GRAND ISLAND, Neb. — Despite a few defections and a handful of other holdouts, it was clear Wednesday that the Nebraska Public Power District has gone a long way toward shoring up its future wholesale customer base.
Faced with the possibility of downgraded bond ratings if it can’t firm up the demand for the electricity it produces, NPPD in recent years has been pushing its 76 wholesale customers to sign new 20-year contracts.
With a Dec. 31 deadline looming for customers to make a decision, NPPD officials revealed during a board meeting Wednesday in Grand Island that they now have signed agreements with 11 of those customers. NPPD CEO Pat Pope said that by all indications, the vast majority of others also are moving toward signing new contracts.
“Things are beginning to move in that area, as we figured they would,” Pope said in an interview. “Even down to the last minute, you have a handful still evaluating their options. But in the end, based on what I have heard, I think they will come to the conclusion the risk of doing something else for a short-term gain far outweighs the benefits of staying with NPPD.”
Unlike the Omaha Public Power District, which provides most of its electricity to residential and business customers who have no choice in who provides their electricity, NPPD is largely a power wholesaler. It contracts to sell most of its electricity to other public power entities, who then resell it to their individual retail customers. And all of those wholesale contracts — representing just over half of NPPD’s annual sales — are set to expire at the end of 2021.
Four northeast Nebraska public utilities have already decided to get their power elsewhere after 2021.
Officials with South Sioux City, Wayne, Wakefield and the Wayne-based Northeast Nebraska Public Power District, which together make up about
5 percent of current NPPD sales, have said there’s too much future uncertainty in the electrical industry to sign another long-term deal. The four went to the market to find shorter-term deals that, they say, offer rate terms favorable for their ratepayers.
The cities and public power districts that have signed new contracts with NPPD are North Central Public Power District in Creighton, North Platte, Cozad, Sutton, Wymore, Wauneta, Wilcox, Prague, Hildreth, Central City and Summerfield, Kansas.
Representatives of some of NPPD’s biggest customers also confirmed Wednesday that they’re moving toward signing long-term deals with NPPD.
Bruce Pontow of Nebraska Electric Generation and Transmission Cooperative agreed that there’s much uncertainty in the future of electrical markets. But he said most of his customers would prefer to face that uncertainty with NPPD — a partner they know and have long worked with.
“I think there’s less risk staying with NPPD,’’ said Pontow, whose organization buys electricity for 21 rural power districts, accounting for more than a third of NPPD’s total sales. “I feel comfortable that NPPD will be cost-competitive, and I feel more comfortable facing the uncertainty with them.’’
Customers who have indicated to Pope that they’re still on the fence include Seward, Auburn, Beatrice, Southern Power District in Grand Island, Butler Public Power District in David City, Perennial Public Power District in York and Cornhusker Public Power District in Columbus. New contract language to address some of their concerns was presented Wednesday.
“We are (still) a little bit in the middle,’’ said Southern CEO Neal Niedfeldt.
Also Wednesday, NPPD’s board approved proposed wholesale rates that give a significant discount in 2016 to customers that sign a new long-term contract with NPPD. It’s considered likely that the northeast Nebraska utilities leaving NPPD will challenge the plan in court.
NPPD Board Chairman Ed Shrock said after the vote that it’s regrettable that NPPD has lost some customers.
“But for those of you who stay, and I think that’s most of you, I think we can be a strong organization,’’ he said. “I think we can serve you very well in the future.’’
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