Oct. 16, 2009

 

The Lincoln Electric System Administrative Board held its regular monthly meeting Oct. 16 at the Lincoln Electric Building. Items from the meeting, as well as other pertinent information, include the following:

 

Board adjusts request downward for retail rate increase, 2010 Budget

Following meetings with the business community and a public hearing, the LES Administrative Board approved Friday (10/16) a 2010 Budget that is $2.3 million lower than proposed and reduced a retail rate increase from 3.9 percent to 2.9 percent.

Approval votes were received from Dawn Rockey, Antonio Marquez, Marilyn McNabb, Kathy Campbell and Patrick Beans. Voting against the increases were Richard Evnen, Matt McNair and W. Don Nelson.

The current economic climate was cited as the primary reason for reducing the request for next year’s budget and rate increase.

To accommodate the lower increase, cuts were made in personnel expense adjustments, operations and maintenance deferrals, administrative and general expense reductions and deferrals and Power Supply expense adjustments.

The next step in the process will be consideration by the Lincoln City Council. A public hearing before the Council will be held Nov. 2, and a vote is expected Nov. 16.

The 2010 Operating Budget stands at $278.8 million and is down from the original request of $281.3 million. The Budget & Rates Committee recommended, and the Board agreed, that neither the $2 million earmarked for the Sustainable Energy Program or the planned contributions of $2 million to the Rate Stabilization Fund be reduced. Also approved was a capital budget of $50 million.

The retail rate increase is necessary to pay increases in fixed costs at LES’ generating resources, increases in regional transmission costs, expansion of the Sustainable Energy Program and ordinary increases in operations and maintenance expenses. A 2.9 percent increase in rates would add about $2.10 a month to the electric bill of an average residential customer.

The rate adjustment by customer class:

• Residential +2.5 percent

• General Service +3.2 percent

• Large Light & Power +3.4 percent

• Large Power Contract +3.2 percent

Also approved was an increase of $6,400 for the Energy Assistance Program, which will total $227,900 next year to be used by the Lincoln Action Program to assist LES customers who are unable to pay their electric bill. Recipients are instructed in energy conservation and budgeting before receiving funds.

A rate increase of 4.0 percent scheduled for March 1, 2009, was deferred to Jan. 1, 2010. LES was able to push the scheduled rate increase because of a softening of prices in fuel and energy markets, reductions in administrative and general expenses, reductions in planned expenditures for purchased energy, shortened maintenance schedules for power plants, reduction in salary allocations and a short-term increase in income from fuel transportation capacity release of natural gas.

Lower revenues this past summer as a result of the cooler weather were not a factor in the proposed rate increase. In fact, LES’ budgeted net revenue at the end of September was favorable to our year-to-date forecast by $1.8 million. This is due to improved wholesale energy prices and measures taken by LES staff. Consequently, expenses were considerably lower and have, at this point, offset the reduced revenue due to cooler weather.

Board selects firm for LES Administrator & CEO search

The LES Administrative Board voted with the Personnel and Organization Committee recommendation to select Mycoff, Fry & Prouse of Conifer, Colo., to help with the search for an Administrator & CEO.

The committee expects to conclude the first round of interviews before the end of December and will narrow the list to three to four finalists for the Board to interview in February.

The firm specializes in recruiting for utility industries. Dawn Rockey, LES Administrative Board chair, noted the firm's depth of knowledge of the electric utility industry and especially public power.

The firm's Web site lists references of American Public Power Association; Nebraska Public Power District, Columbus, Neb.; Sacramento, Calif. Municipal Utility District; City Utilities of Springfield, Mo.; Seattle, Wash. City Light; Gainesville, Fla. Regional Utilities; Tacoma, Wash. Public Utilities; CPS Energy of San Antonio, Texas; and City of Anaheim, Calif., Dept. of Water and Power.

Rockey said expenses for the search will not exceed $73,000, which is lower than initially expected.

 

Other Reports

 

The following statistics for September were presented to the Board:

September 2009	September 2008	Change
Number of Customers
129,187	127,898	+1,289 (+1.0%)
Retail Electricity Use (MWh)
237,255	249,283	-12,028 (-4.8%)
12-Month Average Outage Time/Customer (minutes)
18.3	45.2	-26.9

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