Winter 2024 Generator

president’s message
Construction cost increases
affecting the bottom line
As I have mentioned in previous columns,
Loup Power District is working hard on many
facets of economic development, including
looking at new, large loads that might be
located within Loup’s service area.
With these new loads comes increasing
investment necessary to serve these loads,
which could provide financial challenges.
During the budgeting process for 2024,
Loup management laid out detailed one-and
six-year construction budget estimates to
provide long-term financial information to
the Board of Directors.
Loup is looking at a significant increase in
construction budget costs in the near future,
specifically for 2025, 2026, and beyond.
What are the reasons for these increased
construction budgets? There are several
factors involved:
• NEW LARGE LOADS — These new loads
create the need to expand existing
infrastructure to provide service to these
facilities.
• LONGER LEAD TIMES — It’s taking long
to purchase vehicles, transformers, and
general supplies.
• INFLATION — There are continuing
increases in inflation across all facets of
the electric utility industry.
How can the District deal with these
increases in costs that are occurring? There
are four ways to handle this:
• Borrow money to provide a longer time
period to recover costs from all Loup
customers.
• Review and update customer service
policies to provide security deposits/aid in
construction for those customers creating
the need for new infrastructure.
• Modify and increase rates to collect
additional dollars to cover the cost of the
new construction.
• Reduce cash reserves on hand, although
these are currently near record-low levels.
Loup management and the Board of
Directors are reviewing all of these options
and trying to balance out what would work
best for Loup and our customers.
NPPD recently updated its transmission
extension policy to require a security deposit
for new loads creating additional infrastructure
needs.
Loup management and the Board are
discussing similar options on the distribution
side.
Unfortunately, rate increases will also be
part of the conversation. While these are
never easy to implement, please remember
that Loup’s current rates are 30.3 percent
below the national average and 9.5 percent
below the Nebraska average, which puts
us in the lowest tenth percentile both
nationally and statewide. That is something
to be proud of and to promote.
Management and the board have been
working extremely hard over the past
several years to stay ahead of what we
know is coming. By staying ahead of these
changes, we can keep rates at a reasonable
level while maintaining Loup’s financial
health.
NEAL SUESS
President/CEO
WINTER 2024 | 3