Nebraska’s two largest electric utilities are opposing a first-of-its-kind application to the Nebraska Power Review Board that they argue violates the spirit of the state’s public-power mandate and would result in an unneeded power plant.
The Nebraska Public Power District and Omaha Public Power District have filed protests against an application calling for Bluestem Energy Solutions of Omaha to build and operate a 37.4-megawatt, natural gas-fired plant.
Beatrice City Administrator Tobias Tempelmeyer said the city stands to save 10 percent on its energy costs by breaking with NPPD in favor of the small natural gas plant and a power-purchase agreement with an Ohio energy provider.
Natural gas plants like the one Beatrice wants can quickly ramp up generation and better avoid interruptions of service than can larger, centralized plants like those operated by OPPD and NPPD, said Bluestem President Adam Herink.
Beatrice would own the plant, but Bluestem would take on the debt burden and then sell the city its capacity.
“We’ve identified a transition within the utilities industry where there’s demand for more local, low-cost electric generation,” Herink said.
Nebraska’s top utilities counter that their large plants are already in place, however, and letting a private company build a new one, no matter how small, would run afoul of state law. Even if Bluestem were allowed to build a plant, they say it would duplicate existing capacity at a time when the state and the region already have more power generators than they need.
In other words, utilities are saddled with power plants that create more electricity than their ratepayers can buy, whether they like it or not.
But when the City of Beatrice in 2021 severs ties with NPPD, its longtime, Columbus-based supplier, it will still be required to provide electricity to its approximately 6,800 electrical customers. It must also provide adequate reserve capacity to the grid.
Nebraska utilities have taken advantage of such “public-private” partnerships to deliver lower-cost energy and reserve capacity to their ratepayers from privately owned wind farms.
But never has a nonpublic power entity proposed to build a conventional power plant in the state, said Power Review Board Executive Director Tim Texel.
Bluestem, which has previously built wind farms in Nebraska, argues that it’s simply helping Beatrice adapt to a rapidly changing energy industry. NPPD missed out on its chance to provide reserve capacity to Beatrice with proposed deals that were unfavorable to the city and its ratepayers, Bluestem says, and that’s why the local City Council approved plans for the proposed $38.5 million plant.
When the city tried and failed to negotiate a long-term contract with NPPD that included price guarantees, the Beatrice City Council was forced to look for other options. It found among those options superior choices for Beatrice residents, said Tempelmeyer, the city administrator, thanks in part to an energy marketplace that is vastly different from what it was when the current NPPD contract was signed.
“When the city signed the last contract with NPPD, (buying power in the marketplace) wasn’t an option, so we were pretty limited in what we could do. The last contracts we went through, the city had a lot more options available in terms of where it could go and acquire energy,” he said. “That was the biggest change. We have more options, more competition and better prices.”
The Power Review Board will have a hearing on the disputed application with all three parties in Lincoln on Dec. 16.