This editorial appeared Sunday in the Lincoln Journal Star
Hold on to public power
A report suggesting that major chunks of Nebraska’s public power system be privatized should be viewed with a skeptical eye.
Public power has served the state well since the 1800s. It keeps decision-making in the hands of the people who use the electricity, rather than investors who will give priority to their own interests.
The privatization proposal came in a study commissioned by the Platte Institute for Economic Research, a conservative-leaning think tank in Omaha founded in 2007 by Pete Ricketts.
The study was done by Creighton University economist Ernie Goss, with research economists Jeffrey Milewski and Scott Strain.
As the study points out, historically public power has delivered low rates, decade after decade, to Nebraskans.
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This is still true for customers of the Lincoln Electric System, which ranks 11th lowest in the country among 106 cities included its annual rate survey.
But rates have risen much higher and more rapidly for customers of the Nebraska Public Power District and the Omaha Public Power District.
One reason for the jump in prices was the long shutdown of the Fort Calhoun Nuclear Generating Plant after the historic flood of 2011, when the Missouri River overflowed its banks and basically turned the plant into an island. Recommissioning cost $177 million.
Nebraska’s publicly owned utilities also face a challenging future. The Obama administration’s Clean Power Plan would require states to reduce carbon emissions. Historically the state’s reliance on cheap coal from the Powder River Basin in Wyoming helped keep rates low. The new regulations will force utilities to seek other, more expensive options. Nebraska and other states, however, have sued to stop the plan.
Nebraska’s publicly owned utilities have more flexibility in meeting challenges than it might seem from reading the Goss study and accompanying commentary from Platte Institute staffers.
As LES vice president Shelley Sahling-Zart pointed out, LES has taken advantage of tax incentives for renewable energy available to private companies by buying wind-generated electricity from companies in Oklahoma, Kansas and Nebraska.
And earlier this month the city of Beatrice gave notice to NPPD that it would end its current contract in 2021, and begin purchasing electricity from investor-owned AEP Partners, headquartered in Columbus, Ohio.
Although Goss and his associates projected privatization benefits in the hundreds of millions of dollars, those calculations were described as “flawed and meaningless” by NPPD economist Kenneth Lemke.
Privatization certainly would entail risk. Historically private enterprise has done a poor job of serving the needs of rural states like Nebraska. When Nebraskans own their own power companies they retain more control of their own destiny.