The Municipal Energy Agency of Nebraska (MEAN) Board of Directors at its board meeting in January approved an overall 9.8 percent adjustment to MEAN’s rates and charges as part of its total revenue requirement for fiscal year 2025-26 for wholesale power supply participants.
The overall adjustment includes a 9 percent increase in MEAN’s energy rates and varying individual impacts from an increase in MEAN’s overall Fixed Cost Recovery Charge that is allocated to participants.
The MEAN Board, like local municipalities, annually reviews electric rates and charges to ensure operating revenues are sufficient to pay operating expenses and to maintain financial viability to serve its wholesale power supply participants in accordance with policies approved by the Board. It’s also important for local electric utilities served by MEAN to continue making prudent decisions to ensure local rates are matching costs to maintain the financial health of their respective local electric utility.
MEAN’s approved rate adjustment is to address primary drivers putting upward pressure on MEAN’s wholesale electric cost components, which include:
- Wholesale power market expansion
Costs due largely to one-time expenses associated with the Southwest Power Pool’s regional wholesale power market expansion into the Western Interconnection are impacting administrative and general expenses. These costs go toward implementing new market operations, updating software and fees associated with integrating MEAN’s electric load and resources into SPP’s expanded power market. SPP’s wholesale power market expansion will provide long-term benefits to MEAN by transitioning MEAN’s footprint from three market areas to two. - Inflationary pressures pertaining to plant capital and O&M
Inflationary pressures to capital and operation and maintenance costs to ensure MEAN’s power supply resources are dependable and reliable in the markets where MEAN operates. Capital costs relating to MEAN-owned and contracted generation resources have nearly doubled since 2022-23. These costs are not only impacting MEAN, but utilities around the country. - Other Wholesale Power-Related Costs
Other rate drivers include projected increases in wholesale market prices, generating fuel costs and contracted energy prices in 2025-26. MEAN administrative and general costs are also impacted by maintaining competitive compensation and additional staffing needs. These increases are partly offset by MEAN’s share of the savings related to a recent bond refunding by Public Power Generation Agency for Whelan Energy Center Unit 2.
Explanation of MEAN's Rate Structure Components
The main components in MEAN’s rate structure for collecting revenue include MEAN’s energy charge rates for long-term (Schedule M) and shorter-term (Schedule K and K-1) participants and the fixed cost recovery charge. MEAN’s budget year runs April 1-Mar 31. Below is a brief explanation of those rate structure components:
- Energy Charge Rates
MEAN’s energy charge rates, which also include its green energy charge rate, are used to collect revenue from energy sales to its wholesale power participants. This source of revenue makes up 65 percent of MEAN’s budgeted electric energy sales revenue. Energy sales are highly variable as usage depends on consumer demand, which varies due to weather, time of day and conservation. Fixed Cost Recovery Charge
The Fixed Cost Recovery Charge is 35 percent of MEAN’s budgeted electric energy sales revenue. This charge is allocated to participants based on each participant’s three-year historical average peak electric demand.The Fixed Cost Recovery Charge allows MEAN to recover certain costs related to ownership of power resources, power contracts and MEAN operations. Accounting for certain budgeted costs helps protect 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.
Transmission and Federal Hydro Allocations
Two other primary cost components on MEAN participants’ monthly wholesale electric bill are for transmission and federal hydropower allocations, which are third-party pass-through costs. Local electric utilities must also consider these costs and potential cost changes when reviewing local rates.