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LIBA Asks Lincoln City Council to Reduce the Proposed Lincoln Electric System Rate Increase

The Lincoln Independent Business Association (LIBA) asks that the Lincoln City Council adjust the LES budget to avoid almost $3 million dollars in expenditures and thus reduce the proposed rate increase by one percent.

LES’ 2014 proposed budget requires a 2.9% system wide rate increase with the actual percentage rate increase varying across customer classes from 2.9% for residential customers to a 4.7% increase for large employers.  Some people may say that residential customers will hardly notice this increase, however, to large employers the impact is more pronounced.  For example, to the West Gate Bank Center at Highway 2 and Old Cheney, this increase would add $700 to last months $14,000 electric bill.   Last year, the rate increase cost companies like Veyance, which has over 550 employees, an additional $150,000 a year in electric rates.

Businesses will notice this increase, it will have an effect on their bottom line and has the potential to change the way they do business in Lincoln.

Further, this seemingly minor 2.9% rate increase is part of a larger untenable trend.  In the last ten years LES has raised rates 42%. In the ten years prior, LES rates only increased 8%.[i]   LES should try to reverse the current trend of increases.

LIBA suggests that LES adjust its proposed budget in two ways to reduce the rate increase by one percent.  First, LIBA suggests that LES forgo the annual $2 million contribution to the rate stabilization fund. LES set the ideal fund balance for the rate stabilization fund at $28.5 million dollars.  In 2014 the fund balance is expected to surpass this target due to an anticipated $13 million deposit of lawsuit settlement proceeds.[ii] Therefore, LES should forgo its budgeted $2 million contribution to the fund and reallocate those monies in order to lower the proposed rate increase.

Next, LIBA suggests LES eliminate the $1 million increase in allocation to the sustainable energy program.[iii]  This program already maintains annual funding of $3 million and should not be expanded at the expense of a rate increase to each and every Lincoln ratepayer.

If LES adopts LIBA’s suggested budget adjustments and reallocates this $3 million, the proposed rate increase can be reduced from 2.9% to 1.9%.[iv]  It is time to slow the unsettling trend of continual rate increases and provide much needed relief to Lincoln’s ratepayers.

Finally, in the past year, LES has been lobbied by special interest groups to incorporate solar power.  We appreciate the cautious approach taken by the LES staff and LES Board.

[i] “History of LES Rate Changes;” requested from LES, provided on 23 Sept. 2013

[ii] Financial Metrics – Rate Stabilization Fund; LES Budget; p. 43

[iii] 2014 Proposed Budget – Operating; LES Budget; p. 22

[iv] 2014 Proposed Budget and Rate Adjustment; 2014 Proposed Operating and Capital Budget and Rate Adjustment; p. 4; Presented at LES Administrative Board Meeting 20 Sept. 2013