Council considers LES budget

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By DEENA WINTER/Lincoln Journal Star

The City Council on Monday looked over a $268 million budget for the city-owned electric utility — a spending plan that assumes electric rates will increase 4 percent next year.

That comes on the heels of two increases this year totaling 14.1 percent for Lincoln Electric System customers.

Despite hefty hikes recently, rates paid by LES residential customers rank in the lowest 10 percent, according to one national study.

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The council will vote on the LES budget Dec. 15, but wouldn’t be asked to approve corresponding rate changes until early next year.

If the council approves the budget and 4 percent rate increase, the average LES homeowner’s monthly bill would increase $3 beginning in March.

Electric rates saw an unplanned increase of 9 percent in August to deal with volatility in the wholesale electricity and natural gas markets — which followed a planned 5 percent increase in March to fund the 2008 budget.

LES is the 23rd largest public power electric utility in the U.S. — based on its number of retail customers — and provides electricity to about 275,000 people.

Even with a 4 percent increase in electric rates, the budget is $17.4 million less than the current budget. LES officials say the increase will cover a $7.5 million revenue shortfall next year primarily due to depreciation, the utility’s debt-coverage ratio and contributions to rate stablization fund.

 

LES Vice President Shelley Sahling-Zart touted the organizational efficiencies LES has made, including reducing its advertising budget, merging two divisions and reducing staffing by 2.5 full-time employees.

The budget includes $1.1 million for a new sustainable energy incentive program that will encourage conservation and efficiency.

The budget calls for ending the year with about $2.4 million in LES’ rate stabilization fund, and $6 million in the fund by the end of 2009. After that, LES wants to return to its practice of adding about $2 million annually to the fund until it reaches about $18 million.

The fund has dwindled in recent years to keep electric rates in check.

Bob Caldwell of the Lincoln Employers Coalition said the group, which represents some of the city’s largest manufacturing and industrial businesses, is “generally supportive” of the budget. That’s a departure from a couple of years ago, when the coalition successfully fought LES’ proposed adjustable electric surcharge.

Caldwell said LES has since become more transparent and inclusive about its budgeting process.

“We think the train is headed in the right direction,” he said, but said the group supports continued scrutiny of LES employee benefits and staffing and more forewarning about rate increases.

Another group representing businesses, the Lincoln Independent Business Association, advocated for a checkoff program allowing people to donate money to “pro-green” programs.

LIBA Executive Director Coby Mach said the group also looks forward to seeing a coming internal review of LES staffing and benefits.

Mach also suggested the interest earned by the rate stabilization fund stay in the fund rather than be spent on operations — an idea LES is open to. He also recommended LES reduce its match on retirement benefits, consider shutting off some streetlights to conserve energy and consider finding “small efficiencies” such as printing less elaborate annual reports.

LES employs 449 people.

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.