It is the holiday season, and as the year comes to a close, it is good to pause and reflect on the good things that have happened this year and to be grateful for them. I am thankful to have served Perennial as General Manager in 2024. I am thankful for the dedication and excellent service our employees have given to the District. I am thankful we have been able to maintain our electricity rates for the past eleven years. Yet, as for most services we rely on in our day-to-day lives, we anticipate this next year we will see increases in our rates.
Perennial has been working with our utility rate consultant to complete a Cost-of-Service study for the District. This study accounts for all the costs required to serve our customers and the wholesale power cost from Nebraska Public Power District (NPPD). The main objective of the study is to allocate our rates so that your monthly bill is an accurate reflection of our cost to serve you.
This past November the NPPD board approved wholesale rates for 2025. We anticipate the adjustments to winter and summer rates will result in an annual increase of nearly two percent for the District. Over the past 3 years we have experienced significant increases in the costs of material, labor and overheads for maintaining and extending our existing 1,900 miles of line and 7,600 services.
Since 2020, Perennial has received Production Cost Adjustments totaling $7.3 million from NPPD. These adjustments occur when NPPD collects excess revenues related to the cost to produce the power we need every day. Perennial has elected to pass along the majority of the adjustment to customers on their monthly bills. You may have noticed a line on your electric bill called “Production Cost Adj” followed by a negative number. This is Perennial passing along a portion of this discount to you, our customer. The remaining funds are used towards keeping rates steady by compensating for the increased costs for material and labor.
NPPD is planning to reduce the Production Cost Adjustment in 2025, and it will likely be phased out in 2026. In anticipation of these changes along with overall increases in wholesale and distribution costs, our board is also considering phasing out the PCA for 2025 and planning for retail rate increases in the fall of 2025.
Our board of directors is working with management to implement future rate changes in a way that considers the present monthly cost increases to our customers while also continuing to maintain and build the grid that we depend on for reliable power.
