Beatrice — The City Council on Tuesday adopted an ordinance that raises electric rates in two staged steps beginning Oct. 1 and establishes a monthly infrastructure charge to set aside money for future power-supply infrastructure.

City consultant John Kraske of JK Energy told the council the city’s short-term wholesale contracts expire in 2030 and warned that without gradual increases the community could face a large, single-year shock. “My goal is to propose rates to you that avoid you having to raise ... rates 40% in 2030,” Kraske said during a presentation to the council.

Kraske said the ordinance implements a 6% annual increase in the first two years and a fixed monthly infrastructure fee that is earmarked for capital needs. He estimated the city will need roughly $6,600,000 by 2031 to cover capacity or generation-related investments and recommended phasing rate changes now to avoid a dramatic single-year increase later.

Kraske described the city’s options and why the city is planning now: the council’s retail power contracts expire in 2030 and the city is evaluating whether to build generation or buy capacity and energy in the market. He said building a new local generator now appears to be the least-cost and most-stable option, but that it still will cost more than the city’s current short-term contracts. “At the end of those contracts, it's very likely your power costs will be higher,” Kraske said.

The ordinance directs the first two steps of the rate changes to take effect Oct. 1 (first step) and Oct. 1 of the following year (second step). Under the adopted rate design: residential customers will see a fixed infrastructure charge of $3 per month in year one (rising to $6 in year two); general service customers will be charged $4 per month in year one (rising to $8 in year two); and larger general service-demand customers will be assessed $10 per month in year one (rising to $20 in year two). Kraske said a typical residential customer would pay about $5.25 more per month in the first year, with roughly $3 of that being the new infrastructure charge and about $2.25 coming from energy-rate changes.

Kraske explained the rationale for separating the infrastructure charge from recurring operating revenue: the fee would be placed into a designated fund and “would only be designated for use for infrastructure projects” such as distribution, transmission, or generation, rather than routine operating expenses. He said collecting some of the money now would reduce how much the city must borrow later and would help credit-rating agencies assess the city’s ability to repay bonds for a large project.

Council members asked about alternatives to building a plant; Kraske said purchasing capacity on the market would likely require larger annual increases (he estimated 7–8% per year in one comparable procurement) and that a local dual-fuel combustion unit would provide a hedge against extreme market events. He projected a new generator would run roughly 25–35% of the time, operating mainly during morning and evening peaks and on very hot summer days.

The council voted 7–0 to pass Ordinance No. 25-26 adopting the electric rate changes and infrastructure charge. City staff and Kraske said this is the first step of a multi-year plan; additional rate actions are likely after the city’s generation and financing plans are clearer.

Speakers quoted in this article spoke at the meeting and are on the participants list below. The ordinance text adopted by the council is in the city’s published ordinance packet and takes effect as stated in the motion approved by the council.

The council directed staff to implement the rate ordinance and to continue work with consultants on the long-term generation study and finance planning. Additional rate proposals will return to the council as the city refines estimates of construction and financing costs.

For context: Kraske compared Beatrice’s post-change rates to peer utilities and said Beatrice would remain toward the lower end of the spectrum for residential rates even after the first step. He advised the council that phasing increases gradually helps customers and improves the city’s standing with bond rating analysts, which can lower borrowing costs for a large capital project.

What’s next: The ordinance’s first step is effective Oct. 1; staff and the Board of Public Works will continue technical work on the generation study, siting and financing options, and will return with updated cost estimates and any needed subsequent rate recommendations.