LINCOLN, Neb. (AP) — Nebraska electric customers could end up with lower monthly bills if the state allowed private firms into the market with its public power utilities, energy consultants and executives said Wednesday.
The companies convened in Lincoln for a symposium to discuss Nebraska's status as the nation's only state which relies entirely on public utilities.
Nebraska is still one of the nation's cheapest states for energy but has seen rate increases in recent years, raising concerns that it's losing a competitive edge. The state now has higher average prices than neighboring Iowa, which relies on private, for-profit utilities.
Consultants at the symposium said Nebraska could see rate reductions totaling $250 million to $400 million a year by allowing more companies to compete and drive down prices. Many cities and rural electric associations are now being asked to sign new 20-year contracts with the state's public utilities, which the consultants say is too long a commitment with no specific price.
"Right now we have a one-size-fits-all energy policy," said Gary Aksamit, a Nebraska native who operates Aksamit Resource Management, a Texas-based power marketing firm. "I'm a firm believer in allowing the rural communities to make the decisions that are in the best interests of themselves."
Nebraska's move in 2009 to join the Southwest Power Pool — a regional coalition that pools its energy resources — placed it in a market driven by competitive bidding, said Michael Matheson, president of the Lincoln-based Grain Belt Energy Solutions. The competition has helped lower prices within the pool.
"Some energy providers will have a hard time competing," Matheson said.
Erin O'Connell-Diaz, a former member of the Illinois Commerce Commission, said her state had some of the nation's highest average electric rates before officials started allowing investor-owned utilities in 1997. The state now has some of the lowest rates, she said, and the change saved the state an estimated $41.3 billion.
"It's a huge, huge change from where we started out," O'Connell-Diaz said.
John McClure, general counsel for the Nebraska Public Power District, said his utility's rate increases were due to long-term investments in transmission lines, increased coal costs and a drop in electricity prices caused by the recession at a time when state had surplus energy to sell. NPPD is the state's largest utility.
Other states were also able to tap natural gas, which became much cheaper and more abundant with new drilling techniques. Despite its recent efforts to develop wind energy, Nebraska still relies primarily on coal and nuclear power.
McClure said NPPD retail customers will see no rate increase next year, and wholesale customers that agree to sign a new 20-year contract will see an increase of less than 1 percent. The 20-year contracts are important because providing energy requires large and long-term investments, he said.
"There are opportunities on a very short-term basis, but how good is that for the long term?" McClure said. "If you look at overall performance, I think public power has nothing to apologize for."