Oct. / Nov. / Dec. 2009 - Nebraska Public Power District

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6 ENERGY INSIGHT • OCTOBER / NOVEMBER / DECEMBER 2009 Maintaining reliability comes with a cost Those of us who work for NPPD (or know someone who does) recognize the electric utility business is complex. Nuclear physics aside, it is challenging to describe how something as simple as steam can be used to spin a turbine generator and produce enough electricity to operate thousands of homes and hundreds of manufacturing businesses. We can’t see the electrons that instantaneously cross hundreds of miles of power lines built decades ago yet, perhaps, refurbished a week ago. When the science of power generation is combined with such things as seasonal weather, transmission and distribution grid operations, bond ratings, capital investments, fuel cost volatility, rate classes, off-system sales, debt payments, economic conditions, regulatory requirements, etc., it becomes difficult to answer our neighbor’s simple question, “Why is my electric bill going up?” “The primary reason NPPD needs to raise its rates in 2010 is to fund investments that help us maintain the reliability of our power plants and transmission systems,” said Todd Swartz, NPPD’s pricing, rates, and wholesale billing manager. His department is responsible for conducting costof-service studies that determine how much money NPPD needs from each customer class to generate and deliver power to them throughout the state. (Remember, as a public power utility, NPPD does not make a profit; revenues only pay for the cost of providing service.) Cost-of-service studies completed in early fall 2009 determined an additional $25 million is needed next year to cover NPPD’s costs to serve its 77 wholesale customers, and an additional $13 million is needed to cover what it costs to serve NPPD’s retail (or end-use) customers. The average rate increases in 2010 are 5.9 percent for wholesale customers and 5.7 percent for retail customers, respectively. Actual increases will depend upon individual customer’s use. The average residential customer will pay about 20 cents a day or $6 more per month. “The additional revenues are necessary. We must begin paying back the principal and interest on $198 million NPPD borrowed to pay its share in the construction of Omaha Public Power District’s Nebraska City II power plant,” said Swartz. “For this investment, we are receiving 161 megawatts from the facility. When added to our generation fleet, this coalfired resource increases NPPD’s ability to meet the electrical needs of our customers well into the future.”
The rate increase will also generate the funds needed to build new or maintain power lines that will keep electricity flowing, without constraints, throughout the state. One such example is the 80-mile, high-voltage transmission line between Norfolk and Lincoln that took three years to build and cost $152 million. It was energized December 11. “NPPD doesn’t like to raise rates, especially in an economic downturn,” said Traci Bender, vice president-finance. “That’s why President and CEO Ron Asche asked all of NPPD’s business units to find ways to reduce their budgets both for 2009 and 2010 – without jeopardizing employee safety or NPPD’s reliability.” Employees answered the call and reduced next year’s budget by approximately $32 million. The 2010 budget cuts include: $19 million in cost reductions related to the freezing of executive salaries; the deferral of employee merit pay increases from March of next year until, at least, September or October (and then only if our financial condition has improved); reducing part-time, co-op, and intern positions; holding vacant positions open; deferring changes to NPPD’s employee retirement program; and reducing training, outside services, materials, and supplies, where possible. More than $13 million in cost reductions will come from changes NPPD made to some of its short-term financing plans; another $60 million of capital project costs have been deferred from NPPD’s 2010 capital budget. “These efforts helped considerably, but they still aren’t enough to cover what it will cost NPPD to conduct business in 2010,” said Bender. “NPPD cannot stop investing in a system on which hundreds of thousands of Nebraskans depend. Maintaining reliability comes with a cost. It is a complex and challenging dilemma to keep rates as low as possible while still investing in a $4 billion business. What we can do is continue to control costs where possible, and do our best to reduce the need for rate increases in the future.” ENERGY INSIGHT • OCTOBER / NOVEMBER / DECEMBER 2009 7 Help Lighten Someone’s Load Consider donating to NPPD’s Pennies for Power energy assistance program, where small change can make a big difference. Donating is easy; you can make a one-time contribution, add a specific amount to your monthly bill, or round your monthly bill up to the nearest dollar. Your donations can make a difference in alleviating the stress and worry associated with difficult financial times. To learn more about Pennies for Power, become a program contributor, or find out how to apply for assistance, call our toll-free number 24 hours a day at 877- ASK-NPPD (877- 275-6773). See related article in the Kearney around the state section on page 16.
Page 1 and 2: Current news about Nebraska Public
Page 3 and 4: Wash your hands. That’s a common
Page 5: than in the past. NPPD recently rev
Page 9 and 10: An NPPD Facebook account was set up
Page 11 and 12: Norfolk Operations Center trio star
Page 13 and 14: Cooper completes refueling and main
Page 15 and 16: Entergy Nuclear signs until 2029 An
Page 17 and 18: York / Cindy Klein, Customer Servic
Page 19 and 20: Tyler Micek, son of Records Analyst
Page 21 and 22: on the Kris Anderson, human resourc
Page 23 and 24: Ron Hostetter honored with Archway
Page 25 and 26: Charlie Magnussen celebrates retire
Page 27 and 28: J A N U A R Y of events 1 New Year

Oct. / Nov. / Dec. 2009 - Nebraska Public Power District

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