City Council Hears Energy Presentation
Posted: 06 November, 2013
WAYNE (KTCH/KCTY) - The Wayne City Council heard a presentation by James McNally, city attorney in Neligh, Neb., Tuesday night at their regularly scheduled meeting.
The presentation was in regards to purchasing wholesale economy power verses firm power.
Wayne and 160 other Nebraska utilities are in the 11th year of 20-year wholesale power contracts with the Nebraska Public Power District (NPPD). NPPD serves about one-third of the total Nebraska population. These wholesale power contracts all expire on Dec. 31, 2021.
NPPD gave all wholesale customers notice last October that they want to terminate current contracts and sign new 20-year contracts by this December. NPPD needs to do this to secure $1-2 billion additional bond financing to make substantial investments in generation plants and transmission lines, and new contracts will help them to secure future revenue to pay off the bonds at favorable interest rates. NPPD currently has about $2 billion in existing debt with $1.3 billion left to pay on their 35-year old nuclear and coal plants.
The City of Neligh stopped purchasing power from NPPD and began purchasing from Hastings utility. Neligh recently built a new power plant using modern caterpillar engines for generation and began purchasing daily market rate power through the Municipal Energy Association of Nebraska (MEAN). Neligh runs their generators only for outages or when NPPD calls them to help support voltage in the irrigation areas around Neligh. Neligh powers its generators with soy diesel fuel.
According to McNally, who has been heavily involved in developing the Neligh electric power purchasing plan, the City of Neligh has paid $81,000 since April for their economy power, versus the $108,000 they would have paid to NPPD. The city has made a net profit of $183,000 since April.
The Neligh power plant is a 5.5 megawatt operation, while Wayne’s is nearly four times that size. Based on this assumption, McNally predicts that Wayne would receive a net gain of $1,607,008 if the city purchases wholesale market value energy, accruing a net profit of $564,252 for the year.
The City of Wayne will be evaluating options for future purchase of power, comparing various strategies and cost savings before making a decision.