MEAN wholesale electric rates remain stable for 2021-22
January 24, 2021
The Municipal Energy Agency of Nebraska (MEAN) Board of Directors at its quarterly board meeting in January approved no increase to MEAN’s energy rates or fixed cost recovery charge as part of its total revenue requirement for fiscal year 2021-22 for wholesale electric participants.
It is the fifth straight year MEAN has either lowered or had no increase to its energy rates and fixed cost recovery charge. The Board also approved no change in the energy rate for MEAN’s wind-generation resources.
MEAN’s energy rates for long-term (Schedule M) and shorter-term (Schedule K) participants and fixed cost recovery charge are the two main components for collecting revenue. MEAN’s budget year begins April 1.
MEAN’s energy rates are used to collect revenue from energy sales to its participants. This source of revenue makes up 61 percent of MEAN’s targeted revenue requirement. Energy sales are highly variable as usage depends on consumer demand, which varies due to weather, time of day, conservation, etc.
Fixed Cost Recovery Charge
The Fixed Cost Recovery Charge is 39 percent of MEAN’s revenue requirement. It allows MEAN to recover certain known fixed costs related to ownership of power resources, power contracts and operations. Accounting for certain known costs protects 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.
This charge is allocated to participants based on each participants’ three-year historical average peak electric demand.
MEAN’s steady and declining rates these past few years is largely due to the efforts of the MEAN Board, which worked through a rate restructure initiative several years ago that provides more annual rate stability by better recovering fixed costs.
Two other primary cost components on MEAN participants’ monthly wholesale electric bill are for transmission and federal hydropower allocations. These are third-party pass-through costs.
The MEAN Board annually reviews rates and charges to ensure operating revenues are sufficient to pay operating expenses in accordance with policies approved by the Board.