Omaha Public Power District is asking its Board of Directors to approve an average 2.5% increase in retail rates across all customer classes for 2022, as the utility works to improve and modernize its power distribution system. The utility held rates steady for customers, with no general rate increases, for the past five years.
OPPD’s preliminary $1.8 billion Corporate Operating Plan (COP) for 2022 was presented to the board at their committee meetings this week. It outlines a projected revenue deficit of nearly $26 million in the coming year. The increased cost of materials and labor are contributing to the revenue shortfall, as well as the need to invest in our system for growing communities and to maintain the health of existing structures and equipment.
“This year began a period of transformation for OPPD, which will continue in 2022 and beyond,” said OPPD President & CEO Javier Fernandez. “Our employees are working on innovative projects and initiatives that will position the utility well to continue our mission of providing affordable, reliable and environmentally sensitive energy services.”
The utility conducted extensive research to determine the exact figures that will satisfy OPPD’s budgetary needs, while minimizing the monetary impact to customers as much as possible. Proposed retail rate increases more accurately reflect the cost of the electric service that customers use and when they use it, within each of their respective classes.
With the proposed budget, OPPD's residential customers would see a rate increase of 3.2%, when averaged throughout the year. The overall bill impact for the average residential customer, using approximately 1,000 kilowatt-hours per month, would equate to $35.60 more over the course of a year. It would be noticed more in the summer months, when customers typically use more energy, than the non-summer months.
The increase for industrial customers would also be 3.2%. It would be 0.9% for commercial customers, and 2.5% for lighting customers, such as municipalities and sanitary improvement districts.
The preliminary COP does not require a change to the Fuel and Purchased Power Adjustment (FPPA). The FPPA appears as a separate line item on customers’ bills. Like many electric utilities, OPPD uses the FPPA as needed to recover costs outside of its control, such as fluctuating costs for fuel and for power it buys on the market.
“As a public power utility, OPPD puts all revenue generated by retail sales directly back into the operations of the utility,” said Fernandez. “This allows us to leverage revenue increases directly into improving our electric system and doing the necessary work to help ensure OPPD is ready to face current, as well as emerging challenges.”
Rate increases will partially fund expanded operations, especially in customer care and transmission and distribution. Five key strategic initiatives, currently underway, will shape the utility for decades to come, while maintaining a strong focus on our mission to provide affordable, reliable and environmentally sensitive energy to our customers.
These initiatives include work toward becoming a net-zero carbon producer by 2050. Our Power with Purpose project, to add 600 megawatts (MW) of utility-scale solar with natural gas, supports decarbonization efforts while providing needed capacity to serve our growing communities. OPPD has announced plans for 81MW of solar to date. And work has already started on our Turtle Creek Station and Standing Bear Lake Station. These gas facilities will serve as peaking stations, used only as needed per market conditions and estimated at less than 15% of the time.
“The efforts underway will help ensure our customers have reliable and resilient power,” said Fernandez. For example, more resources will be devoted to the maintenance of overhead power lines. This includes increased tree trimming, since tree interference with power lines and equipment is one of the largest causes of power outages.
OPPD is also modernizing its electrical grid and working towards advanced metering infrastructure (AMI) technology in the future. AMI is an integrated system of smart meters, communications networks, and data management systems that enables two-way communication between utilities and customers. This will open up options and services to better communicate with customers and also to better serve their changing preferences and needs.
OPPD invites the public to view the detailed preliminary budget for 2022 and proposed rate increase at OPPD.com. There, customers will also find a link to an online comment form to share their thoughts with senior management and the board. More information is also available at OPPDTheWire.com.
Directors will vote on a finalized COP at their Dec. 16 meeting.
In other action, directors:
- Approved the October 2021 Comprehensive Financial and Operating Reports, the October 2021 meeting minutes, and the Nov. 18, 2021, agenda.
- Discussed and accepted a revision by the board’s Finance Committee to Strategic Directive (SD) 2: Rates. This change removes outdated language.
- Discussed and accepted the monitoring report SD-11: Economic Development. Acceptance means the board finds the utility to be in compliance with the directive.
- Conducted a Corporate Officer Performance review and approved a compensation adjustment for Scott Focht, vice president of Corporate Strategy & Governance.
- Approved an amendment of OPPD’s Charter, recommended by the board’s Governance Committee, to adjust election subdivision boundaries to reflect results of the 2020 Census. The amended Charter and revised election subdivisions will be submitted to the Nebraska Power Review Board for approval, and the new election subdivisions will be submitted to the election commissioners and county clerks in OPPD's service territory by Dec. 30, 2021.
- Received the monthly President’s Report, available to view at OPPD.com/BoardMeeting.
Pathways to Decarbonization Energy Portfolio Final Results
The final results of modeling for OPPD’s Pathways to Decarbonization Energy Portfolio will be presented during a virtual public workshop Dec. 9, from 4 to 6 p.m. The modeling includes consideration of feedback provided by customers and other stakeholders after previous virtual public workshops on the initial results. Visit OPPDCommunityConnect.com to learn more and register to attend this next event.
Next board meetings
The next Board of Directors committee meetings will be held virtually, via the Webex Events audio/video conference, Tuesday, Dec. 14, 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., dependent upon the duration of the preceding closed-session meeting.
The next monthly board meeting is Thursday, Dec. 16. Please visit OPPD.com/BoardAgenda closer to that date for the specific time, location, and agenda.