LINCOLN – For the second year in a row, Lincoln Electric System is proposing no systemwide rate increase for the upcoming year.
At LES’ Administrative Board meeting today (9/18), LES staff and its Board’s Budget & Rates Committee proposed a 2016 total budget authorization of nearly $380.6 million, approximately 10 percent higher than the 2015 total budget. However, LES’ proposed budget will not require a systemwide rate adjustment in 2016 for several reasons, including increases in wholesale power revenues.
The total budget authorization consists of the $300.6 million operating and $80.0 million capital budget. The operating authorization includes LES’ annual in lieu of tax payment and debt service payments.
LES is also recommending that a portion of its proceeds from the Burlington Northern Sante Fe settlement — related to coal transportation costs — be used to eliminate a 2016 rate adjustment, said Laura Kapustka, LES vice president of Financial Services & CFO.
“We believe this is the best way to return a portion of the settlement with BNSF to our customers,” Kapustka said.
A portion of the proceeds from the BNSF settlement also will be used to fund the utility’s rate stabilization fund to its target, which provides customer-owners protection from one-time events, such as storms, that could cost millions in unexpected costs.
A recent evaluation of LES’ popular Sustainable Energy Program has led to the utility proposing to fund the program at $3 million in 2016, instead of $4 million as it has the past two years. This reduction is proposed for only 2016.
Due to changing governmental standards, next year we will no longer offer one of the most popular lighting incentives, and we also are in the process of evaluating potential new incentives to offer in the future, Kapustka said. Due to the program changes, we felt it made sense to reduce the funds for the 2016 program year.
While LES is not requesting a systemwide rate increase, Kapustka said the utility is proposing minor modifications to how it bills residential, general service and heating service customers. Customers will see a slightly higher customer charge, offset by a lower energy rate. For most customers, changes to their bills will be minor.
Kapustka attributed the change as a way to help recover the fixed costs associated with supplying power to LES customers, which is not dependent on the amount of energy actually used in a given month.
"As a public power utility, we strive for low cost and reliable power and we feel the proposed 2016 budget supports that goal,” she said. “We look forward to sharing and discussing the 2016 budget with our customers.”
A public meeting on the proposed LES 2016 budget and rates will be held Oct. 7 at 7 p.m. at LES’ Walter A. Canney Service Center, 2620 Fairfield St. (27th & Fairfield). LES staff also plans to meet with customers and customer groups during October to provide information and receive feedback.
Board action on the budget is planned to occur at its Oct. 16 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.
Additional information, including a 2016 budget presentation, will be available Sept. 23 on LES’ website at LES.com.