At their monthly board meeting today, the Omaha Public Power District Board of Directors approved a $1.8 billion Corporate Operating Plan (COP) for 2022. It includes an average 2.5% increase in retail rates across all customer classes as the utility works to improve and modernize our power distribution system.
OPPD had held rates steady for the past five years through ongoing lean business practices, despite continually rising costs of materials, goods, and labor.
While the utility continues to trim budgets in areas that will not impact reliability or resiliency of the electric system, OPPD must continue to invest in improving customer experience and positioning itself for the future. A number of focus areas comprise the 2022 COP and the additional $26 million needed to fund it.
“We must make investments in our system—for the health of our existing structures and equipment, to upgrade our technology and enhance our customers’ experience through improved communication and outage information, and to build infrastructure that supports our growing communities,” said OPPD President and CEO Javier Fernandez.
Under state law, the board must set rates based on the cost of service for each customer class. Effective Jan. 1, residential customers will see a rate increase of approximately 3.2%, when averaged throughout the year. The overall bill impact for the average residential customer, using approximately 1,000 kilowatt-hours per month, equates to $35.60 more over the course of a year. It will be noticed more in the summer months, when customers typically use more energy, than the non-summer months.
The increase for industrial customers is 3.2%. It’s 0.9% for commercial customers, and 2.5% for lighting customers, such as municipalities and sanitary improvement districts.
The COP does not require a change to the Fuel and Purchased Power Adjustment (FPPA), which appears as a separate line item on customers’ bills to recover costs the utility cannot control, such as fluctuating market prices for fuel.
“The utility industry is going through a period of rapid transformation,” said Fernandez. “As we navigate these changes, our employees are working on a number of innovative projects and initiatives to better position OPPD for the future.”
Rate increases will partially fund new technology and expanded operations, especially in customer care and transmission and distribution. They will also fund increased overhead line maintenance, including increased tree trimming, to help prevent power outages and ensure resiliency of the electric system.
Tree interference with power lines and equipment is typically one of the largest causes of power outages. The utility has been steadily increasing the tree trimming budget to help prevent service disruptions. In 2022, $14.28 million is budgeted for tree trimming, which is the highest amount ever. This is nearly double the budget for tree trimming five years ago.
“We are committed to doing this important work, while maintaining a strong focus on our mission of providing affordable, reliable and environmentally sensitive energy services for our customers,” said Fernandez.
You can view the full 2022 COP at OPPD.com.
Pathways to Decarbonization
During a virtual public workshop on Dec. 9, OPPD presented the final results of an eight-month modeling process for our Pathways to Decarbonization energy portfolio. The report is not a definitive plan for future generation; however, its findings will help inform utility decisions on our path to net zero carbon by 2050. Modeling includes consideration of customer and stakeholder feedback after previous public workshops. Here are some of the key takeaways:
- OPPD can achieve net zero carbon while balancing affordability and reliability. In order to maintain adequate resources, generation and transmission costs would likely increase, incrementally over time, by approximately 10 to 20% by 2050.
- All net zero carbon scenarios will ultimately include increasing renewables, decreasing fossil resources and re-fueling or retiring OPPD’s coal generation by 2050.
- A mix of new low-carbon generation resources will be required, including renewable energy, energy storage and community-wide energy efficiency.
- While wind, solar, energy storage and demand-side energy efficiency resources support reliability, they do have limitations. This is especially true during certain extreme weather events. We need firm generation to maintain resource adequacy.
- Achieving absolute zero – as opposed to net zero – emissions would be substantially higher in cost, requiring impractically high levels of new resources. However, emerging technologies, such as hydrogen, long-duration storage and small modular nuclear reactors have the potential to make this more feasible in the future.
- Accelerating pathways to net zero carbon would result in relatively low incremental cost. But it requires integrating higher levels of resources in the near-term, which may pose supply chain, financial, grid interconnection and operational risks.
- The changing resource mix poses new challenges with regards to resiliency – the ability of the electric system to recover after a destructive event like severe weather. Utilities must evaluate, understand, and mitigate these challenges as the grid continues to evolve.
Read more about our decarbonization modeling at OPPDTheWire.com. To view the full modeling report presentation, visit our community engagement platform, OPPDCommunityConnect.com. OPPD will accept written comments there through Dec. 17.
A finalized modeling report will be released to the public in mid-January, as part of our integrated resource plan (IRP), which we file with the Western Area Power Administration (WAPA) every five years. The first five years of the IRP will include OPPD’s planned Power with Purpose project, which is to add up to 600 megawatts (MW) of solar generation with natural gas, as well as the retirement of North Omaha Station Units 1-3 and repowering Units 4-5, resulting in substantial near-term emissions reductions.
OPPD will hold a public meeting on its IRP for customers and other stakeholders. This is tentatively scheduled for Feb. 3, and more details will be released closer to that date.
Battery storage project update
OPPD took an important step in its first battery project. BRIGHT, which stands for Battery Research Innovation Guided by High-Potential Technologies, will provide valuable research into how the utility can use energy storage systems for reliability and resiliency of the electric system as OPPD adds more renewables. OPPD is planning to build a battery energy storage device with a one megawatt-hour capacity, two-hour duration, at a Cass County substation.
The project was approved by the Nebraska Power Review Board this past July as the first stand-alone battery in the state. On Dec. 2, the district awarded an engineer, procure and construct (EPC) contract to WEG Electric Corporation.
WEG will provide all engineering, equipment, construction, commissioning, maintenance, and warranty services for the battery energy storage system, which is designed to last about 20 years. The BRIGHT team estimates commercial operation will begin in the fall of 2022. WEG will operate and maintain the battery for the first three years. OPPD will have the option for continued support, to be determined on a year-by-year basis.
Nebraska Environmental Trust grants totaling $600,000 help make this project possible.
In other action, directors:
- Approved the October 2021 Comprehensive Financial and Operating Reports, the November2021 meeting minutes, and the December 16, 2021, agenda.
- Approved the 2022 board meeting schedule.
- Adopted a resolution maintaining the district’s option to issue tax-exempt debt obligations to reimburse 2022 capital expenditures and optimize the use of OPPD’s resources.
- Awarded a contract to Highmark Erectors Inc., in the amount of $777,777 for the construction of a new 161-kilovolt (kV) substation to support load growth and reliability in the Sarpy County area. Construction will take place between January and May of 2022.
- Awarded a contract to Valley Corporation in the amount of $756,934 for the installation of a concrete encased manhole/duct line system along 180th in Sarpy County. The system will contain distribution circuits needed to deliver electrical service to customers in the northwest part of the county.
- Approved the Engineer’s Certification and authorization for OPPD management to negotiate and enter into a contract with Mitsubishi Power Aero to refurbish and to repair the Sarpy County Station Unit 5B engine.
- Received the monthly President’s Report. During this presentation, the board received an overview of Wednesday’s high wind event and restoration progress made to this point. For the latest on these efforts, visit StormandOutage.com. The full President’s report is available to view at OPPD.com/BoardMeeting
Next board meetings
The next Board of Directors committee meetings will be held virtually, via the Webex Events audio/video conference, Tuesday, Jan. 18, at approximately 10 a.m., following a closed session that starts at 8:30 a.m. You will be able to access the meeting and instructions to join at OPPD.com/CommitteeAgenda, beginning about 9:45 a.m., depending on the duration of the preceding closed-session meeting.
The next monthly board meeting will be held in-person at 5 p.m., Thursday, Jan. 20, at the Omaha-Douglas Civic Center, 1819 Farnam St., Omaha, and virtually via Webex. You will be able to access the meeting and instructions to join, beginning at 4:45 p.m., by visiting OPPD.com/BoardAgenda.