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OPPD proposes modest rate increase for 2022

November 18, 2021 | Jason Kuiper | customer service, rates
Utility forester, tree-trimming crew evaluates a job site rate increase

OPPD leadership presented the preliminary 2022 Corporate Operating Plan (COP) to its Board of Directors during their November all-committees meeting. The plan recommends an average rate increase of 2.5% across all customer classes. The board will vote on the plan in December.

For the past five years, OPPD leadership has worked to keep costs down during the rate freeze.  But a number of factors played into the recommendation from management, including rising material costs for infrastructure, investment in technology and programs to modernize the utility, and improving the customer experience through enhanced communication and outage information. As a result, OPPD is facing a budget shortfall in 2022 of nearly $26 million.

OPPD officials conducted extensive research to determine the exact figures needed to satisfy the utility’s budgetary needs while minimizing the monetary impact to customers.

Impact to customers

Each of OPPD’s five customer classes will be impacted differently by the proposed rate increase. For residential customers, those increases would vary slightly from month to month, depending on how much energy a customer uses and when they use it. The proposed increase for residential customers is 3.2%. That means in averaging all months’ bills in a year’s time, a customer with a typical electricity usage of 1,000 kilowatt hours would pay approximately $2.97 more a month. That figure is an average of higher usage months – typically in the summer – and lower usage months, such as in the winter.

While the month-to-month impact would vary based on usage, it would equate to approximately $35.60 more over the course of a year.

For the majority of OPPD’s residential customers, the proposed increase would be most noticeable on their summer bills, when energy use is typically greater.

The other customer classes are small general service (commercial), large general service (industrial), lighting and municipal service (wholesale). The breakdown for customers in these classes depends on their usage and cost of service.

Driving factors

This proposed increase is driven by several external factors, including the increasing cost of infrastructure, as well as investment in new technology resources for customers and initiatives that will transform OPPD as it moves into the future.

A few examples of the ways the additional revenue from these rate adjustments will be used:

  • Implement technology that will increasingly integrate our system and modernize our technology platform to better serve our customers.
  • Increase the reliability of the system through greater investment in the maintenance of overhead lines.
  • Hiring new team members in Energy Delivery to keep up with large infrastructure projects.

System improvements

As a public power utility, OPPD puts all revenue generated by retail sales directly back into the operations of the utility.

Doing so allows OPPD to leverage any such revenue increases directly into improving the system and doing the necessary work to help the utility be one that is ready to face current as well as emerging challenges. And as a public power utility operating as a not-for-profit organization, OPPD works hard to be responsible with its management of the system and its assets while maintaining fair and reasonable rates.

Customer benefits

One immediately visible way customers will see this additional revenue at work is through the increased budget for tree trimming, typically one of the largest causes of customer outages each year. The COP calls for the highest-ever amount to be spent on vegetation management – $14.28 million. That is nearly double what it was 5 years ago, $7.64 million.

As our region grows, the utility must also invest in needed transmission upgrades and additions to ensure power reliability and resiliency. Since OPPD’s last rate adjustment, energy-related costs have increased while demand-related costs have decreased. OPPD’s load factor is higher and there is a need to add generation assets to ensure system reliability and resiliency.

OPPD customer needs are also evolving, requiring new and innovative offerings from the utility. To achieve this, OPPD is investing in a multi-year intelligent energy ecosystem to increase reliability and coordinate data collection to better meet customers’ needs.

The utility is also working to improve customer outage notification through measures like advanced metering infrastructure (AMI), so OPPD knows which customers are without power without relying on customers to report the issue. Another benefit OPPD is pursuing is two-way customer communication so that customers are aware of changes in usage patterns so that they know in real-time how their consumption is affecting their monthly bill.

The proposed rate increase, if approved, would take effect on Jan. 1, 2022.

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About Jason Kuiper

Jason Kuiper joined OPPD as a communications specialist in 2015. He is a former staff writer and reporter at the Omaha World-Herald, where he covered a wide range of topics but spent the majority of his career covering crime. He is a graduate of the University of Nebraska at Omaha and has also appeared in several true crime documentary shows. In his free time he enjoys cooking, spending time with his wife and three children, and reading crime novels.

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