OPPD’s rate restructuring plan

Questions remain


Last month, the OPPD Board of Directors approved a four percent general rate increase for 2016 and the implementation of a fixed service charge that will increase over the course of four years. The changes to the fixed service charge will begin June 2016 and will increase from $10.25 a month next year to $30 by 2019.

Jodi Baker, Media Specialist for OPPD, said OPPD began researching this restructure almost three years ago. She explained the issues that those who opposed plan had were all understood well in advance of OPPD’s stakeholder process and all were considered when they made their recommendation.

“Despite knowing that we would face criticism, we felt that staying with the status quo, while the easier path, wasn’t in the best long-term interest of the company or our customer-owners,” she said.

Many are concerned just how their bills will be affected by the changes, but Baker said consumers with average usage will see minimal, if any, change at all on their bills due to the new rate restructuring and that’s because as the service charge increases, the usage rate decreases. Numbers-wise that breaks down to those whose bills run about $80-$125 a month.

“Those who use more energy, whose bills are more than $125/month, will see a decrease. Lower energy users, whose bills are less than about $80/month, will see an increase,” Baker explained.

The biggest issue expressed in the wake of all the changes has been the impact it would have on low-income households. In other words, those who have a difficult time paying their current bill without the upcoming changes.

Baker said one big distinction that needs to be made is the difference between low-income and low-energy use. The two terms are not synonymous. Some of the lowest-income customers do not live in homes that are energy efficient or don’t own energy-efficient appliances.

“Low-income customers who are high energy users will see an average monthly decrease of $18 by 2019. Low-income customers who use the average amount of electricity will see no changes due to rate restructuring. Customers who are both low-income and low energy users (the majority of low-income customers) will see their bills increase by an average of $9 per month over the course of the next three years,” Baker said.

One group that has been interested in the rate restructuring plan from the very beginning is Omaha Together One Community (OTOC). The organization held an open meeting the week prior to the board’s vote and had presentations by OTOC members as well as a Q&A session with Tim Burke, OPPD’s Chief Executive Officer.

OTOC’s members had hoped OPPD might take a little more time to consider other options before voting on the new rate restructuring plan.

“We are certainly disappointed they didn’t look into other alternatives. There really didn’t seem to be an immediate cause to do this since the rate structure isn’t going into effect until next summer,” said OTOC member Mary Ruth Stegman.

Stegman said OTOC was thankful that the board decreased the initial proposed fixed service charge from $35 to $30. She said it shows OPPD did listen to OTOC. She said they also believe that OTOC, along with other organizations including Nebraskans for Peace and the Sierra Club, helped people better understand what this was all about.

“We feel the public is far more informed on this issue now even though it didn’t go the way we would have liked,” Stegman said.

She said she feels OPPD did listen to some of OTOC’s concerns by adding in a credit for people who will need assistance with their monthly bill. Customers would have to apply for the credit. Stegman explained OTOC feels OPPD did give some assurance that its Common Fund is going to be more available to people who need it.

The new OPPD program Stegman referenced is called the “Residential Low Usage/Low Income Customer Program.” It will assist qualifying customers in managing their budgets through the service charge changes.

Baker explained, “This is a temporary, transitional program which is available to customers, whose usage falls below 600 kilowatt hours (kWh) in any given month through May 2020, and whose low income status is qualified through the State Low Income Home Energy Assistance Program.”

Another way people can obtain financial assistance with their electricity bill is the Common Fund, OPPD’s energy assistance program. Funds are raised through tax-deductible donations by customers on their monthly bills, through the Heat the Streets/Walk for Warmth event as well as OPPD employee contributions.

Mary Spurgeon, OTOC member, said she was encouraged by something that happened at last month’s board meeting. She said Anne McGuire, president of the board, asked that the board be given a monthly versus yearly update on the credit programs. Spurgeon said McGuire and at least one other board member wanted to know monthly about the program’s progress and how it’s going.

Spurgeon said she knows OPPD’s board of directors and staff are focused on making sure customers have reliable electricity that is affordable for most people. She acknowledged it’s a complicated job. But she also said what they don’t see because it’s not their focus, is some of the impacts these decisions have on people.

“I have likened it to moving a big building down a narrow road. You can’t just sit in a truck and do that. OTOC is looking around as OPPD is moving ahead and we see some things that will be really hard on people. We want OPPD to do well but we also don’t want the greater community to be harmed by their actions,” said Spurgeon.

The board’s vote last month does not mean the end of OTOC’s efforts. In fact, they will hold an Issues Café at Urban Abbey on Wednesday, January 13 at 7 p.m. The event is called “Organizing a smart energy future.”

“This will be a frank discussion of the reasons why the OPPD board pushed through their rate restructuring plan despite enormous public opposition,” Spurgeon said.

Questions for OPPD will include when and where the OPPD board and staff considered alternatives, why OPPD would raise their customer service charge to the highest level in the United States for a major utility and what the public feedback has been like regarding the plan.

“We really need to have some brainstorming to see how and what we should push back on regarding this rate structure,” said Stegman.

One of the alternatives OTOC recommended OPPD consider focused on using a demand and charges time-of-use price structure. It was an option OPPD did think about, but Baker said the problem is these require the implementation of Smart Meters, a technology OPPD doesn’t currently have in place.

“We are implementing a pilot program (using Smart Meters) in 2016, and if it works well, we do plan on implementing the technology in the future,” she said.

Stegman said OTOC will be interested down the line to see if OPPD does in fact provide Smart Meters for fairer and more efficient pricing.

“They don’t have that plan ready to go right now, but it seems like the future would demand Smart Meters which they are not ready to do yet,” said Stegman.

So why did OPPD make these changes now?

Baker said the changes in the bill structure allow OPPD to build a better pricing foundation to embrace the developments and changes facing the energy industry.

“OPPD can either lead or follow. However, our mission is to ‘lead the way we power the future,’” she said.

More info at OPPD.com, OTOC.org


Category: News

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