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OPPD Rate Change Proposal May Disempower Low-Income Families

John Twohig via Flickr (license)

All families deserve to have access to reasonably-priced utilities, to keep the lights on and the heat running for themselves and their children. However, recent events have undermined that promise. This past month, the Omaha Public Power District (OPPD) has announced proposals that would increase the overall utilities rate by 4% starting January 1st of next year, and also would restructure the rates to gradually increase the flat service fee from the current amount of $10.25 per month to reach $35 per month in 2019. While OPPD understandably wants to ensure that the costs of delivering energy are covered, the rate restructuring plan has the potential to negatively impact some Omaha families.

Under the new proposal, the flat service fee of $35 would adversely affect some families while benefiting others. For low energy-use households, the average bill would increase from $63 to $73 per month, while high-use households would see their bill drop from an average $137 to $127. This would translate to an effective kWh rate of 14.6 cents for low-use customers, compared to a 10.6 rate for high-customers, a clearly regressive price.

The rate changes’ effect on low-use customers matter because represented in this group are vulnerable populations who may have greater difficulty coping with a price increase. Along with those whose energy consumption is kept down due to living alone, in an apartment, or producing their own energy, low-energy users tend to be low-income households who try to keep costs down by conserving usage. Moreover, OPPD acknowledges that six in ten low-income customers would have to pay more under the proposed plan. This increase would be especially detrimental for low-income families because of the high energy burden they already carry. For example, the Nebraska Legislature’s Legislative Research Office found in their report Picture of Poverty in Nebraska that energy expenses make up a higher percentage of household budgets than middle-class household budgets. The end result is that the OPPD is inadvertently raising prices for those who can least afford to pay.

Justifiably, OPPD says that they cannot take income into account when planning rate changes, because Nebraska law requires that rates be “fair, reasonable and non-discriminatory.”  However, in a recent response to public discourse over this issue, OPPD has announced it will modify its proposal to one that minimizes the effect felt by low-income customers. We hope that it will be one that provides the best fit for all Omaha families.

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