General

OPPD board approves $2.3 billion
Corporate Operating Plan for 2025

OPPD’s board approved a new proposal on Thursday to help ensure a reliable, resilient power supply amid record load growth, new planning-reserve margin requirements and extreme weather this year that drove up costs.

The $2.3 billion Corporate Operating Plan (COP) for 2025 includes an average rate increase of 6.3% across all customer categories. Residential customers will see an 8.4% increase.

The proposal will help OPPD modernize and fortify the system that serves all customers against future stresses, including the kind of extreme weather that struck eastern Nebraska earlier this year.

Big weather events this year account for approximately one-quarter of the proposed rate increase. Severe winter storms, floods, tornadoes and hurricane-force winds battered OPPD’s service territory. A major July 31 windstorm caused the largest customer outage in OPPD’s history.

“These large weather events had a significant and unanticipated impact this year,” said OPPD Chief Financial Officer Jeff Bishop. “This 2025 Corporate Operating Plan will also help us invest in reliability, resiliency and growth and allow us to modernize our technology and facilities for our customers and employees. This will come in the form of increased capital investment in our generation resources and grid, and more funding for critical activities such as vegetation management and headcount.”

The plan also will help OPPD keep pace with unprecedented new demand for electricity. Demand is rising at a time when the Southwest Power Pool has imposed larger planning-reserve margin requirements on its members, including OPPD, to ensure regional reliability.

Additionally, new technology known as advanced metering infrastructure will give customers more precise and timely information about outages.

About the rate change

The total average rate increase of 6.3% goes into effect in January. That figure includes a 4.9% general rate increase across all customer classes, a 0.4% increase from the Fuel and Purchased Power Adjustment (FPPA), which is a line item on bills, and a 1% increase from the Rate Stabilization Account. The FPPA covers rising fuel and purchased power costs that are beyond the utility’s control.

Increases will vary by customer type. Residential customers will see an average 8.4% increase, commercial will see an average 4.6% increase and industrial will see a 5.4% average increase. The average across all customer classes is 6.3%.

The monthly impact on an average residential customer bill of $113 will be approximately $9.44.

Different customer classes pay different rates based on their usage and costs that they place upon the utility. Industrial customers that use large amounts of electricity at a steady, around-the-clock pace are more efficient than residential customers, who consume smaller amounts and whose usage varies a lot throughout the day. The larger, around-the-clock users allow to OPPD recover more of its costs and thus helps stabilize costs for all users.

Why it’s needed

OPPD faced some major challenges this year with a record-setting summer outage, storms that caused widespread damage, rising fuel and purchased power costs and higher supply and labor expenses.

The higher costs to serve both existing and new customers, coupled with inflation and supply-chain pressures, had an impact on OPPD and its work to support a reliable, resilient system.

OPPD officials said they don’t take the request lightly, and they understand the pressure the rate change may put on some customers. The utility has resources available for those who are especially hard-hit, including energy assistance for residential customers and energy-saving tips and products that can help reduce customer bills.

Among residential customers, those with the highest usage will see a sharper impact.

Extreme weather a factor

OPPD is still recovering and rebuilding from several extreme weather events in eastern Nebraska.

First came Winter Storm Gerri in January, which put pressure on some of OPPD’s generation facilities.

In April, two tornadoes caused major infrastructure damage in Elkhorn, Blair, Bennington and Omaha. Near-record flooding on the Missouri River in June required an urgent response and extra staffing to protect OPPD’s now-decommissioned Fort Calhoun Station and a nearby substation from even more costly water damage.

Then came the July 31 storm, with hurricane-force winds that knocked out power to more than half of OPPD’s customers.

A major factor in that outage was the overgrown vegetation. The COP calls for a $12 million increase for more tree-trimming, bringing the total investment to $29 million for 2025.

The proposed increase will help OPPD cut trees near electric lines about every five years or so, instead of the current seven to eight years.

The U.S. Federal Emergency Management Agency will reimburse most of OPPD’s storm expenses, but not all.

Modernizing OPPD’s infrastructure

OPPD also needs to invest in advanced metering infrastructure (AMI) technology. AMI will help pinpoint outages faster and more precisely, without customers having to report them.

The technology will provide other benefits as well, such as giving customers a more detailed picture of their energy usage and how they can be more efficient. AMI will help reduce longer-term billing and meter-reading costs, catch potential problems early and strengthen the larger grid. Other utilities have already adopted AMI technology, with great results.

A lot of OPPD’s current infrastructure – power plants, transmission lines, substations and many other assets – are also aging and need to be upgraded to continue serving customers reliably.

Because of the surging load growth, OPPD also needs to hire more employees to handle the much larger workload.

Below-average rates

OPPD’s rates are far lower on average than other utilities. Residential rates are 24.8% below the national average, according to the Energy Information Administration’s December 2023 data, the most recent available. The retail electric rate was 27.6% below the national average in 2023.

“We know that even a small billing increase can create hardships for some of our customers,” said Vice President of Customer Service Tim McAreavey. “Therefore, we encourage anyone struggling to pay their bill to call us. We want to help you find workable solutions so you don’t fall behind.”

The utility has a range of assistance programs for those who qualify. Some of these programs involve collaboration with other organizations. For more information, visit OPPD.com or call 402-536-4131.

Adding new generation

Utilities around the nation are adding new generation to meet customer needs and comply with new regulatory requirements.

The SPP recently approved increases to the planning reserve margins that member utilities must maintain in their daily operations. The SPP is a not-for-profit regional transmission organization mandated by the federal government to ensure reliable power supplies, adequate transmission infrastructure and competitive wholesale energy prices for its 14 member states, including most of Nebraska.

Planning reserve margins represent the amount of power utilities must have available beyond peak projected demand to guard against unplanned situations or stresses on the regional power grid.

Starting in summer 2026, OPPD and other utilities will need to have enough generating capacity to serve their peak consumption, plus an additional 36% planning reserve margin and a 16% margin in the summer. The change will help local utilities prepare for situations when certain types of generation aren’t available during crucial moments, such as major cold fronts or heat waves.