TRANSMITTAL LETTER

December 31, 1997

Senator Chris Beutler, Chairman
Natural Resources Committee
Nebraska Legislature
District 28 P.O. Box 94604
Lincoln, Nebraska 68509-4604

Dear Senator Beutler:

It is with great pleasure that the L.R. 455 Task Force submits the Final Report of the Phase I Study to the Natural Resources Committee.

As requested by the Legislature, the report provides a comprehensive overview of the organization, structure, governance, regulation and effectiveness of the consumer-owned electric industry in Nebraska. It describes the historical background and the current operational status of the industry. It measures the efficiency and effectiveness of the industry against regional and national standards. And it outlines emerging issues and questions pertaining to the establishment of a competitive market for electric service.

The initial findings show the industry to be highly diverse and attaining economies of scale through voluntary contractual and cooperative arrangements. The ultimate measure of the effectiveness of this structure is the state's average electric rate of 5.4 cents/kilowatt hour which is the eleventh lowest in the nation.

Pressures to alter the industry and to expand competitive wholesale markets and to establish competitive retail markets are likely to rise from the federal level, from decisions in neighboring states with which Nebraska utilities are interconnected, and from interests within the state. Phase H of the study will examine the implications of such changes based upon the research presented in this document and further research to be undertaken.

We thank the Natural Resources Committee and the Legislature for support and initiative for this effort and also express our thanks to those who have contributed to the Phase I research and analysis.

On behalf of the Task Force,

Scott Ridley
Ridley & Associates
115 Kendrlck Road
East Harwich, MA 02645
Tel 508 430 1763
Fax 508 432 3788