It may not be much consolation, but the 6.5% wholesale rate hike being planned by Nebraska Public Power District could have been even larger — closer to ten-percent.
NPPD chief executive officer Pat Pope says 4% of that planned increase can be traced to higher transportation and fuel costs.
Pope says, “We had a legacy freight contract with the Union Pacific Railroad that expired and the tariff that we’re now going to be charged is going to increase our costs to the railroad by 75%, just in 2012 alone, a significant increase for us.”
He says the other 2.5% of the increase is tied to debt service on capital improvements to generation facilities.
“The 6.5% rate increase also includes the use of $18-million in surplus funds,” he says. “A 1% rate increase for NPPD is about $6-million, so if we did not use the $18-million in surplus funds, we could be looking at an additional 3% in a rate increase.”
Wholesale customers, like cities, are typically forced to pass on all or part of the increase to retail customers. Pope says the district has cut its budget by about ten-million dollars, but faces additional costs of meeting more stringent federal environmental regulations for coal-fired power plants.
“This rule-making is really unprecedented,” he says. “In our business, we deal with equipment the size and cost of which usually takes years to implement and millions of dollars. The EPA has come out and said, ‘Well, we don’t really care about that. We want you to begin implementing this rule at the end of this year.'”
Pope calls the cross-state pollution rule an “overreach” by the EPA.
Doug Kennedy, KWBE, Beatrice