A tough year has led to a steep rate increase proposal by the Omaha Public Power District.
The district is seeking board approval for an increase averaging 5.9 percent next year — one of the largest in nine successive years of rate increases.
This latest increase, announced Tuesday, results from a federal requirement that OPPD reduce air pollution from its older coal plants; unprecedented flooding along the Missouri River; rising health insurance and pension costs; and expanded use of wind power, said Edward Easterlin, vice president and chief financial officer.
The increase is expected to generate about $47.5 million toward a more than a $1 billion budget. The board will take public comments in writing and in person over the next month.
Comments will be taken at Thursday's regularly scheduled board meeting and at the December board meeting, during which the board is expected to vote. Written comments are due Dec. 15.
Since 2003, OPPD rates typically have gone up between 2 percent and 5 percent a year, although a jump in coal and other fuel costs caused a double digit increase in 2009.
Overall, rates have increased about 59 percent since 2003.
Prior to that, OPPD had gone 12 years without a rate increase. Factoring in the years without a rate increase, the price per kilowatt hour of electricity has increased by about 1.8 percent a year or 36 percent, said spokesman Jeff Hanson.
By next year, if this rate increase is approved, the average customer's bill will be $94.85 a month; before the series of increases, in 2003, it was $59.78.
The rate increases have funded major improvements in the utility's ability to generate electricity: building a coal plant, retooling its nuclear plant, upgrading pollution controls, and, along the way, absorbing substantial increases in coal costs.
This year, OPPD estimates that it has spent about $68.6 million battling the Missouri River flood.
The two largest chunks of that were the costs of the actual flood fight — such things as sandbags and temporary berms — and of replacing power that was lost when the flood idled the utility's nuclear plant.
The flood also cost OPPD more than $17.4 million in wholesale sales, which is important because revenue from those sales protects residential customers from rate increases.
While the flood is a factor in next year's rate increase, the full effect of the flood isn't being felt by ratepayers.
That's because OPPD took $32 million from a rainy day fund to cover the higher-priced electricity it had to use to replace the power lost from the flood-disabled nuclear plant. The flood-related portion of next year's rate increase will go toward replenishing that fund.
Had OPPD not dipped into savings, the utility would have had to raise rates an additional 4 percentage points, Easterlin said.
Also, the utility found out in July that it would have to meet tougher-than-expected restrictions imposed by the Environmental Protection Agency.
To meet these tougher standards, OPPD plans to cut back some of its coal plants, buy more expensive, lower-sulfur coal and test a chemical process to catch sulfur before it leaves the smoke stacks.
Other utilities in the state are raising rates, too.
According to information provided by OPPD, customers of Nebraska Public Power District face a 6.5 percent increase.
At Lincoln Electric System, customers face a proposed 3.5 percent rate hike. That follows a new, 2.7 percent fee that the City of Lincoln has attached to electric bills. The new fee went into effect Sept. 1.
Between it and the yet-to-be-approved rate increase, the 2012 cost of electricity for LES customers would go up 6.2 percent over the start of this year.
Despite the increase, OPPD rates are projected to remain 6.3 percent lower than the regional average and 24.3 percent below the national average.
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