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OPPD's board set to take an environmental tilt. What will it mean for electricity costs?

OPPD's board set to take an environmental tilt. What will it mean for electricity costs?

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Six years ago, most people elected to the Omaha Public Power District board ran on holding electricity rates low. They campaigned on the importance of containing the costs of powering homes and businesses.

This fall, three candidates who won their races for the OPPD board focused on something else: Each said the district’s environmental goals aim too low, that OPPD should deliver more than half of its electricity from renewable sources.

Those three new voices, when they join the eight-member board in January, will remake the board’s environmental lean, giving OPPD management what could be its first board majority focused on addressing climate change.

If the new group succeeds in pushing the utility to move faster in its march toward greener energy, cleaner air could trump lower costs in some fights, though incoming members argue they can achieve both.

It’s not clear from OPPD or national energy statistics how much it would cost the Omaha utility to pick up the pace in adopting more renewable energy, primarily wind and solar power.

But the societal, environmental and economic costs of doing nothing mean the utility needs to act now, the climate-focused wing says, including a particular focus on accelerating the move away from coal and its carbon emissions.

Each of the board members-to-be told The World-Herald in recent interviews that they would join with the current board’s two most climate-focused members, Craig Moody and Rick Yoder, to act more quickly.

Two of the board’s new faces, Eric Williams in northeast Omaha and Janece Mollhoff of Ashland, Nebraska, defeated better-known incumbents who had defended OPPD’s more deliberate pace of adopting renewable energy sources.

A third, Amanda Bogner, won a close contest in northwest Omaha in which she drew distinctions with her opponent on the need to address carbon emissions.

If their new bloc of five votes together on new environmental goals as early as next year, and each has said they might, they could put OPPD on a long-term path — aiming at 2030 or 2050 — toward 100 percent renewables and/or sharply cutting carbon emissions.

OPPD already expects its percentage of retail electricity from renewable sources to approach 40 percent by late 2019, driven primarily by an increase in wind power contracts. That’s up from as little as 5 percent in 2010.

This measurement includes power OPPD purchases on the open market and sells to its retail customers, along with the portion of natural gas and coal power that it produces in-house but sells locally.

“I think we want to push the envelope on renewable energy,” said Bogner, who added that she has a lot to learn first. “We think there’s an effective way to do this, and we think we can do so in a cost-effective way.”

But OPPD customers should pay attention if elected leaders make alternative energy sound like a free lunch, because it’s not, said Ben Zycher, resident scholar who works on energy and environmental policy at the American Enterprise Institute, a free-market think tank.

Without federal tax subsidies, Zycher said, wind energy would not be as economical as natural gas. The more utilities push for renewables, the greater the burden grows on federal taxpayers, who one day might balk.

Locally, the change in candidate and board member preferences toward renewable energy and reducing carbon emissions reflects a broader shift in public attitudes about a changing climate, experts say.

Roughly six in 10 Americans now say climate change is affecting their home communities, according to a recent study by the Pew Research Center. Voters still disagree about the amount of climate change attributable to mankind, and they argue about fixes, but outright deniers are declining.

Younger people, including Republicans, are leading the way in acceptance of climate change as fact, said Beth Chalecki, a University of Nebraska at Omaha political science professor who studies climate policy. News about hurricanes, flooding, fires and arctic melting keeps coming in waves, as do updated scientific reports, she said, and it’s hard to ignore.

“What’s coming about is people are starting to connect their consumption of energy in its various forms with a changing climate,” Chalecki said.

[ALSO READ: Grace: Climate report scares me. How about Nebraska farmers and rancers?]

The costs of OPPD going further, faster on renewables and carbon are not yet clear. OPPD officials said they had not yet determined how much more, if any, its customers are paying for electricity because of the renewable energy the utility has already added to the mix.

Looking at the amount OPPD residential customers paid for electricity per kilowatt hour from 2010 to 2017, including fixed fees and charges, average costs have increased from about 9.22 cents to 11.47 cents.

But people should not draw a direct correlation between renewables and rising rates, said Javier Fernandez, the district’s chief financial officer. Renewables don’t appear to be driving the increase.

Nearly three-fourths of the OPPD budget addresses infrastructure and employee salary and benefits, not the contracts for renewable energy production or the purchases of fossil fuels for in-house production.

Part of what’s driven the local cost increase is the nearly $300 million OPPD paid to preserve and repair Fort Calhoun Nuclear Station during and after the 2011 Missouri River flooding and then the $700 million to $900 million it’s gathering to safely shutter the power plant.

Other factors include the addition of another coal-fired unit at OPPD’s largest power plant, in Nebraska City, along with customers using less power and market swings in the prices of coal and natural gas.

“We do not recommend a perspective that renewables either increase or decrease rates in and of themselves,” said Mary Fisher, OPPD’s vice president of energy production and decommissioning. “Any resource, regardless of type, has the potential to increase costs if not added in an appropriate and systematic way.”

The current OPPD board in November approved a policy that would bump up the amount of electricity from renewable sources to 50 percent. OPPD officials say they are still sorting out the potential costs of that update to the board’s guiding environmental policy, Strategic Directive 7.

SD-7 sets an OPPD goal of the utility securing at least 50 percent of its retail electricity — or that which it sells to consumers — from renewable sources, while also aiming to reduce the utility’s overall “carbon intensity” by 20 percent from 2010 to 2030, roughly 1 percentage point a year.

Russ Baker, director of OPPD’s environmental and regulatory affairs, described last month’s update of the board’s main environmental directive an “aggressive but reachable” stretch goal.

Moody, an OPPD board member who helped negotiate the update to SD-7 with other board members, ultimately voted against the proposal. As did Yoder. Both said the policy needed more. Moody’s stated aim is to have the district adopt a goal of 100 percent renewables by 2050. In the end, he said, he might lean more toward a zero carbon approach.

Tim Gay, the conservative environmental Yin on the board to Moody’s green Yang, said OPPD management explained to Moody and to him that 100 percent renewables was not doable and that it would be cost-prohibitive.

There’s little value in setting an ambitious long-term goal without a realistic idea of how to achieve it, Gay said. Being too aggressive could lead to costly investments by management that will be passed on to ratepayers, he said.

“It sounds very good, and people want to hear that 100 percent number, but the reality and rates and other things don’t make it workable,” said Gay, who says he is no climate change denier. “I just don’t know how we do it.”

Zycher, of the American Enterprise Institute, said people in the Omaha area will have to decide whether local changes that would ultimately cut a predicted local temperature difference by 2100 of a few one-hundred-thousandths of a degree is worth costs he called “astronomical.”

A recent article in the MIT Technology Review found customers in California at risk of $2.5 trillion in new costs if that state pursues 100 percent renewables before battery storage technology advances and a likelihood of increased costs even if battery storage technology evolves and gets cheaper, too.

Residential electricity customers in California and Hawaii, which have adopted long-term goals of 100 percent renewable energy, pay among the five highest costs for electricity per kilowatt hour in the country, according to the federal Energy Information Administration. Iowa ranks 13th. Nebraska, 32nd.

But Bogner, Williams and Mollhoff, the incoming members of the OPPD board, cite a number of scientific reports on climate change, including a new one from the Trump administration, that each detail the economic and environmental costs of failing to act with a sense of urgency now.

Coastal areas inundated by storms and flooding. Massive populations needing to be relocated. The loss of costly infrastructure. Closer to home, wilder swings from too much rain to drought and water shortages that will cost Midlands agriculture millions of dollars in productivity and food.

Williams said people should know that all three new OPPD board members will be realistic about how quickly they should move. The OPPD board re-evaluates its strategic directives each year, and SD-7 was just adopted.

“I think we’ll probably start looking at long-term planning and what it would take to move in that sort of direction,” he said last week. “I don’t think we would vote again right away. We are reasonable.”

If the new, more environmental wing of the OPPD board has a swing vote, it’s probably Mollhoff, who says her military background and bases of rural and suburban support will keep her from going too far too fast.

The people she talked to while campaigning focused more on reliability and affordability and, in a number of rural places, connectivity, than climate change. But she wants OPPD to pick up the pace on renewables, too.

“We’ve all seen the climate reports that have come out, and we all know that’s not enough,” Mollhoff said. “We need to be more aggressive at every level, starting at the utility level.”

If the next OPPD board aims the utility at 100 percent renewables or zero carbon, Baker said, OPPD management will work with them to mull what that would look like, what it might cost and how technology would need to change.

As of October, more than 80 cities nationally and two states had publicly committed to a long-term goal of 100 percent renewables, according to the Sierra Club. The list includes the usual suspects from blue states, but it also includes some places more familiar to residents of Nebraska and western Iowa, including Atlanta, Kansas City, Missouri, Salt Lake City and Norman, Oklahoma.

Across the river in Iowa, Mid-American Energy is on track to be the first U.S. utility to offset 100 percent of its energy needs with renewables, though it still uses coal and natural gas plants to make sure the power is always on. Mid-American is owned by Berkshire Hathaway, which owns The World-Herald.

The Greater Omaha Chamber of Commerce declined to speculate about what the change in the makeup of the OPPD board might mean for business and industry locally, but its officials, too, acknowledged a changing political tide.

Business owners and shareholders still expect affordable, reliable power, Chamber President and CEO David Brown said, but many local firms and outside job creators also want responsible renewable energy solutions.

That’s the balance they need OPPD to strike.

CORRECTION: A previous version of this story misplaced the decimal point on the description of the changes in OPPD electric rates from 2010 to 2017.

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