General

Board approves OPPD plan for substantial generation growth

A plan to add more electrical generation to meet surging customer demand won approval Thursday from OPPD’s Board of Directors.

OPPD unveiled the proposal in May amid projections that the utility will add an unprecedented 100 megawatts annually over the next several years. The growth rate is akin to building 65 new metro-area high schools or mid-size hospitals in one year. Just a few years ago, OPPD was adding generation at a much more modest 4 megawatts per year.

“This is a pivotal moment for the utility, no doubt about it,” said OPPD President and CEO Javier Fernandez. “Our planned generation additions will help ensure our customers have the power they need, when they need it, as our communities continue to thrive.”

The growth arises from the development of new homes, schools, businesses and larger industrial customers that need a lot more electricity to operate. As a publicly owned utility that serves both urban and rural Nebraska residents, OPPD is legally required to provide for all customers that locate within its service territory.

OPPD’s solution to meet near-term generation needs will mean an estimated capital investment of more than $2 billion, nearly doubling the district’s nameplate capacity, or maximum rated generation output, by 2030.

Nebraska’s public power customers enjoy some of the nation’s most reliable service, based on the latest available federal data. According to a 2022 report from the U.S. Energy Information Administration, Nebraska’s average outage duration for each customer served was the lowest out of all states.

Reliable, affordable power is also a key driver of economic growth. Nebraska’s public power providers play a big part in luring both companies and jobs to the state.

Other factors driving growth

OPPD must also comply with the increased reserve margin requirements of the Southwest Power Pool (SPP). The SPP is a regional transmission organization that helps ensure reliable power for almost 19 million people throughout the central and western United States.

The SPP requires its member utilities to maintain enough capacity to meet its net peak demand for electricity, plus an extra margin of 15%. That’s up from 12% previously, as utilities nationally work to enhance their reliability amid the prospect of extreme weather.

Fernandez said the utility’s plan is a proactive effort to ensure reliable, affordable and environmentally sensitive electricity to all customers.

New homes, schools and small businesses will receive reliable, affordable service as soon as they’re built.

Some larger, industrial customers – such as data centers, food processors, manufacturers, agricultural processors and others – are building new facilities as well and need more electricity to provide a variety of online services. OPPD’s board reviewed the proposal and listened to public feedback over the course of several months.

“We’re doing this for our customers, and I really appreciate the board’s diligence and thoughtfulness in working on this,” Fernandez said. “Customers are counting on us to provide this energy, and our team is ready to go.”

Focus on reliability, renewables

OPPD officials stressed that the biggest users of electricity will pay for the power that they consume, and that a larger, more robust and more diverse energy portfolio benefits all consumers.

“Cost causers are cost payers,” said OPPD Vice President of Systems Transformation Brad Underwood. “That’s not a new phenomenon, that goes back decades. We pass the costs to serve each customer back to the customer based on how they use the electric system.”

OPPD’s plan calls for 1,000 to 1,500 megawatts of renewable energy (wind and solar), including generation produced from OPPD’s Power with Purpose plan that has yet to be sourced.

Also included in the plan are approximately 125 megawatts of battery storage; 600 to 950 megawatts of dual fuel combustion turbines; and at least 32 megawatts of “demand response” (shifting or shedding electricity demand to help balance the grid).

Additionally, the plan would provide about 320 megawatts of added fuel capability and fuel oil storage at existing facilities – essentially upgrading current facilities to allow for additional winter and resilient capacity.

A balanced approach

Underwood said natural gas paired with renewables produces the lowest cost for customers while maintaining reliable service.

Collectively, the plan will help move OPPD toward its goal to become a net-zero producer of carbon by 2050. Adopting renewable sources has helped the utility cut its greenhouse gas emissions by more than 4 million tons over the last decade.

“We’re thoughtfully integrating all the tools we have,” Underwood said. “It’s a mix, it’s about the whole basket.”

The new generation is expected to come online over the next several years, as OPPD secures various regulatory approvals and acquires all of the necessary equipment. Planning far ahead is also important due to global supply chain challenges that have made it more difficult to obtain certain types of machinery, said OPPD Vice President and Chief Financial Officer Jeff Bishop.

OPPD’s proposal calls for an estimated capital investment of $2 billion to $2.2 billion by 2030 to build everything needed. Annual operating and maintenance costs would grow by approximately $310 million by 2030.

The new load could generate an extra $450 million in annual retail revenue by 2030. Customer rates could increase an estimated 2.5% to 3% per year from 2027 to 2030 to pay for the projects and meet the surging demand for electricity.

Utilities nationwide face similar rate pressure as they wrestle with rising costs and growing demand for electricity.

OPPD’s retail rates are 19.4% below the national average, according to the U.S. Energy Information Administration.

Underwood said OPPD is ready for the challenge.

“There’s a palpable call to action on our part,” he said. “As public power employees, we’re honored to build for our family, friends, neighbors, businesses and organizations in the community to secure an affordable, reliable and environmentally sensitive future.”