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Shutting Neb. Nuke Lowers Electric Rates

Closing Fort Calhoun nuclear plant helps OPPD avoid rate hike in ’17

Closing its lone nuclear plant helped the Omaha Public Power District head off a rate hike that would have resulted in an average bill increase of 2.5 percent for residential ratepayers in 2017.

The Omaha electric utility’s board on Thursday approved a recalculation of a portion of rates that accounts for cost changes related to the closure of the Fort Calhoun nuclear power plant and the addition of 400 megawatts of wind power from a massive wind farm in Holt County.

OPPD directors also approved a $1.13 billion 2017 budget that, among other things, would replenish the utility’s so-called rate stabilization account to $50 million, the account’s intended full amount.

The fund is used for stemming rate hikes. It was depleted to $16 million from a high of $41 million in 2015 as utility officials sought to plug a budget shortfall brought on by lower income from excess energy sales, lower demand and increasing costs at the Fort Calhoun nuclear plant.

The facility 15 miles north of Omaha is now shut down and in early stages of decommissioning. That project could cost as much as $1.9 billion, but OPPD will have a better grasp on the estimated cost when it completes a more detailed study of the years-long project by the end of January.

OPPD has saved about $388 million for those costs already, and now that the plant is closed, the district will put an additional $147.5 million into designated trust funds for decommissioning.

But Edward Easterlin, OPPD’s chief financial officer, advised the board to set up another “savings account” to have another pool of money for either decommissioning or for future relief from potential rate hikes.

“We want to create a savings account that provides funding over and above what we think those (decommissioning cost) requirements are,” Easterlin said. “You don’t want to put more money in (existing trust funds) than what is required because once it’s in there, it’s very difficult to take it out.”

That’s because money withdrawn from trust funds by definition is limited in what it can be used for. In the case of OPPD’s decommissioning trust funds, the federal Nuclear Regulatory Commission has a say if the utility were to pay in more than it needed and wanted to claw back some of its contributions, for example.

The 2017 budget calls for $189.2 million in decommissioning costs.

“It’s not like we have it down the street at the bank,” Easterlin said.

Avoiding a rate hike for 2017 is in keeping with OPPD President and Chief Executive Tim Burke’s promise to keep rates flat for five years.

That should be welcome news to OPPD ratepayers, who are still due to see a $5 increase on their monthly bills beginning in January as part of the rate restructuring plan approved in 2015.

Under that plan, fixed-service charges on residential customers’ bills increased from $10.25 a month to $15 a month in June 2016. That charge will increase to $20 in January 2017, and by $5 again in January 2018 and January 2019, at which point it will reach $30 per month.

The restructuring also applies to certain commercial customers, and it includes an offset in the form of a 22 percent decline in electricity rates paid over that period for affected customers.

OPPD’s 2017 budget forecasts net income of $66.5 million on revenues of about $1.08 billion, which is 3 percent less than 2016 total revenues.

Utility officials forecast flat demand for retail sales in 2017 versus 2016, but retail revenues are expected to grow about $9.4 million to $926 million. Next year, OPPD expects an overall 17.5 percent decrease in total energy sales, in part because Fort Calhoun is closed and will not be generating power.

cole.epley@owh.com, 402-444-1534