- Two professional rate consultants performed cost-of-service studies before moving forward with the rate restructure
- Results of those studies confirmed our rates needed some updates
- Rates must cover costs related to the power supply and the distribution system
Some costs are variable like how much energy (kWh) is purchased from NPPD -our wholesale energy provider.
Some costs are fixed (Distribution) Cornhusker Public Power District’s system
- Size of load (demand or kW units)
- Number of customers (monthly fee)
UNDERSTANDING THE RATE BUCKET
THREE primary components make up the “Rate Bucket”
(Distribution) – Monthly fee, a fixed cost, currently referred to as the “monthly minimum.” While these fees had been identified, they were not at the correct level, therefore, the remaining amount was placed into the bucket and recovered through the sale of energy (kWh).
(Distribution) – Demand (kW), or the infrastructure like Cornhusker Public Power District’s substations, lines, transformers, and metering required to serve a customer’s load size. This component had not previously been identified on an individual basis, resulting in the entire cost being placed in the “bucket” and collected through the sale of energy (kWh).
Until… we had metering technology for residential customers that was capable, reliable, and affordable, it was cost prohibitive to measure a customer’s size of load, their demand (kW). A little over three years ago, Cornhusker Public Power District began installing a new metering platform. Now we have the ability to read individual demand (KW) for every residential/business meter to make sure your electric bill reflects how you use electricity with even greater accuracy.
(Wholesale – NPPD) Energy (kWh)
NEW RATE STRUCTURE
The monthly fee needs to collect the true cost of having electric service connected to your home or business.
The costs associated with billing a meter, maintaining the meter, providing customer service, and having all of the infrastructure, maintenance, service technicians, and equipment to ensure power is available (24/7- 365) occurs regardless of whether or not any energy is consumed.
The old rate structure utilized a declining rate block strategy to recover the remainder of the “monthly fee” costs through energy sales; however, the issue is that if customers are not using energy (kWh), this cost goes uncollected, and because the cost must be recovered, those customers that are using energy (kWh) end up paying for it.
Demand (KW) charge
Distribution demand has always been a large part of the customer’s bill… but not as a line item or specific to each individual customer’s load profile. In the past, the actual demand costs for a rate class were all placed into the bucket and recovered through the energy (kWh) unit. It was paid for by customers in the rate class who consumed energy (kWh), not specific to demand (kW) load profiles.
The new rate structure addresses this as it identifies each customers demand (kW) profile and provides a clear price that recovers the amount of the “bucket” for which each customer is responsible.
Energy portion is reduced
A result of identifying and collecting the true cost of connecting to our distribution electric lines, the “monthly fee”, and introducing a demand (KW) component to recover costs based on individual load profiles, we have the opportunity to allow the energy (kWh) unit price to become simplified and reduced.
The new rate design identifies these costs and provides a clear, fair price for each component. 12-12-18
Dear Valued Customer,
As a not-for-profit utility existing to serve you the customer, it is imperative our billing structure and rates (along with our metering, infrastructure, engineering, and planning) evolve with the times. It is essential to adhere to our governing state statutes instructing us to provide fair, reasonable, and non-discriminatory electric rates and services.
Hopefully, you have had a chance to read the many informational articles published by Cornhusker Public Power District over the past 12 months, as they are full of great information regarding a rate methodology/design change beginning October 1, 2018. It is very important to us you are kept
up-to-date on changes taking place at the District.
In October of 2018, we converted our residential rates to a three-part rate rather than a two-part rate. Our former residential rates included the minimum monthly fee (cost of infrastructure and all components to ensure energy is available 24/7, 365) and a declining energy (kWh) charge that did include the cost of demand (KW), but not as a separate line item on your bill, or specific to your exact demand (KW) usage. Why not? Well, until the industry provided metering for residential platforms that was capable, reliable and affordable enough, it was cost prohibitive. A little over three years ago, Cornhusker Public Power District began installing a new metering platform that was capable, reliable and affordable, and so now, we have the ability to read individual demand (KW) for every residential meter making sure your electric bill reflects how you use electricity with even greater accuracy.
The new rate structure includes demand (KW) as a line item, the minimum monthly fee, and an energy (kWh) charge. You will see the new invoice in November, 2018, when you receive your bill for October usage. As with any change, the impacts will vary, as every customer’s energy profile is different.
The new rate structure, along with the information that has been provided, and will continue to be provided (especially on our website) will help you to further understand and identify how you are consuming electricity. It will also provide you with the ability to make decisions as to what electrical appliances/equipment run and when they run, directly impacting your electric bill. This new rate methodology is not a time-of-use rate, it does not require you to curtail your electric load at a specific time or for a specific duration, it simply allows you a choice whether to run multiple electric appliances/equipment at one time, resulting in a higher monthly demand (KW) charge, or to stagger the use of electric appliances/equipment, resulting in a lower monthly demand (KW) charge.
Please contact Cornhusker Public Power District at 402-564-2821 with any questions.
CEO/GM Clay Gibbs
September 26, 2018 – Humphrey Democrat newspaper reported a rate increase for residential customers. This is incorrect. There is no rate increase. Rates are being restructured as of October 1, 2018.
Cornhusker Public Power District announces new residential rate structure
Cornhusker Public Power District’s Board of Directors approved a new residential rate structure at the September 17, 2018 board meeting. The new rate restructure will begin with October energy usage, billed in November. No additional revenue will be collected.
Cornhusker Public Power District recently completed an intensive look into the cost to serve the residential customer.
Cornhusker Public Power District’s AMI metering platform can read demand (kW) for every residential meter. Costs can be assigned to each customer based on their actual load profile rather than on rate-class averages.
The new rate structure includes demand (kW) as a line item, a minimum monthly fee, and an energy (kWh) charge. Impacts of the rate structure change will vary, as every customer’s energy profile is different.
The goal with electric rates is to simply recover the cost to serve the customer and maintain the system. Cornhusker Public Power District is to provide reliable electricity to our customers as economically as possible. Public Power Districts are directed by Nebraska State Statute to be fair and equitable toward all customers. We also have to be financially prepared for any disaster that may cause damage to the system.
OCTOBER 18,2018 PRESS RELEASE
New Rate Structure “UPDATE”
Cornhusker Public Power District is excited to announce our billing software is in place and our target date for billing using the new rate structure is October 1, 2018.
The new billing software is called meter data management (MDM). The MDM software allows our customers choosing to sign-in to our secure portal to:
- Access reports
- View usage information.
Your first bill with the new rate structure will arrive in November and will reflect October usage.
New billing opportunity forecasted
As the electric industry adapts to new technologies presenting new opportunities, Cornhusker Public Power District wants to ensure we are positioned to support those changes and opportunities.
Over the past couple of years, Cornhusker Public Power District upgraded customers’ electric meters to a new advanced metering system to allow the District to improve and simplify your electric rates.
With today’s technological advancements and the ability to communicate with meters, costs can be assigned accurately to each customer based on their actual load profile rather than on rate-class averages.
CEO/GM Clay Gibbs said, “Currently, residential rates recover a portion of the distribution costs (cost of providing electrical service such as poles, wire, transformers) and demand (KW) costs in the monthly fee, because until now, we have not been able to measure the demand component on an individual basis. Therefore the remainder of these costs are placed in the energy (kWh) price, and collected through declining rate blocks.
These rates have served us very well over the years, but we would like to provide even more accurate rates in the near future, by utilizing three-part billing to separate the distribution costs, demand costs and energy based on each customer’s actual usage profile.”
So what does all of this mean for you? Cornhusker Public Power District is currently conducting rate studies and cost-of-service studies to determine the proper rate design necessary to ensure a smooth transition to the new rate methodology forecast for the first quarter of 2018. REN OCT 2017
What is a monthly fee charge?
As a not-for-profit electric company, Cornhusker Public Power District charges only what it costs to keep the lights on for our customers; rates are not marked up to generate profit. The directors and employees watch expenses carefully and are committed to providing electricity at the lowest possible cost.
As we look to restructure rates in 2018, customers will see a charge called a monthly fee charge. Customers demand (KW) and energy (kWh) will change from month to month, but the monthly fee charge will stay the same. This charge covers the expenses to purchase, build and maintain power lines, substations and other equipment to ensure power is available at your location, whenever you need it. REN NOV 2017/ 12-19-2019
What’s the outlook on rates?
Cornhusker Public Power District Board of Directors voted unanimously to approve the 2018 budget which includes no overall rate increase for 2018, at their November board meeting. While there will be no overall rate increase for 2018, a new rate design for residential customers will be implemented in the Spring.
“As things continue to change in our industry, we are focused on keeping up with these changes. One of the more notable changes is the interest in renewable energy generation at the customer level. While this is not new, prices and continued improvements in the products are leading to more opportunities for customers to explore and possibly invest in.
Along with these opportunities comes the need for Cornhusker Public Power District to make some adjustments. We need to ensure our billing structure and rates along with our metering, infrastructure, engineering and planning also evolve with technological advancements.
In the spring of 2018, we will be converting our residential rates to a three-part rate rather than a two-part rate.
Current Rate Structure
Our current residential rates include the minimum monthly fee (cost of infrastructure and all components to ensure energy is available 24/7, 365) and a declining energy (kWh) charge that does include demand (KW) but not as a separate line item on your bill.
New Rate Structure
The new rate structure will include demand (KW) as a line item, the minimum monthly fee (called availability charge), and energy (kWh).
“As with any rate change, there will be various individual impacts based on weather, energy load profiles and usage patterns.” said GM/CEO Clay Gibbs
Cornhusker Public Power District is a not-for-profit utility existing to serve you – our customer. It is essential Cornhusker Public Power District adhere to our governing state statues which instruct us to provide fair, reasonable and non-discriminatory electric rates and services. REN JAN 2018
Explanation of Demand (kW) and Energy (kWh)
Electricity usage is measured in two ways:
Demand (kW or kilowatts): the rate at which energy is used
Energy (kWh or kilowatt-hours): the amount of energy used
Demand Charge (expressed as “kW” or “kilowatts”): Demand, the rate at which a customer uses electricity during a specified time period, is measured by the highest rate in that billing period.
Energy Charge (expressed as “kWh” or “kilowatt-hours”): Energy charges are based on the amount of electricity a customer uses during the billing period which is expressed as kWh.
Think of it in terms of your car’s speedometer:
Example: Car travels at a rate of speed of 80 mph for ½ hour, the miles driven is only 40 miles.
In terms of electricity:
Customer’s rate of consumption is 80 kW for ½ hour, the kWh consumed is 40 kWh.
Understanding Demand and Consumption
The difference between demand and consumption is vital to your choices in reducing your energy costs. A simple way to see the difference between demand and consumption is by considering two examples.
One 100-watt light bulb burning for 10 hours consumes 1,000 watt-hours or 1 kWh. The entire time it is on, it requires or “demands” 100 watts or 0.1 kW from the utility. That means the utility must have that 0.1 kW ready whenever the customer turns the lamp on.
Similarly, ten 100-watt light bulbs burning for 1 hour consume 1,000 watt-hours or 1 kWh. Note that in both examples, the consumption is 1 kWh, however, look how differently the second situation impacts the utility from a demand perspective. The serving utility must now be prepared to provide ten times as much capacity in response to the “demand” of the 10 light bulbs operating all at once.
If both of these customers are billed for their consumption only, both will get the same bill for 1 kWh of energy. And that is the way most residential customers are billed. But the requirement for the utility to meet this energy requirement is very different. In the second case, the utility has to have 10 times more generating capacity to provide the second customer’s brief high demand for power compared to the first case.
Analogies for Understanding Demand and Consumption
Another way of understanding demand and consumption is with a “filling the bucket” analogy. Suppose you want to fill a 5-gallon bucket with water. You can use an inexpensive hose connection to your sink providing 1 gallon per minute to do it, and it will take 5 minutes. Or you can get to a more expensive large faucet that provides 5 gallons per minute, it will fill in just one minute. The flow rate is the equivalent to demand, and the 5 gallons of water are equivalent to consumption. In this example, filling both buckets has the same “consumption” but very different “demands.”
The same is true of electricity. While you may be able to accomplish the same thing by operating a small wattage appliance for many hours as operating something of higher wattage for just a few, the higher wattage piece of equipment will create a higher demand on the utility. Using our analogy, you are asking for a larger pipe, and that costs more. If time is of the essence, it might be worth having the more expensive high flow rate or wattage. This is why utilities often charge some customers for both demand and consumption. A customer that sets a high demand requires more services from the utility–additional generating plant capacity, and more expense in lines, transformers and substation equipment.
Some people like to use a car analogy to explain and understand how demand and consumption relate. The car’s speedometer is like the demand meter and the odometer is like a consumption meter. Two cars could travel the same 100-mile road, one at 10 miles per hour for 10 hours and the other at 100 miles per hour for 1 hour. It takes a much more capable and expensive engine to power the car at 100 miles per hour than it does to power the one going only 10 miles per hour.