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Nebraskans are barely moving the growth needle when it comes to the latest forecasts of electricity demand. A new report from the Nebraska Power Association shows that the state’s ratepayer-owned utilities predict stagnant peak demand for the next 20 years. Years of sluggish demand helped prompt the Omaha Public Power District board of directors to approve a rate restructuring late last year. Under a plan designed to offset the financial sting of lower usage, OPPD increased fixed fees charged to customers while lowering how much it charges for usage. The plan took effect in June. OPPD officials say, however, that even lower-than-expected demand doesn’t mean customers would be hit with another rate hike. The utility has cut tens of millions of dollars out of its operations in the past year, and in June its board voted to shut down the Fort Calhoun Station, which in recent years has become a money pit. Closing down the plant came with a five-year rate freeze. Utilities officials anticipate that demand will continue to diminish. “There’s been a proliferation of more efficient end-use devices by customers; and, then, several of the utilities have some kind of demand-reduction program in place that we think is helping to drive down overall demand growth across the state,” Jason Fortik, vice president of power supply at Lincoln Electric System, told the Nebraska Power Review Board at its monthly meeting last week. Those factors prompted the state’s largest power suppliers, including OPPD and the Nebraska Public Power District, to slash their most-recent individual estimates for growth over the next 20 years. In fact OPPD cut its growth-rate projection by 1.2 percentage points in 2016, putting its forecast in negative territory. Officials at the Omaha utility predicted average annual demand growth of -0.3 percent from 2016 through 2035, down from the 0.9 percent forecast in 2015 for the succeeding 20 years. NPPD cut its outlook to 0.1 percent for 2016 through 2035, down from 0.5 percent last year. It turns out that Nebraskans, like their counterparts nationally, are increasingly turning on more energy-efficient appliances when they put laundry in the washer or plates and glasses in the dishwasher. And instead of running short of demand with existing supplies in 2024 as the Nebraska Power Association forecast just a few years ago, the new forecast means Nebraska utilities should be able to meet local demand until about 2035. Meanwhile, utilities themselves are encouraging ratepayers to be more mindful of when they’re running power-intensive appliances like air conditioners, particularly during the hottest and highest-demand periods of the day. One such program at OPPD switches customers’ air conditioners off and on for 15-minute intervals during peak periods for ratepayers who enroll in its Cool Smart program. That one program made up about 56 megawatts’ worth of peak demand reduction for OPPD through 2015 — good enough to account for about half of OPPD’s total savings from similar efforts last year. While it may seem like such programs could wreak havoc on utilities’ revenue streams, there is real value in reducing peak loads, said Michael Hyland, senior vice president of engineering services at the American Public Power Association. A good example of this is a “peaking power plant” that can be called into service to meet spikes in demand; such facilities are used relatively rarely when compared with larger, always-on plants and are therefore expensive to use. “Any time you can avoid using an electron as a consumer, that means you can avoid having to generate it,” Hyland said. The Lincoln utility’s Fortik agreed. A reduction in demand growth doesn’t necessarily foretell falling revenue, because utilities often have different billing structures for various customers, Fortik said. A large manufacturing plant could be billed for the amount of energy it consumes in addition to paying a premium for energy consumed during a peak period; a residential customer generally is not penalized for use during peak demand. At any rate, the slow and sometimes-negative demand growth characteristic of utilities in Nebraska and across the country shouldn’t be cause for alarm, said Jeff Panger, a credit analyst with Standard & Poor’s who tracks OPPD. The U.S. Energy Information Administration is currently forecasting demand growth of just 0.3 percent through 2040. Nebraska utilities estimate annual demand growth of 0.29 percent for 2016 through 2035. While that’s down from 0.75 percent last year and a 10-year high of 1.85 percent in 2007, Nebraska ratepayers should sleep soundly knowing that their utilities have enough juice to keep the lights on. “The flip side to that slow growth would be substantial growth, which might be met through the need to add new generating resources,” Panger said. Put another way, new power plants are expensive, and they can take years to build. So when it comes to slow or even negative demand growth, Panger said, “Having a stable power supply is not a bad thing.” |
