A closer look at the 2013 proposed electric rate increase
Omaha Public Power District works hard to keep your rates as low as possible. That’s been a hallmark of this utility in the past, and it will continue to be in the future. The electric utility industry is changing at a faster pace than ever before. We are managing the business economically to adapt to the outside pressures-particularly changing environmental regulations and changes with the way electricity will be managed over the grid.
The proposal calls for a 6.9 percent retail rate increase. That is an average across all rates, however, residential customers should expect an average increase of $7.30 per month. The amount will vary with usage.
The 6.9 percent proposed increase factors in a 0.4 percent reduction in fuel and purchased power costs. Those costs have been reduced due to lower coal costs.
The bottom line is that the utility has a $60 million deficit for 2013, despite all efforts to control costs.
Topics of Interest
What is driving the proposed increase?
This past year has been challenging. We recovered from the flood only to face new challenges. Three main areas are impacting 2013 rates:
1. Fort Calhoun Nuclear Power Station
The cost to restart this facility and return it to its high-performing status and prepare it for additional nuclear regulations is costly, but the long-term benefits will exceed the incremental costs. In August, OPPD contracted with Exelon Generation, the largest owner and operator of nuclear power facilities in the United States. The cost of this contract, and the associated re-start costs, play a significant role in this proposed increase. OPPD made the decision to restart Fort Calhoun Station as it recognized the importance of the facility to its future customers. Restarting the generating station will ensure OPPD maintains a diverse fleet of electrical generating stations.
2. Off-System Sales
In the past, OPPD has relied on significant revenue from selling excess electricity on the open market to other utilities. Market prices for electricity continue to decline, primarily due to abundant new domestic natural gas supplies. Natural gas prices, which have the greatest influence on the amount and the prices we can sell our excess energy for, are down over 70 percent in the last five years.
3. Capital Investments
Maintaining the performance and reliability of $5 billion of utility assets is an ongoing cost. These investments ensure that our transmission and electric delivery systems will provide reliable power.
Those capital improvements are being made on production, transmission and distribution areas.
Return to top
Why OPPD remains a good value
OPPD’s corporate mission is to provide affordable, reliable and environmentally sensitive energy services to our customers.
We are committed to remaining a value to you. Even with this proposed increase, our rates are still more than 18 percent below the national average. In fact, a new data center locating in Sarpy County cited low power rates and high reliability as the main reasons for choosing Nebraska. That type of economic development is good for our community.
Providing reliable power remains our main focus, and this past summer during the extensive heat wave, we delivered without the brownouts or blackouts that other utility customers experienced.
OPPD also is committed to the environment. With our recent wind investments, OPPD will get about 6.6 percent of its energy from renewable resources by the end of 2013. We are well on our way to our goal of having 10 percent of our retail energy from renewable resources by 2020.
It is our customers, however, that matter most. Our reliability and customer service have earned us 12 consecutive JD Power Awards. That means a great deal to us because the information about our performance comes straight from our customers.
Return to top
OPPD’s Focus on Safety and Reliability
The Omaha Public Power District values safety and reliability. We realize the importance of electricity in the daily lives of our customers and delivering it safely takes priority. A reliable power supply ensures a healthy, growing economy and helps maintain eastern Nebraska’s standard of living.
Our reliability ratings are among the best in the country, ranking in the top quartile. This level of reliability requires constant coverage, and we respond at all hours, day and night, to our customers’ needs. We utilize wireless connections to quickly assign crews during storms in order to minimize outages.
Return to top
Energy Efficiency Education
Under the proposed rate increase, the average residential bill will go up about $7.30 per month. But there are many ways to manage energy usage. Here are some tips on energy efficiency:
- Set your thermostat as low as comfortably possible in cold weather
- Set water heater at 120 degrees, unless dishwasher requires 140 degrees
- Caulk/seal windows and doors
- Wash only full loads of dishes and laundry
- Unplug unused electronics and chargers
- Clean refrigerator condenser coils each year
- Use energy-saving setting on all appliances
- Close the damper when you’re not using your fireplace
- Use compact fluorescent lights in lamps and fixtures
- Install an insulation jacket on your water heater
- Repair leaky faucets and toilets
- Seal large leaks in heating ducts
- Clean or change your heating and cooling system’s air filter monthly
Return to top
Other Energy-Saving Information
Watt Detector Kits – available for checkout by consumers at participating libraries. The kit calculates how much energy is being consumed and how much money is being spent on an hourly, daily, monthly or yearly basis.
Energy Advisor – email questions to email@example.com or call 402-636-3850 (outside the metropolitan area at 1-800-648-2654)
Twitter/Facebook - receive energy-saving tips and outage information at twitter.com/oppdcares and at facebook.com/omahapublicpowerdistrict
Return to top
Frequently Asked Questions
| Regarding Fort Calhoun Station
Did the flooding at Fort Calhoun cause our rates to increase?
While not directly linked to the flood, the recovery of that plant is proving costlier than anticipated. That being said, with the new operating company running the plant, we expect economies of scale and anticipate those costs to start declining beginning in 2014.
Why are we raising rates to restart Fort Calhoun? Wouldn’t it be more affordable to close the plant?
Actually, the restart of that plant is important for the future. After a thorough review, it was determined that restart was the best option as we looked 20 years out. The restart allows for fuel diversity, and that’s important as fuel prices fluctuate.
You said you’d “heat up” the plant on December 1st. Is that still true?
When we announced the December 1st date, we stated that date was our goal if our discovery did not identify any further delays in the schedule. We discovered two areas that needed work to take us into the first quarter of 2013. We have made significant progress in our efforts and are confident in the work we have identified. The remaining work is well understood with the right leaders and teams in place. We will restart Fort Calhoun Station when we have satisfied ourselves, and the NRC agrees, that the plant is ready and we can sustain the improvements we have made.
How much is the Exelon contract costing OPPD?
The exact amount is confidential and proprietary, however, with the increased efficiencies that organization brings, we expect to start seeing reduced costs at Fort Calhoun Station starting in 2014.
| Regarding Customer Impact
How much will the proposed rate increase affect my bill?
The average residential customer will see $7.30 increase on their bill each month. That amount varies with usage.
Is there help for people struggling to pay their bills?
The OPPD Energy Assistance Program was established in 1988 to provide emergency aid to elderly, disabled or other needy customers who are experiencing severe financial difficulties and need help with their energy bills. The funds are collected from OPPD customers and employees. In fact, employees contribute about $60,000 per year on average to the fund. To apply for assistance, please call the Red Cross at 402-343-7755 or toll-free at 1-888-890-9569.
Are there any discounts for senior citizens?
Unfortunately, we cannot identify a certain customer base for reduced rates. What we do provide, however, is ongoing education to senior citizens and all customers to help you manage your usage so you can control your own costs. Additionally, we partner with many agencies that can provide financial assistance for our customers. We have an energy assistance program that regularly provides funds to hundreds of seniors and disadvantaged families. In fact, we raise about $180,000 a year on average and last year, nearly $60,000 of that came from OPPD employees.
Will we ever see a rate decrease?
OPPD never enters a year expecting to raise rates. In fact, the focus is and has been on operating as efficiently as possible to avoid increases. However, to ensure the utility stays strong and continues to provide reliable power, investing in system improvements will always be important. While no rate decrease will occur, your utility will continue to work hard to keep internal costs low and try to avoid increases when possible.
| Regarding OPPD's Finances and Efforts
What is the financial situation of OPPD?
We have a strong financial standing. In fact, the bond ratings we receive are the highest a generating utility can receive. Strong bond ratings equal strong financials. Even though we are taking money from our savings account to offset the amount of this increase, we will reimburse that account in a timely manner and it does not affect our overall financial standing.
Has OPPD done all that is necessary to avoid a rate increase?
As outlined in this material, we have worked hard to minimize this increase. There is an increased effort to operate efficiently, we sold what excess generation was available and spread out the cost to restart Fort Calhoun Station over ten years. In addition, we are taking money from our savings account to offset the increase.
How does OPPD’s rates compare to other utilities in our area?
Even with this proposed increase, OPPD’s rates are 3.5 percent below the regional average and 18.5 percent below the national average.
Is OPPD the only utility raising rates?
No. Several regional utilities have already announced increases. In fact, Excel Energy in Minnesota just announced the largest of these increases at 10.7 percent.
What impact does stricter EPA regulations represent in this proposed increase?
Because the Cross State Air Pollution Ruling was overturned, we were able to reduce the fuel and purchased power price adjustment, which lowered the overall retail rate increase. However, there are dollars in this proposed increased to address Nebraska City Station emission compliance.
Are we using any of this money in the rate increase to become more green?
We currently have more than five percent of renewable energy in our portfolio, the bulk of which comes from wind. By the end of 2013, we will be at 6.6 percent of our renewable goal with the addition of more wind. We are looking to add more wind next year.
Return to top