LINCOLN – After two years with no rate adjustment, LES staff and its Board’s Budget & Rates Committee, proposed an increase to retail electric rates during Lincoln Electric System’s Administrative Board meeting Sept. 16, 2016.
Residential customers will see an average rate adjustment of 3.5 percent, while the system average adjustment will be 3 percent. LES’ rate philosophy is to equitably allocate costs to each class of customers with the goal of maintaining rates for each class within 5 percent of the cost to serve the customer class.
This means that while the system average rate adjustment is 3 percent, individual rate classes will see adjustments both above and below the average. Even with the proposed adjustment, LES electric rates are projected to remain among the lowest in the country.
“The rate adjustment is primarily due to increases in net power costs which are related to decreased wholesale market revenues, driven by low natural gas prices,” said Laura Kapustka, LES vice president of Financial Services & CFO. “Power costs are typically the single largest driver of rates.”
LES recently refinanced approximately $120 million in revenue bonds which resulted in a net present value savings of approximately $19 million. This refunding, combined with internal cost management measures, helped to significantly lower the rate adjustment.
LES also continues its restructuring of electric rates to properly allocate the fixed charges and variable energy charges associated with supplying power to customers.
As part of this process, LES is proposing to segment the residential rate class into three levels based on average monthly electric usage. This in turn provides a more equitable distribution of fixed costs between high- and low-use customers.
A public meeting on the proposed LES 2017 budget will be held Oct. 6 at 7 p.m. at the Walter A. Canney Service Center, 2620 Fairfield St. LES staff will also be meeting with customers and customer groups during October to provide information and receive feedback on its proposed 2017 budget and rates.
Board action on the budget is planned to occur at its Oct. 21 meeting. If approved by the LES Administrative Board, the proposed budget and rates will be considered by the Lincoln City Council at a public hearing in November.
LES 2017 budget and rates information is available at LES.com.