Electric Rates 101
NPPD PROPOSES RETAIL RATE INCREASE IN 2014
As a public power utility, NPPD’s rates are set to cover costs. Revenue received is used to pay operating expenses and make necessary investments in maintenance, construction and system upgrades. The rates do not include a profit margin.
Since Nebraska’s utilities are not owned by investors, we can charge lower prices because we don’t have to send dividends to stockholders. While keeping rates as low as possible for customers is one of NPPD’s main objectives, another is maintaining service reliability for customers. For the past several years, balancing these goals has been a challenge. Rate increases have been needed to pay for necessary investments in infrastructure to maintain reliability and meet regulatory requirements. We have also been faced with increasing operating expenses, such as an increase in the fuel we use to generate electricity from our power plants.
NPPD is working to keep its rate increases as low as possible, but for 2014, a preliminary 2 percent rate increase is being proposed for retail customers. This is an overall average percent increase for all customer classes and could be subject to change depending on NPPD’s financial performance in 2013. The actual increase will vary depending on customer type and usage.
NPPD’s Board will not approve the final rate increase amount until November or December of this year.
Following is a break down showing the average range of the potential increase by retail customer class:
|Rate Class||Estimated Increase|
|Residential||1 to 3%|
|Small Commercial||0 to 2%|
|Large Commercial||2 to 4%|
|Industrial||2 to 4%|
|Commercial Space Heating||3 to 5%|
|Irrigation||0 to 4%|
|Municipal Pumping||0 to 2%|
|Street Lighting||0 to 5%|
A 2 percent average increase means an average residential customer will see a $2 to $3 per month increase on their electric bill. This is based on average monthly usage of approximately 1,000 kilowatt-hours.
KEY REASONS FOR THE RATE INCREASE
Retail rates will increase 2% due primarily to the increase in the cost to generate and deliver energy to electric customers. Of the proposed Retail rate, 1.6% is due to those increases, with the remaining .4% due to the adjustment made in the native firm load that have not reached the predicted load increase.
NPPD’s budget shows the need to increase 2014 revenue requirements by $28.4 million. The rate increase for power supply and delivery will produce $15.3 million in additional revenue while rate stabilization funds will be used to cover the remaining shortfall, primarily due to Cooper Nuclear Station’s costs and lower revenues from sales of electricity to other utilities.
PUBLIC POWER WORKS FOR YOU
Nebraska’s publicly-controlled utilities have operated successfully for nearly 125 years with a model that is unique to this state. Nebraska is the only state in the nation that serves its electric customers entirely through public power entities. In Nebraska, it’s the public and electric utility customers, like you, that provide control over their local utility. It’s ultimately your power.
This business model continues to work well. Electricity prices in this state remain a good value. NPPD’s electric rates are significantly below the national average and competitive regionally as well. While investments to our infrastructure the past several years have been substantial, it’s important for NPPD to prepare for the future energy needs of our customers. To do this, our focus remains clear. We are committed to providing the reliable and affordable electric service you expect and deserve.
We have implemented energy efficiency programs to help consumers manage rising electricity costs and continue to heavily scrutinize our budgets and defer projects that will not impact safety and reliability. This includes reducing use of outside services, non safety-related training and travel and other discretionary costs. We are also eliminating open positions through retirements or attrition where possible and have reduced our workforce by as much as 5 percent.
To avoid a higher rate increase in 2014, NPPD has been cutting or delaying projects that will not jeopardize safety or reliability. NPPD is also reducing staff, evaluating inventory levels, reducing employee training, travel and outside services. The District is also committed to working proactively with customers to find solutions that best minimize future costs increases.
By working to reduce costs and improve efficiencies, NPPD’s goal is to continue to make Nebraska’s electric rates even more competitive today, and in the future.
Despite recent cost increases, Nebraska and NPPD’s retail and wholesale electric rates remain competitive, regionally and nationally.
DOWNLOAD RATE MATERIALS
Providing customers with rate information as early as possible is one of NPPD’s key objectives. View additional rate increase materials available for download, including a brochure and talking points. Also be sure to check out NPPD’s online interactive activity demonstrating the value of electricity and how much energy an NPPD consumer can get from one dollar.
NPPD’s mission is to safety generate and deliver low-cost reliable energy and provide outstanding customer service. Working in partnership with the state’s rural public power districts, cooperatives and municipalities, NPPD helps serve an estimated 600,000 Nebraskans with retail or wholesale electric power and energy-related products and services.