NPPD sees 4% rate hike in 2013
Nebraska Public Power District is projecting 3-4 percent annual rate increases over the next five years.
The cost outlook, which was presented Thursday during a meeting of the board of directors, comes as most Nebraskans begin budgeting for increased electricity prices this year.
The state's largest utility bumped the average retail and wholesale rate by 6.5 percent this year to counteract the rising cost of coal transportation and repay debt taken on for infrastructure improvements.
The increase was promptly passed on to customers by many of the 52 communities and 25 smaller public power districts and cooperatives that purchase electricity from NPPD. An additional 89,586 customers are served directly by NPPD as retail customers in 89 communities.
No matter the classification, end users are likely to be paying more for NPPD electricity over the next half-decade.
The power provider is targeting a 4 percent average jump in rates next year, with 3 percent increases in each of the following four years.
But Vice President and Chief Financial Officer Traci Bender cautioned board members about the "uncertainty" of projecting rates past 2014, as they could fluctuate up to 5 percent in either direction.
President and CEO Pat Pope called the projected rate increases the "upper limit."
"You've got to take those really far-out years with a bit of a grain of salt," he said.
The district faces many unknowns moving forward.
Drivers such as generation, outages, electricity and fuel prices, transmission access and environmental regulations all threaten to move the rate over the coming years.
"If we get hit with an environmental issue or something that comes up, we should be able to explain that to our customers," Pope said.
Other costs are expected to rise, as well.
The district is forecasting 3 percent increases in employee salaries, outside labor costs and materials for 2013 and other expenses are expected run 2.5 percent higher.
Between 2013 and 2018, additional payroll benefits - such as retirement contributions, vacation, FICA and workers compensation - are projected to go up by 2.9 percent, from 29.8 to 32.7 percent of an employee's salary.
NPPD employees are eligible for 3 percent performance-based raises this year, which will cost the utility up to $4.9 million. The board has authorized pay hikes four of the past five years as a way to meet a state statute requiring the district to offer competitive wages.
While salaries have increased, Pope said he plans to keep the number of people receiving that pay in check.
Since January 2010 the district has cut its work force by more than 100 full-time employees, including 77 that took an early retirement incentive last year, by trimming the fat off the workload and eliminating unnecessary tasks.
The district, which had 2,116 full-time employees entering 2012, plans to add about 60 workers this year to fill current openings.
"I have no intention of letting that number float back up," Pope said.
NPPD has increased its rates a compounded 63.5 percent since 2003 for wholesale customers, including Loup and Cornhusker public power districts, Brainard, David City and Central City.
Wholesale power purchases from NPPD make up 70-80 percent of the local public power districts' expenses.
Despite implementing rate increases each of the past six years, NPPD says it remains an affordable energy source for Nebraskans, charging 7.35 cents per kilowatt-hour compared to the national average of 9.88 cents.
Source: Columbus Telegram
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