Oct. 19, 2007

 

The Lincoln Electric System Administrative Board held its regular monthly meeting Oct. 19, at the Lincoln Electric Building. Items from the meeting, as well as other pertinent information, include:

 

Sustainable Energy Program Included in 2008 LES Budget

 

A sustainable energy program that will increase Lincoln Electric System’s (LES) use of renewable energy and encourage customers to conserve energy was approved Friday (10/19) by the LES Administrative Board as a part of its 2008 budget.

 

The operating budget allows about $1 million for renewable energy projects and customer programs aimed at increasing use of energy-efficient technologies. Pending approval by the Lincoln City Council, the 2008 plans for the program will be developed including an opportunity for the public to provide input on the program’s components.

In addition, included in LES’ capital budget is $4.5 million for renewable energy projects.

Approximately $2 million in the operating budget would be designated for LES’ Rate Stabilization Fund. The fund helps maintain stable rates for LES customers in the event of high-cost expenses such as severe storm damage and large capital or operating costs. The Rate Stabilization Fund, which reached a high of $12 million, now stands at $4 million.

The 2008 LES operating budget totals $198 million, which is $17.8 million higher than the current year’s budget. LES Chief Financial Officer Keith Brown said power costs comprise 79 percent of the budget, including about 61 percent in direct costs and 18 percent for depreciation. Power costs are expected to increase by $9.4 million in 2008, while depreciation costs will increase $3.6 million. Other operating costs are 15 percent of the budget and will increase $3.6 million, he said.

LES projects a decrease of $46 million in capital expenditures in 2008 compared to 2007, a drop from $113.9 million to $67.7 million. The completion of the Walter Scott, Jr. Energy Center Unit 4 near Council Bluffs, Iowa, is the primary reason for the decrease. Capital costs are primarily funded by long-term debt and include construction costs for transmission and distribution lines, substations and power plants.

With the approval of the LES Administrative Board, the budget and capital expenditures will next be considered by the Lincoln City Council.

 

5.5% Rate Surcharge Lifted by LES

 

A 5.5 percent rate surcharge on LES bills was ended two months early by LES’ Administrative Board at its meeting Friday (10/19).

The surcharge was included on bills starting March 1 to pay for unbudgeted replacement power costs when an ice storm last December downed transmission lines in central Nebraska. The resulting shortage of energy forced LES to buy or generate electricity at a significantly higher cost to meet the needs of its customers.

The impact of the surcharge on the typical residential customer was $3.87 per month and was authorized to continue through the end of this year.
A majority of the energy used by LES customers is provided by LES’ lowest-cost power plants - Laramie River Station, near Wheatland, Wyo., and Gerald Gentleman Station, near Sutherland - but only half their output could reach LES after the storm. The cost to replace power totaled $9.77 million.

Bundy said although the surcharge has raised about $7 million of the $9.77 million needed, financial projections in other areas of LES’ operations allowed ending the temporary customer surcharge Oct. 31.

Cited as reasons for the lifting of the surcharge were the following:

• The efficient operation of LES’ power plants.

• The on-time completion of the Walter Scott, Jr. Energy Center Unit 4 near Council Bluffs, Iowa.

• Reasonable wholesale prices for energy.

• LES’ expected sound financial position at the end of the year.

2007 Power Purchase Program Results

 

Ten LES customers participating in LES’ Power Purchase Program, representing 7.5 Megawatts (MW), were asked to curtail load three days in 2007, according to a report to the Administrative Board by Vice President of Consumer Services J. Todd Hall.

Customers reduce the demand on LES by running emergency generators, curtailing load or both. Participation is voluntary. LES pays participants $0.12 per kilowatt-hour (kWh). Last year, payments to customers totaled $6,987.

As an example, on this year’s peak load day, Aug. 13, seven customers curtailed use from 2-8 p.m. and reduced load by 3.2 MW.

Customers participating in the program were Archer Daniels Midland, District Energy Corporation, Goodyear Tire and Rubber, Lancaster County Youth Services, Lincoln Airport Authority, Nationwide Insurance, Nebraska Department of Roads and Nebraska Heart Hospital.

 

Other Reports

 

The following statistics for September were presented to the Board:

September 2007	September 2006	Change
Number of Customers
126,352	124,612	+1,740 (+1.4%)
Retail Electricity Use (MWh)
258,915	231,694	+27,221 (+11.7%)
12-Month Average Outage Time/Customer (minutes)
35.5	16.6	+18.9

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