Scrutiny of public power on horizon? Bill would create task force to examine Nebraska's system

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Posted: Thursday, February 13, 2014 12:00 am

Public power in Nebraska: How's that working out for you?

State Sen. Ken Haar wants to answer that question. To that end, the Malcolm lawmaker wants to create a 34-member task force with a broad mandate to examine the structure, purpose and future of Nebraska's 165 public power entities.

His proposal has utilities nervous, however. Nebraska Rural Electric Association lobbyist Kristen Gottschalk called the proposal an “assault” on public power.

Legislative Bill 1100 would set up the task force to study nearly every aspect of the state's public power business — rates, regulations, the consequences of trading on a regional transmission market — and submit recommendations to the governor by Dec. 1.

Among Haar's concerns: The number of public power entities in the state, which he said suggests opportunities for consolidation. How these entities are adapting — or not — to the regulatory and market changes roiling the industry. And the fact that Nebraska utilities “increasingly purchasing power generated outside the state,” as his bill puts it.

As examples, he cites a new 10-year deal between the Northeast Nebraska Public Power District in Wayne and Big Rivers Electric Corp. in Kentucky, as well as a recent decision by the Lincoln Electric System to buy output from an Oklahoma wind farm.

“We're importing electricity to Nebraska. It doesn't make sense,” he said. “So I think we need to look at the structure of public power generally and see if it could better serve Nebraska.”

In short, he said, Nebraska needs to better position itself for the coming era of clean, locally produced energy. The way to kick off that process is a wide-ranging study, he said.

Industry representatives are lined up to testify against the bill when it comes up for a hearing today before the Natural Resources Committee.

“This study is unnecessary, and I believe the scope, and the time frame, is unreasonable and unrealistic,” said John McClure, board chairman of the Nebraska Power Association and general counsel to the Nebraska Public Power District.

“There isn't any indication to me that there's a concern about affordability, reliability or accountability in Nebraska,” he said.

The task force would have only four industry representatives. That's evidence that Haar has a predetermined outcome in mind, Gottschalk said.

“When you look at the makeup of the committee, it's a bunch of people who don't understand the industry, or it's people who have a vested interest in changing the way the industry operates,” she said.

Haar's bill comes amid significant changes to power markets that make it easier, and potentially more attractive, to cut a deal with an out-of-state company.

In March, the Southwest Power Pool, a regional organization that coordinates transmission and marketing for utilities in nine states, including NPPD, the Omaha Public Power District and the Lincoln Electric System, will begin operating a clearinghouse market that will determine which plants produce power throughout the region.

“In other words, the Southwest Power Pool will be telling us when and where to run our generation resources,” Haar said. “That's huge.”

Mark Shults, general manager of the Northeast Nebraska Public Power District, said there's a misconception about what the Big Rivers deal means.

“It does look like we bought from a coal generator,” he said, “but their power's not coming to Nebraska. ... Whether we stayed with NPPD or switched to Big Rivers, we're going to be served the same way: With power sold to us out of a market clearinghouse, where (the Southwest Power Pool) is the market operator.”

Essentially, he said, Big Rivers will act as the district's agent in finding power in the market instead of NPPD. The district now will have more options, he said.

He estimates the deal will save his customers $1.3 million annually over 10 years.

Shults said such deals will become more common as more of the state's public utilities get involved in the new market.

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