Newsletters > December 2007 Customer Newsletter
News from the Northeast Nebraska Public Power District
December 2007
Northeast Nebraska PPD remains a low cost provider of Electricity
One of our lenders, the Cooperative Finance Corporation (CFC), monitors
dozens of financial performance indicators for over 800 rural electric
companies across the nation. In their report to us this summer, NeNPPD
consistently had good financial performance and passed the benefits of
that performance directly on to customers by charging lower than average
electric rates. The chart below left shows that NeNPPD averages 6.8 cents
per kWh retail while the average charge among the 30 rural electric systems
in Nebraska is 7.6 cents per kWh. The national average among 818 rural
electric companies was 8.7 cents. NeNPPD also pays more taxes to Local
Governments that any other rural electric system in the State. Our tax
payments average 2.8 mills per kWh (4%) compared with the state average
of ½ % and a national average of 1%. The symbol for NeNPPD on
the graphs below is NE107.
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One reason that rates can be lower at NeNPPD is that the Board and Management work hard to control expenses. The chart above right shows that controllable expenses for labor, materials, fuel, postage and all of the things required to operate has gone down as a portion of the cost of a kWh. Not everything is really controllable and certainly the prices of the things we need are continually increasing, but management works hard to operate as efficiently as possible and to only use what is needed to get work done. The pay off is in lower rates to our customers.
NPPD announces an 8.5% increase in the cost of wholesale power
for 2008
Our wholesale power supplier, the Nebraska Public Power District (NPPD)
has announced an average base rate increase of 11-12% for 2008. With the
expiration of the current wholesale Production Cost Adder (PCA) of 2-3%
on April 1, 2008, the effect to NeNPPD is a net increase of approximately
8.5% for wholesale power purchases for 2008. Because the cost of wholesale
power represents over 60% of each dollar we collect, our operations can’t
absorb the extra $800,000 annually NPPD will charge us. We will begin passing
this additional cost of wholesale power onto customers in April of 2008.
Leader says a ‘Perfect Storm’ is brewing nationally
for electric utilities and customers
A recent news article quoting the President of the National Rural Electric
Assoc., Mr. Glenn English, pointed out that national events are coming
together in a way that could dramatically increase the cost of electricity,
especially in rural areas where a higher proportion of low and fixed income
people live. Nationally electric utilities are in need of building more
generating plants to meet an ever growing demand for electricity, but uncertain
future regulations, increasing costs, and vocal public opposition to traditional
coal fired plants have utilities at a stand still. English warned that
if political leaders fail to understand the true costs of a rapid shift
away from coal that the impacts on electric rates could be devastating.
Fortunately, the NPPD has some extra plant capacity and our ratepayers
are sheltered in the short term from some of these effects.
There is an inherent risk of electric service
All forms of energy can cause harm. Typically electric or natural gas service
is provided on condition that the customer assumes responsibility for
damage to customer owned property caused by utility problems. An extreme
example is when electricity or natural gas fuels a fire. It is generally
understood that the damage is not the responsibility of the utility and
that homeowner’s insurance steps in to protect the customer. It
is a little less clear when lightning hits an electric line and runs
along the wire into a home and burns up valuable electronics. In this
case neither the customer nor utility did anything wrong, but the damage
is real. There is no perfect way to prevent this lightning damage, but
the customers can financially protect themselves with insurance. Customers
can also protect their expensive electronics with surge suppressors.
Even harder to understand might be a situation when a wire is knocked
down or simply falls and causes other customers problems. Over the years,
laws and courts (ruling on laws) have addressed these issues by holding
that customers are responsible to financially protect themselves with
insurance. There is a very practical reason for this: If a utility were
required to reimburse customers for every TV or computer lost to lightning,
cars and farm equipment hitting poles, or wind slapping wires together,
etc., then electric rates would have to cover the cost of the utility
carrying insurance on each customer whether it was ever used or not.
This would make rates substantially more costly and still not relieve
customers from the need for proper insurance for their own needs. One
of the questions we often get is by customers asking ‘Who owns
the meter base?’ The answer is that the customer owns the meter
base and NeNPPD owns the meter. The meter base includes the mast and
wires inside the mast, so the point at which NeNPPD’s ownership
ends is at the wire splice just before the mast on overhead services
and at the meter base on underground services.
Employee happenings
Gina Reinke, wife of NeNPPD Lineman Tim Reinke gave birth to a baby girl
named Claire on Aug.25. Apprentice Lineman Nate Pospisil joined our company
in June and moved to Wayne from Winnetoon. Apprentice Lineman Matt Sorenson
from Onawa, IA started work December 3 as did Apprentice Lineman Paul
Veldkamp from Inwood, IA.
Five Year Construction Work Plan on Schedule
Recently our crews have built new power lines out of the McLean, Emerson,
Allen and Homer Substations. Our consulting Engineers develop a 5-year
work plan of projects that can improve reliability and the efficiency
of the electric system. We are wrapping up the fourth year on target.
We will budget for the final phase of our work plan in 2008 while also
beginning a new 5-year plan to start in 2009. We also are proud to have
Husker Ag Ethanol plant begin operations at their new expansion project.
NeNPPD establishes new Director Sub-Districts for elections
Working with the Nebraska Power Review Board, NeNPPD has changed the boundaries
for Director representation from 3 Sub-Districts with each Sub-District
represented by 3 Directors to 9 Sub-Districts with each Sub-District
represented by one Director. The Board felt this arrangement would permit
more direct representation of customers. NeNPPD covers a wide area and
with the 3 Sub-District plan the geographic size of each Sub-District
was so large as not to allow the Directors personal familiarity with
the entire Sub-District. Customers may view a map of the new 9 Sub-Districts
at www.nnppd.com.
Website has important customer and safety information
Links for kids to new games promoting electrical safety can now be found
on the home page www.nnppd.com. Links to ‘Electric Universe’ and ‘Electric
Safety World’ games are shown at the bottom of our web home page.
Links to safety materials for use by classroom teachers are also available
through our web page and we will conduct on site training for rural fire
departments on how to deal with electricity during an emergency.
Automatic Meter Reading is working
The District is now reading almost all meters in towns remotely. We have
installed approximately 2600 meters, which can be read remotely using
our electric wires as the pathway for communicating with the meter. This
month we expect to begin sending monthly bills to a few hundred rural
customers that have been ‘self-read/self-bill’. When converted
to AMR, ‘self-read’ customers will first get a letter informing
them of the change and that they will no longer have to read their meter
and calculate their own bill after the date contained in the letter.
If you are a ‘self-read’ customer you should continue to
read your meter until you get such a letter.
The Board of Directors and Manager:
Don Larsen, President Paul
Bodlak, Vice President Sy
Kneifl, Treasurer
Dan Loberg, Secretary
Lowell Birkley Dan Gansebom Tom Gustafson Dave Lebsock
Larry Silhacek Mark Shults, Manager
Follow this link to see The Board of Directors and Manager
View this and all previous newsletters at our website www.nnppd.com
Click here to download a
printable PDF version of the December 2007 Customer Newsletter