COLUMBUS — Industry leaders believe public power has effectively and affordably fueled Nebraska’s energy needs for decades.
But it’s the next 10 years that may be the most trying for this unique model of consumer-owned utilities.
Pressure to move toward more environmentally friendly energy production practices is mounting from both electricity consumers and the federal government.
John McClure, interim CEO and president of Nebraska Public Power District (NPPD), said it’s a goal of the state’s largest utility to affordably and reliably serve its customers in an environmentally-friendly way.
“How you get that done is very challenging,” he added.
More stringent environmental regulations could be the first major push to reduce utilities’ reliance on fossil fuels like coal.
“The current administration has sent very clear signals that they would like to reduce the reliance on coal to produce electricity, and they’d like to see other technologies,” McClure explained.
While specifics remain unknown, expectations are that areas like air emissions, water-related issues and coal ash disposal will be targeted.
Required changes to meet these regulations could cost NPPD billions of dollars.
Additional pollutant control at just Gerald Gentleman Station, a coal-fired plant near Sutherland, could cost $1.5 billion.
Other legislation threatens to put an end to once-through cooling, a technique that cycles water through power plants before it’s returned to neighboring rivers and reservoirs. Its ban would require cooling towers to be installed, a costly endeavor that also places utilities at odds with water restrictions as it requires four to five times as much usage.
The big question, McClure said, is whether these cooling towers would be required only for new construction or if each existing plant would be need to be retrofitted. If the latter is demanded, he said, some power plants may be closed in lieu of making the expensive upgrades.
Any increased production costs or a reduction in the number of coal-fired power plants, which currently supply about 50 percent of the nation’s electricity and 55-65 percent at NPPD, would undoubtedly lead to higher electricity rates for Nebraskans.
“Our lowest-cost facilities, historically, have been our coal-fired power plants,” said McClure. “Low-cost coal has made electricity cheap in Nebraska.”
At Loup Public Power District (LPPD) and other wholesale customers of NPPD, the repercussions would likely come by way of trickle-down rate increases passed on from NPPD. Often, these increases are then shifted to Loup’s retail and wholesale customers throughout Platte, Colfax, Nance, Madison and Boone counties.
“Most of those regulations hit NPPD a lot harder than they hit us,” Loup Power District President and CEO Neal Suess said, “but they all affect us a little bit.”
Suess said the goal at Loup is to work with NPPD, developing a better understanding of why and when rate increases can be expected so customers aren’t as shocked by higher electricity bills — something that can be expected again next year as NPPD continues to build infrastructure-improvement costs into its rates.
Still, McClure assured, “We’re still among the lowest-cost states in our electricity prices.”
LPPD has established a top priority for its impending strategic plan of promoting commercial and industrial expansion in the area. This includes both new construction and filling empty buildings scattered throughout Columbus. “That basically helps our load grow,” said Suess. “It helps bring people into Columbus and the surrounding areas.”
And the resulting sales could help stabilize rates by spreading any increases over a larger customer base.
At the same time electric utilities are battling environmental regulations, they must also continue to make moves toward “green” technology implementation. “We are seeing, as we move forward, more interest in distributed generation,” McClure said.
But power generated from the sun and wind continues to be expensive and somewhat unreliable. Still, NPPD has a goal of producing 10 percent of its electricity using renewable resources by 2020, which is being largely met by wind farms and hydroelectricity.
Suess said some large industrial consumers have already begun requesting greener electricity — as their customers request more environment-friendly production — and he expects that trend to spread to smaller businesses and residences.
“We’re going to have to start looking at adapting to some of those requests when they come in,” Suess added, which would come through a partnership with NPPD as Loup sells its generated power to the larger district.
While fuel cell-powered homes and roads filled with electric vehicles probably aren’t in Nebraska’s immediate future, other technologies could begin to affect the way people use electricity.
Smart grids are quickly gaining popularity across the U.S.
This advancement allows electricity users to receive real-time power prices instead of the seasonal rates currently offered. By having up-to-the-minute pricing, appliances could be programmed to run during off-peak hours, when rates are typically lower.
The question is how high electricity rates need to be before this service is demanded by Nebraska consumers.
“It has to be a lot higher than what it’s at right now,” Suess said.
LPPD also faces other uncertainties in the near future.
In 2021, its contract with NPPD expires.
“It would make sense that we would probably stay with NPPD, but we’ve got to look at what’s best for our ratepayers,” said Suess.
Additionally, a new license for the district’s hydroelectric facility is needed for continued operation after 2014. The result of this relicensing, Suess said, will help the utility determine its power-generation capabilities over the next 50 years.
Perhaps a bigger question for the state is what power-producing practices will be joining hydroelectricity five decades from now.