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Look at the big picture on LES rate hikes

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Monday, May 07, 2007 - 10:01:21 am CDT

Lincoln Electric System ratepayers who are grousing about being hit with another proposed rate increase need to keep things in perspective.

If they were living almost anywhere else, they’d be paying more.

LES rates are among the lowest in the country. That’s not just chest-thumping by a local utility that has cherry-picked a few other utilities for comparison. It’s backed up by outside surveys, as well as LES’ own annual survey of more than 100 utilities.

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(In case you’re new to town or haven’t been paying attention, please note that LES is publicly owned. You and all the other LES ratepayers own your very own electric utility.)

Local ratepayers should be glad they’re not in parts of the country that deregulated their electric industries a few years ago when that concept was in vogue.

In Illinois, rates this year soared by 30 to 50 percent when a 10-year freeze ended. In Montana, rates have risen by about 70 percent for some customers. Electric utilities in Maryland tried to raise rates by 72 per cent last year. Legislators forced temporary rollbacks.

If you lived in New York City last year, your residential bill for 1,000 kilowatts was $237.95. In Lincoln you paid $60.95. And that’s despite a 4.5 percent rate increase that went into effect in February last year.

Analysts are warning that customers of private electric companies might face spiraling costs in the future because private equity firms are targeting them for buyouts.

The buyouts mean creation of massive debt, according to investment columnist Jim Jubak of MSN Money. He says that customers whose companies are bought out will “wind up paying more for less service.”

Private market forces don’t work their customary magic when it comes to the electric industry. The national electrical grid is already plagued with bottlenecks. But private companies can exploit these bottlenecks for financial gain.

“Ordinarily I have nothing against investors or companies that exploit pricing inefficiencies in the market,” Jubak wrote last week. “That is, after all, one way that the market eliminates these inefficiencies over time. But in this case the buyout deals for utilities in these markets will make the inefficiencies worse. The newly private utilities will have no incentive to build new transmission lines to improve the national grid, and they will have no incentive to spend capital to build new, less polluting and more efficient power plants …”

Like any other electric utility, LES has to raise rates to keep up with rising costs and to build new power lines and generating plants to keep up with growing demand.

But judged on a national perspective, the proposed LES rate hikes are nothing to complain about.


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Bob wrote on May 7, 2007 2:33 am:
" Well they had the same thoughts on our price per gallon compared to what the Europeans would have to pay for a gallon of gas as well. When we were paying like $2.00 per gallon they were paying for a the same amount of gas for about $4.50 per gallon. So because they pay more for the electrical power somewhere elase does not mean that we have to be paying the same here in Nebraska. When Nebraska catches up to the wages earned of other areas of the US then okay we will have to pay more. Until then keep your thoughts centered on the needs of Nebraska. If you don't like it then move to Illinois, New York City, Montana or Maryland. They have their problems for their areas and we have ours. They are all different problems. Maybe you get paid enough so that the rate increases will not matter that much to you. There are many families and individuals working and living from paycheck to paycheck that this rate increase will have an affect on. With the increase in the price of gas that the major oil companies control and with the increase in everything else these people will be even in a much more desperate position than they are today. THE RICH JUST KEEP GETTING RICHER AND THE POORER JUST KEEP GETTING POORER. "

 stignob wrote on May 7, 2007 7:31 am:
" Well isn't this nice, another story to make us feel better with the looming major electrical price increase. Isn't this a re-run from a year ago? LES hates it when the weather is nice, because no money is being made by them. "

 Please... wrote on May 7, 2007 8:34 am:
" don't compare Lincoln's rates to New York City's. "

 Better Jobs wrote on May 7, 2007 8:41 am:
" The editorial board fails to tell you, if you move to a city where you pay higher electrical rates, you most likely are going to be making more money doing your job. This city's employment sucks when you compare apples and apples in the job market. "

 as wrote on May 7, 2007 8:48 am:
" Ok, fine so electric rates in this city are lower than most rates in larger cities around the country - no argument there. But what this article fails to point out is that most of the wages in these larger areas are also higher which makes higher living expenses easier to afford. Daily living expenses in Lincoln are skyrocketing while wages are essentially stagnant. Not a good combination "

 Just once... wrote on May 7, 2007 9:04 am:
" Just once I'd like to read an editorial that encouraged an agency to control spending instead of the taxpayer/consumer taking another hit. "

 John wrote on May 7, 2007 10:22 am:
" Electric rates are driven by wholesale power prices. Recent industry trends in moving towards market based wholesale power costs tend to make the incremental costs of retail suppliers similiar across across the midwest and some degree across the nation. Energy prices will definitely have an upward movement to the future. The nation's electric infrastructure has not keep up with increasing demand. LES should be complimented on keeping those rate increases to a minimum. No one likes increases in prices, but Nebraska utilities will not be able to hold off the inevitable wholesale cost increases and trend no matter how efficient their operations are. The measure of success is can they minimize those impacts. Those are the hard cold facts. A single digit increase demonstrates good operations in this enviroment. "

 Don't get it wrote on May 7, 2007 10:33 am:
" Don't like your pay, join a Union "

 K-Man wrote on May 7, 2007 11:09 am:
" Don't complain about a 4.5% rate hike. I moved from Lincoln to SW Colorado 3 1/2 years ago and we get a 6-10% rate hike every January 1st. We are paying about 131.00 for 1000 Kilowatts. The electric company keeps telling us they are a Co-op and have some of the cheapest rates in the country. "

 Ted wrote on May 7, 2007 4:13 pm:
" Check out the property taxes in some of these places. I don't mind the electric rate increases but its the out of sight property taxes. Yeh my former state has higher electric rates but the property taxes are four time less than Lincoln. Just wait til Great Plains Gas takes over, I have a feeling we'll really be in for it. Then add to all that, if a Democrat is elected President, our FIT taxes are going to zoom to the moon. They are already working on the changes and they aren't pretty!! Think your hurtin' now, it will get worse, especially if a Democrat becomes President. You can already see what the Democrat city leaders have done to your property taxes!! "

 Nope wrote on May 7, 2007 4:16 pm:
" Wages in most of the larger areas are not necessarily higher than Lincoln. In fact, wages in Lincoln are comparable to other cities the same size. If you think wages are higher somewhere else, why are you still in Lincoln? Move and quit complaining! If you want to complain, shut up! We are tired of your crying. "

 Oh Yeah.. wrote on May 7, 2007 5:31 pm:
" People never want to pay fair value when they are buying something from someone else, but just watch them when they are selling something of their own. Ditto for what "other people" make in their employment. Same difference here. "

 PW wrote on May 7, 2007 9:16 pm:
" Wait til you complainers are retired on a fixed income and you income never goes up. Everybody raises their prices and your fixed income keeps going down. Cost of living is double in Lincoln compared to 3 state over. At least they provided for the retired, Nebraska doesn't!! "

 Bill Morgan wrote on May 7, 2007 10:26 pm:
" Number 1 this isn't New York, and they keep increasing the customer facility charge so that makes their actual charge per kw less. I do agree that we don't pay high prices, but it isn't as good as published amounts. I would love to strip the extras and see what it actually is when they factor the facitlity etc charges into the kw charge. "

 Stimpy wrote on May 8, 2007 8:28 am:
" OK, someone explain the logic in this decision again...You're going to make me pay more so that my prices can stay low? How does that work? These increases have been going on for years now. Earlier this year their excuse was because of the ice storms out in central Nebraska. Excuse me, but why should I have to pay more, when central Nebraska should be paying for everything? People were meant to live and die free. We're not meant to be enslaved by companies who constantly turn the screw a little tighter then back it off, then repeat the whole process again and again, so we don't scream so much. "

 Mike Honcho wrote on May 8, 2007 9:19 am:
" Yes, Stimpy, you should pay more in lieu of the ice storm because the electricity that LES was providing was more expensive than normal...this was due to the fact that cheaper electricity couldn't be transmitted through the downed lines out west. The electricity that you continued to use was purchased/produced at a higher rate, and that cost was passed on the consumer. If you disliked the rate increase, you could have just stopped using the electricity. I really don't have a comment regarding this rate hike...although it really does stink for those on fixed incomes. "

 Mat wrote on May 8, 2007 10:28 am:
" You say that LES hates it when the weather is nice becasue they make no money. Actually the opposite is true. When the weather is nice in Lincoln is the only time that LES or any other publicly owned utility is able to make significant off system sales. In other words when the weather is really hot, or really cold all of their generation resources are running just to satisfy their native load. And since by law LES cannot make money off of their native load the only way to make money is through off system sales. "

 JP wrote on May 8, 2007 1:13 pm:
" Maybe our public utility should look into producing more of our own electricity rather than buying it on the open market. The Loup canal was built decades ago strictly to run hydroelectric plants and they are still funtioning to this day. On top of that if they really wanted to they could add more plants to that canal. Maybe LES should look a project like that where we can add more plants when we need to, then we can sell our excess power on the open market for wholesale prices. "

 dlb wrote on May 8, 2007 2:23 pm:
" New York's rate is nearly 4 times higher than LES. Do you really think someone fliping burgers at mickey d's in NY is making $30/hour. I think not. The wages between Lincoln workers and NY workers are going to be a lot more comparable than you think. Instead of paying 500-600 dollars a month for a 1 bedroom apt. they are living in 1 room **period** for that amount. "

 Josef wrote on May 8, 2007 4:50 pm:
" Everyone commenting here seems to be obsessed with the wage differences between NE and the rest of the nation that pays higher electrical rates. Although, yes, the average person in NY makes more for doing the same job we do here, it's not 4 times more like their electrical bills, or 10 times more for rent! If we did more to entice businesses into our communities, we wouldn't have to worry about such low wages. Not to mention making the effort to get educated! How many people here can say they have an MBA? Those people doing your job in NYC probably do.. "

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