The NIPCO Board of Directors approved a resolution setting NIPCO’s 2020 Wholesale Power Rate at 61.22 m/kWh at its meeting on October 29. This is slightly more than a 1 mill-per-kilowatt hour (m/kWh) decrease from the 2019 rate.
There are several factors that contributed to this decrease, some of which include:
- A rate decrease from NIPCO’s primary power supplier, Basin Electric Power Cooperative. This rate decrease is currently projected to hold steady for the next nine years.
- Steady rates, projected through 2022 from NIPCO’s other power supplier, Western Area Power Administration.
- NIPCO’s 2015 entrance into Southwest Power Pool (SPP) as a Transmission Owner (TO) allows for the reimbursement of costs associated with the operation and maintenance of qualifying transmission facilities. Approximately 79% of NIPCO’s transmission assets are considered “qualifying facilities” within the RTO (Regional Transmission Organization).
- Continuation of purchase power agreements and power supply contracts with Basin Electric Power Cooperative.
NIPCO is currently undertaking significant construction to rebuild and upgrade aging facilities and these costs have been factored into the rate. NIPCO currently has 385 miles of 69kV line that is 50 years old or older, so these upgrades are necessary to keep our system reliable.
In her presentation, NIPCO Chief Financial Officer Jane Scheitler listed possible threats that may negatively impact NIPCO’s rate forecasts and cause rates to increase. Some threats include unfavorable weather conditions, trade policy, and federal decisions affecting the bio-energy industry that could pose a risk to the local farm and agricultural economy. With a 2020 Presidential election and an uncertain outlook as to regulatory impacts, federal environmental legislation is not factored into the financial forecasts. Scheitler offered an explanation to the board:
“Our primary power provider, Basin Electric, may be forced to comply with more stringent environmental agency oversight and regulations. These additional costs would ultimately cause NIPCO rates to increase.” -Jane Scheitler, NIPCO Chief Financial Officer
Threats aside, NIPCO’s new rates are calculated based on long-range projections built on numerous assumptions. Some of these assumptions include a projected sales increase to NIPCO Class A members of approximately 1.19% per year over the ten-year forecast period, estimated avoided costs realized through NIPCO’s load management and energy efficiency programs, and increased reimbursements from SPP.
The new rates will be entered into NIPCO’s 2020 Policy and will go into effect on January 1.