The Municipal Energy Agency of Nebraska (MEAN) Board of Directors at its quarterly board meeting in January approved an overall three percent rate adjustment as part of its total revenue requirement for fiscal year 2022-23 for wholesale power supply participants.
MEAN’s energy rates for long-term (Schedule M) and shorter-term (Schedule K- and K-1) participants and the fixed cost recovery charge are the main components in MEAN’s rate structure for collecting revenue. MEAN’s budget year begins April 1.
The overall three percent rate adjustment includes a six percent increase in MEAN’s energy rate and a two percent increase in the wind energy rate for energy sales from MEAN’s wind-generation resources. The adjustment also includes a two percent reduction to the overall fixed cost recovery charge allocation to participants. Prior to this year MEAN had five straight years of either lowered or no increase to its energy rates and fixed cost recovery charge.
MEAN’s energy and wind energy rates are used to collect revenue from energy sales to its wholesale power participants. This source of revenue makes up 63 percent of MEAN’s targeted revenue requirement. Energy sales are highly variable as usage depends on consumer demand, which varies due to weather, time of day and conservation.
Factors leading to the energy rate adjustments include:
- Higher market prices than recent years resulting in overall increase in market purchase expenses in the regions across MEAN’s operational footprint;
- Annual increases in contracted generation including wind resources;
- Rise in costs for required operating reserves to meet regulatory and tariff requirements.
Fixed Cost Recovery Charge
The Fixed Cost Recovery Charge is 37 percent of MEAN’s revenue requirement. It allows MEAN to recover certain known fixed costs related to ownership of power resources, power contracts and operations. Accounting for certain known costs protects MEAN’s wholesale electric participants from revenue volatility from energy sales caused by unpredictable factors such as weather-related usage fluctuations, unplanned resource outages and fuel costs.
This charge is allocated to participants based on each participants’ three-year historical average peak electric demand.
The MEAN Board annually reviews rates and charges to ensure operating revenues are sufficient to pay operating expenses in accordance with policies approved by the Board.