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Lincoln Electric System

One of the electricity sources for the Lincoln Electric System is its Terry Bundy Generating Station in Lincoln.

ERIC GREGORY, Journal Star file photo

OMAHA -- Nebraskans could be saving more on their electric bills, according to a new study paid for by groups seeking to open the state to competition from private electric companies.

But Nebraska's public power advocates say the numbers don't add up and questioned claims made in the study done by Goss & Associates Economic Solutions, which is headed by Creighton University Professor Ernie Goss.

The study says potential savings are being stunted as cheap electricity generated by natural gas and wind in other states undercuts sales of less cost-effective power made by Nebraska coal-fired and nuclear plants.

The study focuses on the Nebraska and Omaha public power districts. The groups that paid for it are calling for the Legislature to let customers choose who they buy electricity from, as well as mandating more transparent billing that shows separate charges for energy, demand, transmission and distribution.

The study was paid for by the Wind is Water Foundation, which has a close relationship with Americans for Electricity Choice, a nonprofit led by Gary Aksamit. The Nebraska native has spent three years pushing to open the state to competition from for-profit electric producers.

Wind is Water Director Michael Matheson said the groups are working with state senators to introduce legislation to reform Nebraska’s power landscape, but would not say which senators.

Increased competition will lead to lower electric bills, and more transparent bills will let consumers know what drives changes in their rates, Goss said Tuesday at one of a series of news conferences being held across the state to promote the study.

More than a dozen states including Texas already allow customers to choose electric providers in a system known as “retail choice.” 

That would also let consumers decide whether they want to buy from companies that focus on renewable sources or simply pick the cheapest option, Goss said.

Shelley Sahling-Zart, vice president and general counsel for Lincoln Electric System, said the study seems like a solution in search of a problem. 

Nebraska's electric rates are some of the lowest in the U.S. Last year, the state had the 15th lowest statewide average electric rate in the nation, a fact to which public power companies point to.

"On residential rates, Nebraska is lower than all the retail choice states, about 31 percent lower than the retail choice states' average," Sahling-Zart said. 

Nebraska is the only state to be entirely served by public electric utilities.

Nebraska’s utilities already buy electricity from a regional market, Goss said; consumer choice would cut out the middle man.

The three largest -- Nebraska Public Power District, Omaha Public Power District and Lincoln Electric System -- joined a regional power system in 2009 known as the Southwest Power Pool based in Little Rock, Arkansas.

In 2014, the pool launched a wholesale marketplace for electric sales, coordination of next-day power generation and improvement of regional balancing of electric supply and demand.

The basic idea is that all power generators bid their electricity into the pool, then buy out what they need for resale to customers. So the cheapest electricity gets used first and more expensive electricity might not get generated at all if it’s not needed.

Southwest Power Pool said its marketplace has saved members $1 billion since going online by making cheap electricity available throughout the region.

Goss' study says Nebraska's power districts are struggling to produce power cheap enough to be viable on the market, leaving the state's less efficient plants idle and districts less able to recover fixed costs.

He pointed to the shuttering of OPPD’s Fort Calhoun Station and the idling of NPPD’s Sheldon Station in September, both because Southwest Power Pool's wholesale market prices were lower than the plant’s cost of production.

NPPD's spokesman Mark Becker refuted the claim, saying the district's power plants, including Sheldon Station, are being called on by the pool to produce power.

Goss did not have information on the cost of producing electricity for each of the state’s individual power plants, but he said the market price is below the aggregate price at which NPPD or OPPD can generate it.

NPPD’s average generation cost in 2015 was $28.21 per megawatt hour and OPPD's was $32.11 per mwh, while the average Southwest Power Pool day-ahead market price was $22.84 per mwh and real-time market price was $21.68 per mwh, according to the study.

Nebraska long has benefited from the Wyoming Powder River Basin’s coal, but cheap natural gas from the fracking boom and wind generation is undercutting some of Nebraska’s coal-burning generators, the study says.

NPPD generates nearly 52 percent of its power from coal, 30 percent from nuclear, 6.5 percent from wind, 5.5 percent from purchases, 5.3 percent from hydroelectric sources and 1 percent from natural gas or oil.

NPPD has not raised its residential rates for four consecutive years. The district plans to increase wholesale rates, what it charges other utilities, by an average of 0.6 percent in 2017.

The study does not address LES, which for 2017 has proposed raising its systemwide electric rates an average of 3 percent.

LES said it has the 13th lowest rates this year among 100 cities surveyed nationwide. Compared to seven other Midwestern cities -- including Omaha, Minneapolis and Des Moines -- LES rates are the lowest in six of 12 categories, including residential rates.

Earlier this year, Aksamit sued the state’s four largest public power entities seeking to get detailed information of generation costs. The case is still in the courts.

On Tuesday, he called for relegating Nebraska’s public power companies to managing infrastructure like electric lines and power poles, then allow for-profit companies to provide the power.

“What I’m advocating for is a separation of the power generation business from the lines and the wires business in Nebraska,” Aksamit said. “Set the generation assets aside in a trust and allow them to wind themselves down. Whichever ones are economically viable will remain. Whichever ones aren’t economically viable will be flushed out through the marketplace.”

Reach the writer at 402-473-7304 or nbergin@journalstar.com.

 On Twitter @ljsbergin.

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