The Future of Power Costs in Nebraska

Looking at the kilowatt hour rate by state shows that Nebraska ranks 10th lowest in the nation. The Energy Information Administration (the source most used for comparing rates in all energy sectors) cites Nebraska’s average rate is 7.21¢ per kilowatt hour. Lowest on the scale is Wyoming which charges an average of 6.08¢ per kilowatt hour. As a nation, the average kilowatt hour cost is 9.82¢. Conversely, the state with the highest cost of electricity is Hawaii which charges an average of 21.21¢ per kilowatt hour.

Like Nebraska, Wyoming’s chief source of power is obtained through coal plants. Actually, 45% of our nation derives its electricity from coal; 23% is from natural gas; 20% from nuclear; 7% from hydro plants, 4% from renewables and 1% all other.

The EPA is expected to enact several key regulations in the coming decade that will have an impact on the U.S. power sector, particularly the fleet of coal-fired power plants. Because the rules have not yet been finalized, their impacts cannot be fully analyzed. Rest assured, any ruling by EPA will impact electric rates negatively because the EPA is focusing on our nation’s largest source of power…coal.

At a recent meeting hosted by Nebraska Public Power District, the general expectation is that NPPD will raise the wholesale cost of power by 6.5% for 2012. NPPD explains (click link) why the rate increase is necessary. In addition to other factors, they are citing a 75% increase in fuel costs as being the primary driver behind the increase.

About 60% of Dawson PPDs operating costs are wholesale power purchases. That means Dawson Power customers may see a 4% (estimate) increase in their rates simply based on NPPDs increase. We are also affected by rising fuel costs so there may be an adjustment to our projection as we do a cost of service study later this year.