Customer Newsletter, January 2008

Complete Newsletter Edition

SPD Implements Rate Increase for 2008

At their December meeting, Southern Power District’s Board of Directors reviewed the results of a Cost of Service Study performed by Utility Financial Consultants. These studies are performed for Southern in order to establish new rates for the district, based upon the cost to serve various rate classes, and factors that are driving up the cost to provide electricity.

Nebraska Public Power District has announced that wholesale rates will increase by 12 percent in 2008. This increase will be implemented to address rising costs for fuel, transportation and labor, along with the costs associated with last year’s ice storm. Additionally, Southern has been affected by rising costs, and we endured our own hefty ice storm costs which included labor, materials and significant interest expense from emergency financing to pay the mounting bills from the storm. The Federal Emergency Management Agency (FEMA) will reimburse the district for about 65 percent of our costs—which amounted to about $45 million. We are still waiting for payment of some of those funds from FEMA which has created additional interest expense for the district. This is a major factor in our rate increase for 2008.

The result of all of these factors was that Southern’s Board of Directors approved the implementation of an overall rate increase for our retail customers of 12 percent beginning January 1st. The study approved by the board identified the cost to serve all the various classes of customers and some will increase as much as 15% while others will be 10%. These increases are for the average use per customer in each of our rate classes. Customers with consumption more or less than the average can see increases that will vary up or down from the average increase for their class.

There are two surcharges that have appeared on your electric bill. One has ended with your December bill and the other will expire at the end of April, 2008. We have also been advised by NPPD that we can expect a 9% increase in our wholesale rate in 2009 and smaller increases to follow through 2012.

As we go forward into 2008, we want to let you know that we are working hard—as we always do—to provide you service at the lowest cost possible. Although rising costs are occurring to all Nebraska utilities, and across the country, we are aware of the impact it has on you the customer and it is an issue we do not take lightly. Our board and staff are working with a budget in 2008 that keeps reducing costs at the forefront. One example of how we will put this statement into action in 2008 is our goal to reduce expense by using only in-house staff for engineering and building new lines for projects in 2008. Our own engineering staff will design the lines…and our own linemen will build them. This is a very ambitious plan for the district and our employees, but one that we are determined to see through.

Other stories you'll find inside this edition:

• Southern Provides Aid in Aftermath of Midwest Ice Storms
Because Southern was able to resolve their outages quickly, we answered the call for help from our neighbors to the south. More>>>
• Generator Safety Information
Portable generators are useful when temporary or remote power is needed, but they also can be hazardous. More>>>
• Southern seeking applicants for 2008
  Lineman Scholarship Program
If you know a recent high school graduate, or a student who will graduate from high school in 2008, now is the time to start thinking about SPD's Utility Line Scholarship Program. More>>>