Retail Energy Buyer

Subscribe to the free weekly newsletter written just for retail energy buyers

Symposium Panelist Says Nebraska Deregulation Could Save $250 Million

September 16, 2015 By Cheryl Kaften

Industry consultants and executives assessed Nebraska’s public power system — and some found it wanting — at an Energy Symposium in Lincoln on September 9, saying private competition could save ratepayers millions of dollars.

In fact, opening Nebraska’s retail electricity market to outside competition could save the state’s energy customers $250 million or more annually, CEO Gary Aksamit of Dallas-based Aksamit Resources Management, claimed at the symposium, as reported in a story posted on Omaha.com. Askamit Resources Management is the parent company of energy marketer First Security Power, based in Minneapolis.

John McClure, vice president of Government Affairs for the Nebraska Public Power District (NPPD), said he couldn’t respond to Askamit’s estimate without seeing the analysis behind it. However, he argued public power has served the state well over the long term and will continue to do so. “I don’t feel any need to apologize for public power’s performance in Nebraska,” he was quoted in the same report. “Rates in Nebraska are very competitive.”

Aksamit replied that, in fact, he had based part of his findings on NPPD data. He explained that he had calculated his $250 million estimate by comparing two numbers – the current price for a megawatt hour (MWh) of electricity on the open market; and the MWh price published in NPPD’s 2014 annual report. Market prices presently range from $10 to $13 less than the NPPD price, Aksamit stated. Assuming the state’s public power districts conservatively generate 25 million MW annually, that puts the potential savings at $250 million to $325 million.

Still, while Nebraska’s rates are high, they remain about 16 percent below the national average and 4 percent lower than those in the Midwest region. Omaha.com reported.

What’s more, executives on the payroll of the state’s three largest power generators — Omaha Public Power District, Lincoln Electric System and NPPD — said at the meeting that recent rate increases can be attributed to a tough economic cycle, as well as significant changes in the coal and natural gas markets. They were backed up by McClure, who promised that NPPD’s retail customers will see no rate increase next year. He also warned that warned that not all customers have benefited when states transitioned from a publicly regulated utility system. He gave California as an example.

Finally, allowing for-profit utilities to compete for Nebraska customers would require changes in state law – and State Senators Ken Haar (D) of Malcolm and John McCollister (R) of Omaha, who attended the conference, said it was too early to say whether such measures could be introduced when the legislature convenes in January.

But Haar said elected officials have to consider what’s best for the state. “The message here today is the markets have changed,” he said. “Either we’re going to have to adapt, or it will spiral down and collapse.”

Leave a reply


*