NPPD raising rates, cutting budget

COLUMBUS -- Today, the Nebraska Public Power District's Board of Directors voted to increase electric rates an average of 5.7 percent for retail customers (end-use customers that receive a bill from NPPD directly) and 5.9 percent for wholesale customers (other Nebraska utilities that purchase power from NPPD and sell to their end-use or retail customers). The changes will go into effect Jan. 1, 2010.

While the actual percentage a customer will incur depends on the type of customer and the amount of power they use during a month's time, an NPPD retail residential customer can expect about a 6.0 percent increase, which equates to approximately 20 cents a day or $6 a month.

"To maintain NPPD's reliability as a major power supplier in Nebraska, we have recently invested $152 million for a high-voltage power line needed in eastern Nebraska and $198 million in shared costs of Omaha Public Power District's Nebraska City II power plant that will serve future generations," explained Ron Asche, NPPD president and CEO. "These investments are contributing to the need to raise rates. In addition to these facility investments, NPPD is also replacing or refurbishing older power generation facilities, transmission lines, and substation equipment. These investments are needed to maintain the reliability of electric service to our customers."

To help mitigate the rate increases, NPPD's 2010 budget includes reductions of day-to-day operating costs of approximately $32 million. Cost controls put into place include a freeze on executive salaries and a deferral of employee salary and benefit increases next year. NPPD also made reductions in planned material and supply purchases, use of contractor services, and other programs due to the recent economic downturn and mild weather that has resulted in reduced revenue.

NPPD's wholesale customers include 52 municipalities and 25 other public power utilities and rural cooperatives, each of which purchases varying amounts of energy from NPPD depending upon their respective retail customer needs.

NPPD's retail customers live in 80 communities throughout the state. NPPD's retail customers also include large and small commercial businesses, irrigators, and industrial customers. Approximately two-thirds of an average retail customer's bill pays for "wholesale" costs, which are the cost of generating electricity and delivering it across high-voltage transmission lines throughout the state.

"Customer revenues pay the operational costs to generate power at more than nine major power plants and distribute it across thousands of miles of power lines 24 hours a day, seven days a week," Asche said. "There is never a good time to raise electric rates, particularly now, when customers are feeling the adverse affects of the recent recession. NPPD is scrutinizing all expenditures, and will do everything we can to keep our rates as low as possible, without jeopardizing safety or reliability of service."