Revenue Shortfalls & Energy Efficiency

This morning at 7:00 AM I was awaken by the typical sound of my alarm clock radio blaring into my ear. The radio station my alarm is set to typically runs through the current news at this time every morning. As much as I despise the sound of that alarm clock, its part of the structured routine that gets me going every day. But, today was different. There was something within the news report today that really caught my ear.

What caught my interest was a story announcing that Nebraska Public Power District (NPPD) is projecting a revenue shortfall this year of about $30 million. (Read this article if you'd like to know more). NPPD officials say that a record-cool July and the poor economy are contributing factors to this shortfall. This is news I have heard behind the scenes in recent days so that was not really a surprise to me.

What really captured my attention was the conversation about this issue that continued after the news report was read. The on-air personalities provided some brief comments about this story and noted that utilities promote the use of less energy through efficiency measures. They also commented that using less electricity results in revenue shortfalls, such as NPPD is seeing this year.

These comments brought to mind the image of customers scratching their heads in bewilderment, wondering why public power districts would try to sell you LESS of the product that they produce and distribute. Most businesses or organizations that produce a product or provide a service would never even think about promoting LESS use of their product or service. AND, despite the fact that our wholesale provider has experienced shortfalls in revenue, we are going to continue urging our customers to be efficient, or use less electricity. If you weren’t bewildered before, are you now?

Let me say first of all that the revenue shortfall is not due to the efforts that customers are taking to use their electricity more efficiently. The cool temperatures and rainfall in July dramatically affected the overall use of electricity in irrigation services and cooling. Plus, the price for the excess energy that NPPD typically sells has dropped this year due to the economy. These issues combined added up to the $30 million shortfall now being reported by NPPD.

Now, back to energy conservation. Why on earth would we continue to urge our customers to use less electricity? I have often heard it said that “the cheapest kilowatt hour is the one that you do not have to produce”. In other words, keeping the demand for electricity down will delay the need for the addition of new generation. Adding new sources of generation is costly. Given all the factors that come into play to determine your rates, taking steps to use less energy in your home, business or on the farm will make a POSITIVE difference in the future. So, we are not going to ask you to swap out the CFL's you've put into place in your home for a less efficient incandescent bulb. If you are taking steps to become more energy efficient, keep up the good work!

The revenue shortfall announced by NPPD is one that will impact rates. We will be watching this closely and you can follow any new updates on Southern’s Rate Watch page.

LeAnne Doose,
Communications Director, SPD