Customers of the Omaha Public Power District won't see a second rate increase this year, despite setbacks at its nuclear reactor and an estimated $32 million price tag for bringing the troubled plant back on line.
The utility is biding time by cutting spending and counting on insurance reimbursements.
“If you had told me three months ago that we'd be able to get through this year without a rate increase, with all we've been through at Fort Calhoun, I'd have said you were crazy,” board member Fred Ulrich told colleagues last week.
Fort Calhoun Nuclear Station has been offline since April 2011 — first for routine maintenance, then because of a June electrical fire and finally for last summer's flooding and its aftermath.
The utility is targeting a September restart date for the plant, said Dave Bannister, vice president and chief nuclear officer. That's about a year later than the utility first estimated.
The significance of the delayed startup is that it sends OPPD into another summer of peak electricity demand without one of its important, reliable and affordable sources of electricity. That could make OPPD more dependent on the spot market for electricity.
On a day last July, OPPD paid a spot price of $73 a megawatt while Fort Calhoun was offline. Producing power at a functional Fort Calhoun costs OPPD about $34 a megawatt.
People need not worry about the utility running out of electricity, said Jeff Hanson, a spokesman. OPPD has lined up additional contracts to avoid most of the fluctuations of the market.
Additionally, OPPD is hopeful that insurance will pick up some of the cost of purchasing outside power, Hanson said. That plays a role in being able to avoid a second rate increase this year.
Ulrich says he's confident the staff is doing all it can to get the nuclear reactor ready by fall.
The price of repairs and improvements would have been higher had the plant needed to make significant equipment upgrades. Instead, most of the improvements involve changes in processes and troubleshooting.
That $32 million price tag is the “incremental” cost of bringing the power plant back on line. It doesn't take into account the full cost of the plant's operations since it shut down last year.
To absorb the extra costs, OPPD is cutting about $29 million from this year's $790 million operations and maintenance budget, Hanson said. The utility will delay projects, eliminate some and reduce personnel costs.
Hanson said the utility instituted a hiring freeze earlier this year and is eliminating 42 positions from a staff of about 2,200.
OPPD raised rates 5.9 percent Jan. 1, citing factors that included last summer's flood, rising health insurance and pension costs and anticipation of tougher federal air pollution standards.
As of this spring, OPPD had spent about $76 million protecting its power plants from the flood and replacing the power Fort Calhoun could not generate.
So far, it's received about $7 million from insurance for eligible expenses and expects another $5 million, said Edward Easterlin, OPPD's vice president and chief finance officer. Reimbursements from the Federal Emergency Management Agency are expected later this year or early next, he said.
A spokesman for Local 763 of the International Brotherhood of Electrical Workers declined to comment on the effects of the budget cuts. But Ken Dowdy, with IBEW Local 1483, which works out of Fort Calhoun Nuclear Station, said the cost-cutting moves will not affect the nuclear reactor.
The focus at Fort Calhoun, he said, is doing what it takes to get the plant back in operation.
Ulrich said the board is committed to making one-year cuts that do not compromise the safety of OPPD's system or its reliability, or unduly affect employees.
The utility and union are in the midst of labor negotiations, but he said labor negotiations are focused on longer-term cost issues, such as benefits.
“We're not going to make labor pay to fix Fort Calhoun,” he said.
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