The board of directors of Nebraska’s largest electric utility, Nebraska Public Power District (NPPD), unanimously approved its 2016 Wholesale Rate Schedule on October 21.
The rate schedule includes a 3.8 percent overall average increase in 2016 wholesale rates, which the utility said,“will be used to fund transmission investments and $25 million in retiree healthcare benefits associated with past service provided to NPPD’s wholesale customers.”
NPPD’s revenue is derived mainly from wholesale power supply agreements with 50 towns and 25 rural public power districts and rural cooperatives, which rely totally or partially on NPPD’s electrical system. NPPD also serves about 80 communities at the retail level. Because of the utility’s role as both a retail and wholesale provider, an estimated 600,000 people in Nebraska depend on NPPD for electricity.
While the wholesale rate hike is anticipated to be 3.8 percent, wholesale customers who sign a new, 20-year power purchase agreement (PPA) with NPPD will get a break. Those customers who sign a long-term wholesale PPA will receive a rate discount of 3.57 percent, because NPPD can finance their portion of the uncollected retiree healthcare obligations over a prolonged time period. This results in an overall average rate increase for such customers of 0.6 percent.
NPPD’s Board heard from customers both opposed to and in support of the 2016 wholesale rate proposal at a rate hearing Oct. 8 in Columbus.
“Our customers’ feedback, not only at the rate hearing but over the past two years of contract negotiations, has played a critical role in the board’s approval of these rate options,” said NPPD Chairman Ed Schrock. “We believe the rate schedule is fair and non-discriminatory for all customers who have invested in a not-for-profit system [that] has served a majority of them for more than 45 years.”
NPPD’s new wholesale power contract contains a financial performance standard that incents the utility to operate competitively for its wholesale customers throughout the duration of the contract, and offers wholesale customers the ability to add up to 10 percent of local renewable energy.
Board action on retail rates for 2016 for nearly 90,000 end-use customers who receive a bill from NPPD is expected in November; however, the district expects that there will be no retail increase for a third consecutive year.