General

Rate proposal aims to maintain reliability, resiliency amid growth

OPPD announced a new customer rate proposal on Tuesday to help ensure a reliable, resilient power supply in the midst of record growth, new planning-reserve margin requirements and extreme weather that drove up costs this year. 

The utility is asking its board of directors to approve a total rate of 9.44 cents per kilowatt-hour across all customer categories as part of its $2.3 billion Corporate Operating Plan for 2025. On average, that’s a 6.3% increase across all customer categories. Residential customers would see an average 8.4% increase. 

The proposal would 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. 

Severe winter storms, floods, tornadoes and hurricane-force winds battered OPPD’s service territory in 2024. The costs to serve customers during those big weather events account for approximately one-quarter of the proposed rate increase. 

“OPPD and its customers experienced numerous severe weather events throughout 2024. The cost to serve our customers during these events were material and not anticipated, which represents approximately one-quarter of the rate increase,” said OPPD Chief Financial Officer Jeff Bishop. “The remaining request is focused on investing in reliability, resiliency and growth along with modernization of our technology and facilities that will serve our customers and employees well into the future. This will be delivered in the form of increased capital investment in our generation resources and investments to modernize our grid, along with increased resources for critical activities such as vegetation management and headcount.” 

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

The proposal would also pave the way for new technology to give customers more precise and timely information about outages.

Rate change details 

The proposal calls for a total average rate increase of 6.3%, starting 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), 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 would vary by customer type. Residential customers would see an average 8.4% increase, commercial would see an average 4.6% increase and industrial would see a 5.4% average increase. The average across all classes is 6.3%. 

The monthly impact on an average residential customer bill of $113 would be approximately $9.44, starting Jan. 1. 

The need

OPPD faced some major challenges in 2024 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, have affected OPPD as it works to support a reliable, resilient system. 

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

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

Extreme weather 

OPPD is still recovering and rebuilding from several extreme weather events that pummeled eastern Nebraska this year. 

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

In April, two tornadoes ripped through the Omaha area, causing a lot of infrastructure damage. The tornadoes devastated stretches of the Elkhorn area, 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 heavily overgrown tree foliage that caused widespread damage and slowed restoration efforts. Part of OPPD’s proposal calls for a $12 million increase for more tree-trimming, brining 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 reimbursed most of OPPD’s storm expenses, which totaled about $38 million, but not all. 

“We have done everything we can to make up for the shortfall,” said Beth Hoyle, OPPD’s director of financial planning and analysis. “We’ve looked for every way we can to cut and trim without sacrificing reliability and resiliency.” 

The need to modernize 

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. It will giveg 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 overall grid. Other utilities have already adopted AMI technology, with great results. 

A lot of OPPD’s current infrastructure – power plants, transmission lines, substation, and many other assets – are also aging and need to be upgraded to maintain reliability. 

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

Rates below average 

OPPD’s rates are far lower on average than other utilities. Residential rates are 24.8% below the national average, according to figures from the Energy Information Administration, December 2023, the most recent data 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. 

New generation needed 

Utilities around the nation are adding a 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 members in 14 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 utilities prepare for situations when certain types of generation aren’t available during crucial moments, such as major cold fronts or heat waves. 

If you have questions about the 2025 Corporate Operating Plan, visit OPPDCommunityConnect to submit them.