Final Report
Nebraska Legislature
L.R. 455 Phase I Study

December 1997







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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


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Tim Anderson
Central Nebraska Public Power & Irrigation District

Jay Holmquist
Nebraska Rural Electric Association

Clint Johannes
Nebraska Electric Generation & Transmission Cooperative

Richard Kosch
Lincoln Electric System

Larry Marquis
Nebraska Municipal Power Pool

John McClure
Nebraska Public Power District

Ron Mortensen
Omaha Public Power District

Charles Pallesen, Project Facilitator
Cline, Williams, Wright, Johnson & Oldfather

Scott Ridley, Project Manager
Ridley & Associates

Written comments or questions should be submitted to:

Charles Pallesen, Esq.
Cline Williams/
1900 First Bank Building
Lincoln, Nebraska  68508


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Chapter One: History

1.l The first stage (1882-1910)
1.2 The second stage (1911-1933)
1.3 The third stage (1934-1946)

1.4 The fourth stage (1947-1973)

1.5 The fifth stage (1974-present)

1.6 Summary and Emerging Issues

Chapter Two: Structure and Governance

2.1 Consumers and Electric Rates
2.2 Electric Utility Organizations and Structure

2.3 Governance of Consumer-Owned Systems

2.4 Supporting Organizations

2.5 Summary and Emerging Issues

Chapter Three: Statutory and Regulatory Oversight

3.1 Statutory Framework for Nebraska's Consumer-Owned Systems
3.2 Jurisdictional and Regulatory Roles

3.3 Fundamental Service and Rate Requirements

3.4 Summary and Emerging Issues

Chapter Four: Planning and Operations

4.1 Electric Facilities
4.2 Reliability

4.3 Integrated Resource Planning

4.4 Environmental Issues

4.5 Technology Development

4.6 Work Force

4.7 System Efficiency

4.8 Summary and Emerging Issues

Chapter Five: Finance and Tax

5.1 Source of Capital and Indebtedness
5.2 Bond Resolutions

5.3 Credit Ratings/Competitive Assessments

5.4 Revenue Transfers

5.5 Summary and Emerging Issues

Chapter Six: Deregulation and Restructuring

6.1 Federal Legislative Actions
6.2 FERC Rulemaking and Decisions

6.3 Industry Deregulation and Restructuring In Other States

6.4 Stranded Assets, Stranded Benefits, Stranded Obligations

6.5 Bundled or Multi-Service Delivery

6.6 Transition from a Regulated Environment


2-1 Nebraska-Type of Consumer
2-2 Predominantly Rural Systems
2-3 Predominantly Urban Systems

2-4 Comparative Average Energy Costs 1995

2-5 U.S. Electricity Organizations 1995

2-6 Mid-Continent Area Power Pool Region Electric Utilities 1995

2-7 Governance of Utility: Mechanisms for Local Control

3-1 Nebraska Utility Consumer Services
3-2 Nebraska System's Range of Authority To Conduct Business

3-3 Retail Service And Rate Requirements

4-1 1995 Nebraska Generation Resources
4-2 Net Capacity Factor 1995

4-3 Power Plant Production Cost 1995

4-4 Average Cost Per Kilowatt Hour Purchased 1995

4-5 1995 Average Cents Per Kilowatt Hour Purchased By Region 1995

4-6 Reserve Margin Comparison

4-7 Energy Conservation Programs

4-8 OSHA Incidents Per 100 Employees
5-1 Nebraska Plant Investment 1995


C2-1 Average Revenue Per Kilowatt Hour 1995-All Nebraska Systems
C2-2 Nebraska Power Flows 1997

C4-1 1995 Power Plant Fuel Diversity Installed Capacity

C4-2 1995 Power Plant Fuel Diversity Net Energy

C4-3 Nebraska Reliability Data

C4-4 Statewide Capability vs. Obligation 1996-2015
Comparative Data Charts A-F 63-66
C5-1 Nebraska Capitalization 1995

C5-2 Debt to Equity Ratios 1995

C5-3 Nebraska Revenue Transfers 1995

C5-4 Transfer Payments Comparison 1995


M2-1 Nebraska Service Areas
M4-1 Nebraska 11 5KV-345KV Transmission Network 1996

M4-2 Nebraska Subtransmission SOB

M4-3 Regional Transmission-MAPP

Chapter Notes


Appendix (Requires Adobe Acrobat Reader to View)

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