Generation Plan - 2016
FCS to cease operations by end of 2016 - No Rate Increase
On Thursday, June 16, 2016, OPPD's Board of Directors voted to cease operations at Fort Calhoun Nuclear Station (FCS) by the end of 2016. The board also voted and approved to move forward with SAFSTOR as the method of decommissioning.
With this vote, the utility has committed to no general rate increase through 2021 and takes a major step to be 20 percent below the regional average. The recommendation was presented at the June board meeting and news release issued after the vote. See Additional Resources for all presentations and supporting material.
On Tuesday, June 14, 2016, OPPD’s senior management made a recommendation to the Board of Directors on Fort Calhoun Nuclear Station (FCS) decommissioning options, as well as costs and timing associated with each.
OPPD’s original recommendation in May, followed by Exelon’s announcement it will be closing two plants in Illinois, highlights the difficulties facing the nuclear industry in a changing energy environment. OPPD’s news site, The Wire, explains how the nuclear industry is facing sweeping changes.
The Wire also features stories on the modeling, as well as a recap of the decision, timing and more on the decommissioning method.
For more information on decomissioning, the Nuclear Regulatory Commission (NRC) provides a video and background information.
Board Governance Policies
Omaha Public Power District (OPPD) was created in 1946 as a public corporation and political subdivision of the state of Nebraska. The Board of Directors and its committees lead OPPD and advance the interests of all customer-owners and employees.
The Board governance policies are a product of the Governance Initiative and designed to help the Board: 1) sharpen its focus on critical issues, 2) clarify the relationship between Board and management, 3) optimize decision-making, and 4) deliver organizational results aligned with agreed upon strategic performance objectives and risk levels.
The Board policies clearly outline Strategic Directives.
On April 14, 2016, in support of Strategic Directive 9 (Resource Planning), the Board of Directors requested a current status on resource planning efforts, potential scenarios on the draft resource portfolio and a recommendation to ensure OPPD achieves its mission over the next 20 years.
This request was consistent with Board actions and discussions over the last two years and builds upon the efforts and decisions around resource generation. A timeline of events outlines the actions from 2014 to today.
At the April 14, 2016 board meeting, Board Chair Mick Mines read the following statement:
The utility industry is experiencing dynamic changes at an accelerating pace. Our world is becoming more energy-efficient; demand for energy is declining; low wholesale market energy prices have negatively impacted revenues from off-system sales that have historically helped OPPD provide lower prices to its customers. Industry changes, aging generation facilities and increased regulations are contributing to higher operational costs. Electric utilities find themselves in the position where they must embrace innovation and move quickly to find new and better ways to deliver affordable, reliable and environmentally sensitive energy services to its customers.
These changes have and will continue to dramatically impact our customers, employees and stakeholders. For several years now, they have required the Omaha Public Power District to make challenging decisions that support our mission and commitment to our customers. These decisions will continue to provide the District with new opportunities to lead the way we power the future.
An area of significant investment, approximately $650 million annually or 53% of OPPD’s annual operating budget is directed toward the production of energy to serve the District’s customer owners. To help guide these investment decisions and deliver optimal value to the District, the Board of Directors, in collaboration with Senior Management, established Strategic Directive SD-9: Resource Planning.
The Board of Directors recognizes that the District will have to adapt to the rapidly changing electric utility business environment. The OPPD resource planning process will provide the resources and analytical capability to adequately assess OPPD’s Integrated Resource Portfolio (or Supply and Demand Portfolio) to ensure reliable, competitive, cost-effective and environmentally sensitive service for our customers.
To attain this goal, OPPD shall:
~ Periodically assess, for strategic and integrated resource plans, OPPD’s mix of generation assets, demand-side management programs, purchased power agreements and renewable energy resources.
~ Utilize multiple scenarios to properly evaluate the range of risks posed by varying future assumptions such as, but not limited to fuel costs, economic growth, regulations and emerging technologies.
~ Ensure all integrated resource strategic plans support and align with OPPD’s Strategic Directives.
During the past two years, building upon the efforts and decisions OPPD made in 2014, OPPD has undertaken significant initiatives to optimize its portfolio, including but not limited to:
~ An acquisition of an additional 400 megawatts of wind generation, which, by 2018, will lead to more than 30% of OPPD’s energy coming from renewable sources
~ The retirement of coal-powered North Omaha Station units 1-3 this year and installation of additional emissions controls on North Omaha units 4 and 5 and Nebraska City Station Unit 1. In 2023, OPPD currently plans to alter North Omaha units 4 and 5 to be fueled by natural gas.
~ A reduction of electrical load by 300 megawatts by 2023 through new and existing demand-side management programs, enabling customers to reduce power usage during times of peak demand.
Over the past nine months, OPPD spent significant time and effort on its long-term resource planning. We have studied the economics of our generation facilities, discussed impacts of the Clean Power Plan and began to assess implications for our integrated resource plan.
We request that OPPD provides the Board of Directors a current status on resource planning efforts, potential scenarios on the draft resource portfolio and a recommendation to ensure OPPD achieves its mission over the next 20 years.
See Additional Resources for all presentations and supporting material.
Planning for the future, OPPD management recommends ceasing operations at Fort Calhoun Station (news release). Upon the decision, the utility proposes no general rate increase through 2021 and takes major step to be 20% below the regional average.
OPPD has anticipated a number of questions to address customer, stakeholder and employee concerns.
~ Post-board vote FAQs on the decommissioning process and impact. — June 16, 2016
~ Pre-board vote FAQs on the recommendation — Updated June 7, 2016
OPPD will provide updates as more information becomes available regarding the future state of Fort Calhoun Station, and as OPPD identifies trends in comments and questions.