NPPD making fiscal gains from heat

Jul 17 - McClatchy-Tribune Regional News - Tyler Ellyson Columbus Telegram, Neb.

July 17--COLUMBUS -- Not everyone is complaining about the heat.

Nebraska Public Power District is using increased revenue from the record-setting warmth to slowly melt away a deficit that was projected to reach nearly $22 million by the year's end.

Last month, the utility's board of directors approved the last of $15 million in spending cuts instituted as a response to reduced power sales during the mild winter and spring. The reductions, which represent about 1.5 percent of the district's annual budget of $950 million, include leaving some open positions unfilled, limiting travel and training expenses and restricting work schedules, according to Chief Financial Officer Traci Bender.

NPPD also hopes to shorten a scheduled refueling and maintenance outage at Cooper Nuclear Station near Brownsville to save on expenses, Bender said. That outage is expected to last 30 days.

Although all the approved reductions will remain in place, Bender said better-than-projected revenues this summer could help the electric utility break even by the end of the year. Currently, a $5.8 million deficit is projected.

"I'm optimistic about the year," Bender said. "Unfortunately, our customers are going to have some pretty high bills just because of the amount of energy they've been using."

According to Bender, NPPD's energy sales from June 1 through Wednesday were about 30 percent above budget.

The district set an all-time energy usage peak of 2,851 megawatts on July 3 before topping that mark the following day, when a peak of 3,036 megawatts was reached. The previous record high of 2,671 megawatts, set July 30, 2006, has been topped 15 times since June 28, according to NPPD spokesman Mark Becker.

Increased electricity demands can be attributed to the unseasonably hot and abnormally dry conditions that have dominated the state over the past month and a-half.

While business owners and residents have cranked up the air conditioning, farmers are battling a statewide drought that's caused irrigation use to rise dramatically.

Last week's U.S. Drought Monitor report showed the entire state was experiencing at least moderate drought conditions with areas of central and western Nebraska in severe or extreme droughts.

Nearly 50 percent of NPPD's record electricity demand came from irrigation use, according to Bender.

To keep up with the increased usage, Bender said NPPD has also been forced to purchase additional power from outside the state, run higher-cost plants such as the natural-gas powered Canaday Station, which hadn't been online in about two years, and buy electricity from municipal utilities like those in Wayne and Ord.

"Our costs are a little bit higher," said Bender.

But, the system has held up well.

Outside of a few outages caused by overwhelmed subtransmission lines in north-central Nebraska and near Gothenburg earlier this month, Bender said reliability hasn't been an issue.

The district works with other public power entities across Nebraska to control the irrigation load during peak demand times, typically 3 to 8 p.m., and has asked customers in certain parts of the state to conserve energy during those high-use periods.

Bender said NPPD hasn't been forced to shut off the power to any customers so far.

The utility will likely examine its transmission infrastructure later this year to determine if any upgrades need to be made, according to Bender.

"Because reliability is so important, we can't say this (weather) will never happen again," she said.

Looking to the more immediate future, Bender is keeping her eyes on this fall's refueling outage at Cooper and what could be an abbreviated growing season as indicators for how the utility's year-end financial statement will fare.

"We're just going to keep going as-is," said Bender. "We'll see what the rest of the summer holds."

According to Erik Pindrock, a meteorologist with AccuWeather, The Telegram's weather source, area residents won't see much relief from the sweltering heat in the coming weeks.

Pindrock said high temperatures ranging from the mid-90s to low 100s can be expected through this weekend, and the rest of the month doesn't look much cooler.

Highs through July could easily be five to 10 degrees above average, which is around 87 or 88 for this time of year, Pindrock said.

Long-range models show the hot, humid and dry weather could stretch through August, he added.

"The weather pattern doesn't change that much," Pindrock said.