Midlands Voices: Proposal would put cost of unnecessary, burdensome requirements on ratepayers


Published in the Omaha World-Herald on March 27, 2022

By Dennis Demmel, president of the Board of Directors at the Center for Rural Affairs

Nebraska’s public power districts provide some of the most reliable electricity in the country. According to the Energy Information Administration, Omaha Public Power District, Lincoln Electric System and Nebraska Public Power District all rank in the top 30th percentile for reliability among all utilities nationwide.

They achieve this reliability while prioritizing affordability. Nebraska’s electric rates are 18% below the national average and rank in the top 15 among all states for the lowest electric rates, according to EIA.

Nebraska’s public power model has served the state well because elected officials make decisions for the utility based on the best interest of their customer-owners. That is why many of us are shocked to find a bill in the Unicameral that seeks to significantly disrupt our public power districts’ decision-making authority.

The Natural Resources Committee, which has prioritized Legislative Bill 1045, is proposing an amendment that would require our public power districts to pay $50 million to a county treasurer each time they decide a power plant should be closed because it is wasting ratepayer money. That $50 million would come from ratepayers themselves. A fee of this size is a tremendous burden that would prevent public power districts from keeping rates low.

In addition to the fee, the amendment would also require public power districts to pay the salary of everyone working at a power plant that is no longer economical for five more years. This five-year severance package would also be paid for by ratepayers.

I believe this bill was drafted, in part, with the worthwhile goal of ensuring reliability. However, the bill seeks to achieve this by forcing ratepayers to fork over tens of millions of dollars for expenses completely unrelated to electric generation and delivery. That is a problem.

Make no mistake, these unnecessary and burdensome requirements will become the responsibility of the home and business owners who now enjoy affordable rates. They will also prevent public power districts’ from making decisions that are in the best interest of their customer-owners. The measures outlined in this bill would not improve the state’s already high reliability and low rates but would instead result in higher electricity bills for every Nebraska resident.

All this is taking place against the backdrop of an evolving power industry. Today, utilities have access to technologies thought impossible just a decade ago. LB 1045 fails to acknowledge this reality. This evolution requires more flexibility in decision making, not less.

Our utilities should remain focused on providing their customer-owners with the most affordable and responsible energy available today and looking into the future. It is not responsible nor reasonable for a public power district to continue to operate a power plant if data demonstrates that cheaper sources of energy production are available and that reliability can be maintained. This simple tenet has served us well.

Public power districts take seriously the responsibility of balancing and maintaining affordability, reliability, and sustainability for their customer-owners. They should not be punished with excessive fees by making decisions in the best interest of Nebraskans.

Senators should vote no on this amendment to LB 1045.