failed coil(s) of the Unit 5 generator at the North Omaha Station. A generator winding to stator fault was discovered on November 3rd in the North Omaha Unit 5 main generator while conducting generator insulation testing during a planned maintenance outage. General Electric was contracted to determine the location of the electrical fault and to determine the number of coils which must be repaired and removed. Management has secured an Engineer’s Certification stating that compliance with the sealed bidding provisions of the Nebraska State Revised Statutes 70-367 would not be in the public’s interest due to the outage extension that would result. The total value of the repair contract is estimated to be in the range of $500,000 to $6,100,000. The exact amount will be determined by a non-sealed bid process that will include vendors other than the original equipment manufacturer. Chairman Dodge inquired if the District has any recourse for insurance reimbursement, and Vice President Hansen indicated his team is working with the District’s insurer, FM Global. Mr. John Atkieson, with the Nebraska Wildlife Federation, asked the Board to consider this as an opportunity to replace the unit with a cleaner sustainable resource. Director McGuire commented that converting the unit to gas is being considered by the District. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5933 authorization for management to negotiate and enter into a contract for the rewind and repair of a 161-13.8kV 32 MVA mobile substation transformer. Committee Chair McGuire stated that this item is to approve the Engineer’s Certification and authorize management to negotiate and enter into a contract for the rewind and repair of a 161kV mobile substation transformer. On September 10, 2012, the District’s critical 161-13.8kV, 32 MVA mobile substation transformer failed. The District has no other mobile substation transformer to provide backup service for the (80) 161-13.8kV transformers in service. It is very critical that the District have the availability of its 161-13.8kV mobile substation transformer restored as soon as possible. Recent failures of two other 161-13.8kV transformers have left the District without spare transformers of that voltage rating. The procurement of replacement spare transformers is in progress. However, in the event of a transformer failure, the mobile substation transformer provides the ability to restore lost capacity within days, as opposed to a timeframe of weeks to replace a failed transformer with a spare one. Jordan Transformer indicated that they could have the unit rewound by May 2013, which would allow it to be returned to the District before the anticipated summer peak load. Compliance with sealed bidding provisions of the Nebraska Revised Statutes Sections 70-637 through 70-639, as amended, would be impractical and not in the public interest. Ms. McGuire asked that the Board approve the Engineer’s Certification and authorization for management to negotiate and enter into a contract with Jordan Transformer for the rewind and repair of the failed mobile substation transformer. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
RESOLUTION NO. 5934 approval of the 2013 Board of Directors meeting schedule. Committee Chair Green reported this item is to approve schedule for Board of Directors’ 2013 meetings. The 2013 meeting schedule is outlined in Exhibit A. One evening Board meeting is scheduled in August to afford OPPD’s customers an opportunity to attend a meeting outside of normal work hours. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Yes; McGuire – Yes; Scheve – Yes; Thompson – Absent; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.
Copies of the foregoing resolution are filed in the District’s Corporate Records file.
The next item of business was the President’s Report. President Gates gave the following report:
-We have reached agreement on amending the two Cameco UF6 supply contracts to defer 2013 deliveries into the years 2014 – 2016.
These deferrals were anticipated and reflected in the 2013 Nuclear Fuel Budget.
-We currently have 10 trains parked on the Arbor Line; year-to-date revenue from parked trains is $658,300.
-Renewable energy has contributed 5.1% of OPPD’s retail energy sales YTD (thru October).
-Working on final report for the dry sorbent testing on Nebraska City Unit 1 that was completed during a 20 day test during September.
This testing will provide information to help us to make a more informed decision on MATS (Mercury Air Toxics Standard) compliance. The final report will be completed early in December.
-The Nebraska City natural gas pipeline ran into weather and construction issues that delayed completion during October.
Those have been overcome and it will be complete by the end of the month, well ahead of the contract requirement of February 2013.
This is only the piping outside of the plant.
The remaining work inside the plant is underway and will be complete on NC2 in the spring of 2013 and for NC1 in the spring 2014.
-Special recognition to Central Maintenance for achieving one year without a DART injury. (DART means days away cases + restricted cases + transfer cases)
Fort Calhoun Station
FCS Priorities – Safety, Human Performance, Fix the Plant and use Corrective Action Program
Plant remains in cold shutdown with the core off-load to the spent fuel pool with the reactor vessel head installed
Status of On-going Work
-Emergency Diesel Generator No. 1 (DG-1) maintenance was completed concluding with a test run.
-The 480VAC Bus 1B3A and Island Bus 1B3A-4A maintenance window was completed.
-Manhole 31 – “A” train work continues. Majority of the cable modifications and manhole structural work are completed. Remaining work is associated with returning “A” and “C” raw water pumps to service.
-Qualification testing of the ten removed containment electrical penetration feed-through continues. The results of the testing will determine the method that will be used to change the configuration of the containment penetration seals.
-Containment structural beam modeling continues. The results of the modeling will determine the scope and the design change needed.
-The drop-in meeting with NRC commissioners had to be canceled due to Hurricane Sandy. The
meeting is being rescheduled for early 2013.
-Received the detailed MC-0350 checklist from the NRC.
Many of the items listed are already closed
-The NRC public meeting is scheduled for tonight at Dana College in Blair
TRANSMISSION & DISTRIBUTION (T&D)
-OPPD, in partnership with Metropolitan Community College and the Omaha Public Schools, recently initiated a new program.
The program objective is to increase student awareness of the line technician profession, especially among females and minorities.
OPPD Line Technicians, Street Light personnel, and a Utility Line Instructor from Metro are visiting OPS high schools to present a one hour overview that details the work and education needed to become a line technician. Thus far, over 400 students at 5 OPS high schools have heard this message.
-The Energy Delivery Business Unit is taking action to reduce cost of materials used in certain distribution circuit installations by using alternative materials.
The distribution engineering group observed copper cable prices are more expensive than aluminum cable.
An analysis was performed comparing life cycle costs to determine if aluminum cable would be an effective alternative.
-Three new substations will be added to the OPPD system to help keep pace with growth across the metro area.
The new substations are being built in Bellevue, west Douglas County and southeast Sarpy County.
The new Bellevue substation will be built on Offutt Air Force Base and completed by late 2014.
It is part of OPPD’s long-term plan for Offutt and the surrounding area. The new STRATCOM Headquarters Building is part of the increasing mission of the base and will be served by the new substation.
As with the other projects, these substations will ensure that OPPD can continue to provide safe, reliable, low-cost electricity.
-OPPD sent six cable splicers and one supervisor to New York to assist Con Edison in restoring their downtown electrical network system.
OPPD crews left November 1 and arrived in New York that afternoon and began work on Friday, November 2.
Their assignment is to do replacement and repairs to the network protector equipment in the Times Square area.
The employees returned home last night.
The District exercised its right to call the remaining portion of the 2002 Series B Electric System Revenue Bonds in the amount of $13,990,000 on November 1, 2012 using available funds. These bonds would have otherwise matured on February 1, 2013. The District saved approximately $175,000 by calling the bonds early.
-The Omaha Chamber of Commerce announced the Fidelity Investment project that will be located in Sarpy County.
This is a $200 million project that is anticipated to add 10MW to OPPD’s load within ten years. Over 50 people from OPPD have been involved in some phase or element of this project over the last two years. Initially, Fidelity Investment will employ 30 people.
-We currently have over 12,264 sign-ups for the OPPD Air Conditioning Management Program which will be a great start for 2013.
-OPPD and its customers raised over $206,265 to date for the ARC Energy Assistance Program to assist customers with their electric bills and financial situation.
-OPPD and its product partner will complete 13 ECO 24/7 projects in 2012 totaling over $4 million in project revenue and seeing savings of approximately 10 million kWhs and 1,000kW.
-Career Connections, OPPD’s mentoring program, involves 79 employees this year and the program engages the employees in a year-long development process
-OPPD-based or community-based projects are an integral part of their development. This program gives the mentor and protégé the opportunity to work together on a project that provides value to OPPD or the communities we serve.
-Projects that will enhance the communities we serve include:
-Coordinate the OPPD food drive for the Food Bank for the Heartland- Strike Out Hunger 2012
-Delivered 16 box loads of much-needed supplies to the Veteran’s Hospital
The next item of business was the presentation of the Preliminary 2013 Corporate Operating Plan and Electric Service Rate.
Committee Chair Weber explained the process by stating that the Senior Management team has put together a very thorough Corporate Operating Plan presentation. The Board will receive input this morning from the public. SAIC (formerly R. W. Beck) will provide a very comprehensive evaluation of the budget and provide an independent review. The District’s rate consultant, CH2M HILL, will review the Plan and provide an opinion to the Board. The Board members will review the proposals and follow the criteria to ensure we have listened to your input, while maintaining rates that are competitive, maintaining system and financial stability, and continuing to expand our renewable resources. A decision will then be made in December. At this time, Mr. Weber turned the presentation over to President Gates.
Mr. Gates began by talking about the 2012 accomplishments and future challenges we face in 2013. He stated that we maintained system reliability during extreme summer heat, which stressed staff and infrastructure led to a record use of electricity in July. Indicative of the bounce-back nature of the year, however, OPPD maintained a reliable, steady flow of power, dodging brownouts and blackouts without a single peak demand day.
Mr. Gates continued that focus on reliability has always been a hallmark of our utility and was accomplished without the output of our nuclear power plant. The plant remained off line this past year after the flood and increased oversight by the Nuclear Regulatory Commission.
Mr. Gates also said that OPPD is making steady progress in returning the unit to service, and are working through the 0350 detailed checklist that was recently received from the NRC. He also noted that we are confident that our new Operating Services Agreement with Exelon Generation will result in a more efficient Fort Calhoun Station.
In addition, we also received affirmation for the hard work and effort by the OPPD team. For the 12th consecutive year, we received the J.D. Power & Associates award for our excellent residential customer service.
He commented that OPPD is finalizing the new 10-year strategic plan, which will detail how we need to evolve as an organization to continue to meet the needs of our customers. Our new mission statement associated with the plan is to “Provide affordable, reliable and environmentally sensitive energy services to our customers.” This was a guiding principle in developing the 2013 Corporate Operating Plan we are presenting today.
Mr. Gates continued by saying that looking ahead to next year, our first priority is to safely return Fort Calhoun Station to service. Our Corporate Operating Plan is based on this occurring in February. We have been working and refining the schedule for several months and believe this date is feasible. There are obviously a number of external factors, namely the final NRC inspection and sign-off that limit our control over the timing of this event.
Another significant area of focus for 2013 will be to continue to prepare for our participation in the Southwest Power Pool Day 2 Market, which is scheduled to be implemented in the first half of 2014. Some key activities that will take place next year to prepare for this transition include reorganizing the power marketing area to provide analytical oversight capabilities, developing software system interfaces with SPP, and developing strategy and risk parameters.
OPPD will also continue to provide safe and reliable service. We have over 350,000 customers who rely on the District and we will continue to do everything under our control to meet their expectations.
He continued by stating during 2013 we will be negotiating three important fuel related contracts; a routine contract for coal supply beyond 2013, a rail track maintenance contract, and a new coal transportation contract to replace our expiring agreement with Union Pacific.
Union contract negotiations with the three bargaining units representing OPPD employees are ongoing. The possibility exists that negotiations could continue into 2013. For the purposes of the operating plan we are presenting today is based on assumptions in the current contract which expired this summer.
The final three items are related and represent a challenging balance act as we move forward. We have to continue to react to a number of regulations that impact nearly all areas of our company. Managing these regulations is taking place in an environment where external stakeholders have a much greater presence compared to prior years and often have conflicting agendas. And we have to do all this while becoming a more efficient provider of electric service to our customers.
Mr. Gates concluded that while we have a lot of hard work ahead of us, he is confident that we have the people and resources to take on these challenges and at this time. At this time, he turned the presentation over to the Chief Financial Officer, Edward Easterlin, who reviewed the details of the 2013 Corporate Operating Plan and the 2013 Service Rate Adjustments.
Vice President Easterlin began by reviewing the Assumptions for the Plan:
Retail Energy Sales
1.8% increase over the 2012 budget.
He added that our budgets are based on normal weather conditions and we are continuing to see growth into 2013
4.1% increase over the 2012 projected
Mr. Easterlin said that our sales are below forecast, despite the warm summer. One reason for this is, as new larger customers have joined our system, they have not increased their electrical usage as we forecasted. These customers should be back on tract in 2013.
6.9% Retail Rate Increase
7.3% general rate adjustment ($64 million)
(0.4%) Fuel and Purchased Power Adjustment (-$4 million)
Other Operating and Non-Operating Income
This includes reduced flood recovery reimbursements
Reduced sales price expectations due to external market factors and is an adder into the rate increase
Debt Retirement Reserve
$29 million will be transferred and utilized in 2013 as a revenue source to help reduce rates
Rate Stabilization Reserve
Maintain $32 million balance throughout 2013
$32 million funded in 2012 using insurance proceeds and FPPA collection
This fund was expected to be built back over three years. We are now expecting to receive additional insurance reimbursements for an outage at FCS and will use this money to replenish this fund and credit the customers.
Capital and operating and maintenance expenditures are planned to maintain system reliability and serve future load growth
Union negotiations are in progress
Projected costs based on current union contracts
Cost reductions associated with final contracts will be used to partially offset future rate increases
Fort Calhoun Station – return to service Feb 1, 2013
Nebraska City Station Unit No .1 – none
Nebraska City Station Unit No. 2 – 23 day outage
North Omaha Unit No. 1, 3, and 5 – none
North Omaha Unit No. 2 – 16 day outage
North Omaha Unit No. 4 – 23 day outage
Sarpy County – 5 days per unit
Cass County Unit No. 1 – 46 days
Cass County Unit No. 2 – 25 days
Mr. Easterlin reviewed the following additional information:
2013 retail revenue by class ($ millions)
Gov’t & Muni $ 19
2013 Budget $915
A comparison of Wholesale Revenue for 2009 through 2013 was reviewed. The graph shows the revenue we receive from our NC2 participants and revenue we receive from off-system sales
A comparison of Other Operating Revenue & Non-Operating Income for the same time period was also reviewed. Four categories make up this portion of the budget and include: Transmission Wheeling Revenue (revenue from utilities who move power through our system from one destination to another), Investment Income, Products/Services, and Other Electric Revenues (includes rent from railcars, payments from FEMA, and other miscellaneous sources).
Mr. Easterlin reviewed the Operation & Maintenance Expense for 2009 through 2013. The District’s 2013 total budgeted O&M expense is $852 million which is $66 million or 8.4% more than the 2012 projected amount. This category includes Fuel, Production (cost of operating our generating facilities), A&G, T&D, Purchased Power, and Customer Accounts.
The next review was of the Capital Expenditures for the same time period. The 2013 budget includes costs for T&D, Extended Power Uprate (EPU), Nuclear Production, General Plant, and Fossil Production and totals $166 million.
Mr. Easterlin discussed the 2013 Large Capital Projects:
NC1 Emission Compliance $11 million
Nuclear Regulatory Compliance $ 6 million
NC Gas Pipeline $ 2 million
NC2 Catalyst Replacement $ 2 million
Transmission & Distribution
T&D Functional Work $24 million
T&D Improvement Program $10 million
Customer Projects $ 7 million
Mr. Easterlin reviewed the Long-Term Debt Financings and said no bond issue is forecasted for 2013. The 2012 Projected amount of $273 million reflects the debt issue that was combined with a refunding issue to provide interest savings over the remaining life of the bonds that were refunded. The size of the issue was larger than anticipated because some of the money has been redirected to pay expenses at the Fort Calhoun Station. Not having those funds available, means the District has to borrow more to bond fund a larger portion of our capital.
Net Income for 2013 is projected to be $52 million, which is made up of $23 million and represents the difference between our projected revenues and projected expenditures, and $29 million which represents the transfer from our savings account. In 2012 the net income is projected to be $50 million and included in this is $5 million from our savings account. The number is small due to approval by the Board to use regulatory accounting to take the majority of the FCS restart costs and put in a deferred account and amortize the costs over ten years.
Mr. Easterlin reported $61 million is projected for 2012 in the Debt Retirement and Rate Stabilization Accounts. The total includes $29 million in the Debt Retirement Account and the District plans to use all of those funds in 2013. We are also building back the Rate Stabilization account to $32 million and hope to have that available at the end of 2013.
Mr. Easterlin indicated that, as a result of the District borrowing more, we see increases in our Debt Ratio. This represents our capital structure and what percentage of our capital structure is equity and what percentage is financed. Our target is 50% and our goal is to stabilize this number and reduce back to or below 50% longer term.
Mr. Easterlin presented a comparison of Coverage Ratios. He said that utilities are the second most capital-intensive industry in the country, behind only the railroads. In addition, since we borrow significant sums of money to construct our facilities, the rating agencies and our investors look very closely at these ratios. Of significant importance is the fact that we are not meeting any of the targets, and to ensure we meet these targets, we would need to ask for an additional 4% increase.
A comparison of Days Cash on Hand for the time period 2009 through 2013 was discussed. Our internal target is to maintain a cash-on-hand balance of at least 100 days. This level is important in order for us to be able to manage through unexpected risk events.
Mr. Easterlin discussed the SAIC (formerly R.W. Beck) Review and noted the areas to be included in the report:
Customer Usage Forecasts/Methodology
Integrated Resource Plan
Operation and Maintenance Expense Budget
Capital Expenditure Plan
The preliminary review is complete and the final report is expected in December.
In summary, Mr. Easterlin reviewed the following:
OPPD’s Mission – “Provide affordable, reliable and environmental sensitive energy services to our customers”
2013 Corporate Operating Plan is aligned with the corporate mission
Rates remain below regional average and national averages
Expenditures sufficient to maintain system reliability
6.6% of energy from renewable resources (wind and landfill gas)
Resume Fort Calhoun Station operations
Continuous improvement opportunities
Managing O&M expenditure
Prioritizing and managing capital investments
Mr. Easterlin then presented the 2013 Electric Service Rate Adjustments
Based on 2013 Preliminary Corporate Operating Plan
CH2M HILL, the District’s rate consultant, is in the process of reviewing
2013 Projected Retail Revenue Requirements
Cost of Service ($ millions)
Retail Revenue Requirements
O&M $ 812
Debt Service $ 129
Capital Improvement Fund $ 126
Payments in Lieu of Taxes $ 33
Gross Revenue Requirement $ 1,100
Off-System Sales $ 96
Other Revenue $ 37
Debt Retirement Account $ 29
Total Revenue Credits $ 162
Net Retail Revenue Requirements (what we have to pay for) $ 938
Proposed Rate Adjustment
Millions % Change
2013 Projected Revenue Requirements $938
2013 Revenue with Current Rates $878
Difference – Necessary Increase $ 60 6.9%
FPPA Decrease ($ 4) (0.4%)
General Rate Increase $ 64 7.3%
6.9% Rate Increase ($60 million)
7.3% general rate increase $ 64 million
Increased nuclear production expenses
Reduced market expectations for off-system sales
Advanced debt issuance to fund prior/future capital investments
0.4% FPPA decrease -$0.4 million
Lower coal costs due to CSAPR ruling
Lower coal costs due to market factors
Reduced nuclear generation/increased wind purchased
Increased collection of prior year FPPA costs due to FCS outage
Actions to Reduce Rate Adjustments
Savings ($ millions)
Sale of excess energy $ 38
Use of debt retirement account $ 29
Two year amortization of FCS related FPPA Expenses $ 20
Amortization of FCS restart and recovery O&M expenses $ 16
TOTAL $ 103
Estimated Monthly Customer Impact (actual charge will vary based on each customer’s usage and rate schedule)
Current Proposed Total Chg % Increase
Residential $ 94.45 $101.75 $ 7.30 7.7%
Commercial $499.49 $524.25 $24.76 5.0%
Industrial $85,011 $92,194 $7,183 8.5%
Lighting $170.87 $172.31 $ 1.44 0.8%
Overall Average 6.9%
Mr. Easterlin added that the percent of increases are different for each customer class due to analysis performed during a cost of service study. The study determines the cost of serving each customer class and compares that cost to what our revenues are under the current rates and/or projected rates. We take a gradual approach in that if a customer class if paying less than their assigned costs, the increase is above the average; if the customer is paying more than their assigned costs, the increase is less, and is proportioned to how close they are to their true costs.
Other Regional Rate Actions (Average is 5.76%)
Utility Proposed Rate Increase Effective Date
MidAmerican 2.7% 2013
NPPD 3.75% 2013
KCPL (KS) 5.6% 2013
KCPL (MO) 4.8% 2013
Wisconsin Public Srvc 9.2% 2013
LES 2.6% 2013
Northern States Pwr (WI) 6.7% 2013
Excel Energy (MN) 10.7% Proposed
2013 Retail Rate Comparison
OPPD is 3.5% lower than national average and 18.5% below national average
Miscellaneous Rate and Service Charge Adjustments
Updated line extension charges
Changed service regulations to allow for EV and truck stop charging stations
Updated various street lighting methods
Miscellaneous wording changes in rate schedules and service regulations
Mr. Easterlin reviewed a graph displaying Annual Average Retail Rate that included the years 1983 through 2013. The graph shows, that while discounting for inflation, our rates have actually decreased.
Retail Rate History
OPPD retail rates have increased an average of 2.0% per year
Inflation has increased an average of 2.7% per year
If OPPD rates had increased at the higher inflation rates, the 2013 rate would be 23% higher than if currently is (10.13 cents/kWh vs. 8.28 cents/kWh)
CH2M HILL Review
CH2M Hill is retained by the Board of Directors:
Review and comment on the District’s cost of service study and rate proposal
Advise the District on industry-accepted methods for allocating costs to various classes of customers as a basis for reflecting costs in District’s rates
Critical review of rate changes proposed by the District
Advise the Board as to whether the proposed changes are fair, reasonable, and non-discriminatory
Summary of 2013 Rate Proposal
Total increase of 6.9% ($60 million)
Increase general rates by 7.3% ($64 million)
Decrease FPPA rate by 0.4% (-$4 million)
Miscellaneous service charge adjustments
3.5% below the regional average
18.5% below the national average
Public Notice and Comment Process
November 13, 2012
Presentation to Board of Directors
Rate proposal information placed on website
Local media notified through traditional practices
November 15, 2012
Presentation at Board of Directors meeting
December 13, 2012
Request Board of Directors approval
The next item of business was the opportunity for those in attendance to address the Board on the Preliminary 2013 Corporate Operating Plan and the 2013 Electric Service Rate Adjustments presentations.
Mr. Laverne Thraen, 4728 Cass St, #12, Omaha, NE, asked the Board to invest in Smart Grid technology and pursue other efficiencies rather than raising rates.
Mr. Donald Metcalf, 3964 Weber St., Omaha, NE 68112 requested his meter be exchanged for an analog meter. President Gates asked that Mr. Metcalf talk with Vice President Burke after the meeting.
Mr. John Atkieson, with the Nebraska Wildlife Federation asked for the District’s cost of wind power. Director Green said the agreements with the wind producers state the cost information is proprietary and confidential. Mr. Atkieson also asked the Board to consider climate change and its effects in the 2013 budget.
Ms. Ernestine Boykin, 2511 N. 52 St., Omaha, NE 68104 voiced her concern over inefficiencies in a power outage restoration effort at her residence. She also asked for clarification on budget information as well assistance in addressing street light issues in her neighborhood. Vice Presidents Easterlin and Burke provided information.
Ms. Carolyn Joyce, 1830 N. 101 St., Omaha, NE 68114, addressed the Board on behalf of Doug Kagan of the Nebraska Taxpayers for Freedom. Vice President Easterlin provided some information and Vice President Burke advised he had received an e-mail from Mr. Kagan and would visit with Ms. Joyce and Mr. Kagan about their concerns.
The next item of business was the opportunity for those in attendance to address the Board on any items of District concern.
Ms. Cynthia Tiederman, 7562 Drexel St., Omaha, NE 68127, advised the Board on a report from the Union of Concerned Scientists regarding information about closing coal plants. The report is entitled, Ripe for Retirement – the Case for closing America’s Costliest Coal Plants is attached.
Mr. David Corbin, 1002 N. 49 Street, Omaha, NE 68132, thanked President Gates for presenting at the 2012 Nebraska Wind Conference and advised the Board on some of the information presented during the conference.
Mr John Pollack, 1412 N. 35 Street, Omaha, NE 68131, thanked President Gates for adding the language of “environmentally sensitive energy” to its mission statement and briefed the Board on future weather forecasts. He also voiced his concern for adding additional wind resources into OPPD’s system.
Mr. John Atkieson, with the Nebraska Wildlife Federation asked the Board for additional consideration of other renewable resources and voiced his concerns over the continued use of our coal fired plants. He also presented a document entitled, Ride the Wind: Expanding Omaha Public Power District’s Use of Wind Power to the Board which is attached.
Mr. Ken Winston, 4905 S. 149Street, Omaha, NE 68137, who represents the Sierra Club distributed Securing Nebraska’s Energy and Economic Future Report and reiterated there are many opportunities for OPPD to promote wind and additional programs for energy efficiencies. He also will provide written comments on the 2013 budget.
Mr. Tom Foster, 5211 N. 6 Ave., Omaha, NE 68110 voiced his concerns over the mercury and other pollutants at the coal fired plants. He also asked for information in the Exelon contract as well as Fort Calhoun operations. Vice Presidents Easterlin and Hansen provided information.
Mr. Laverne Thraen, 4728 Cass St, #12, Omaha, NE, asked the Board about the repair of equipment at the Fort Calhoun Station. President Gates provided information.
Ms. Carolyn Joyce, 1830 N. 101 St., Omaha, NE 68114 inquired about the impact of mercury in compact fluorescent bulbs and President Gates and Vice President Burke responded.
Ms. Mary McGragen asked about potassium iodine tablets that are available and asked if OPPD had a process in place to distribute the tablets. President Gates said it would be up to the state to make the decision to distribute the tablets.
President Gates reminded everyone that with this morning’s discussion about the North Omaha Station, it is important to remember that the plant is in full compliance with all federal and state limits.
There being no further business, the meeting adjourned at 12:25 p.m.
Edward E. Easterlin D. S. Emerson
Assistant Secretary Corporate Secretary