MEAN official briefs Waverly Utilities on market expansion, 9.8% rate increase and cost drivers

The Municipal Energy Agency of Nebraska (MEAN) briefed the Waverly Utilities Board on wholesale market changes, rising capital costs and the reasons behind a 9.8% wholesale rate increase that took effect April 1, 2025.

Kyle, a MEAN representative, told the board that MEAN’s footprint is geographically diverse and that several market and capital drivers pushed costs higher. He identified three primary cost drivers: wholesale market expansion and implementation costs; plant capital and O&M; and other wholesale and power purchase costs. “What we had to do to cover our costs” included a 9.8% rate increase, Kyle said, and he explained that some costs were one-time implementation charges tied to market expansion while others reflect ongoing capital and operating needs.

On the market-expansion point, Kyle said MEAN participated in an expansion of the Southwest Power Pool (SPP) footprint and that implementation requires software, consultants and a so-called pseudo-tie. He told the board the wholesale-market expansion component was roughly $3.1 million in one-time costs, and that the pseudo-tie implementation alone was about $2.5 million. “Most of it is 1 time,” he said of the SPP-related costs.

Kyle said the pseudo-tie and software costs were largely responsible for this year’s larger rate action and that, absent those measures, the increase might have been far smaller. He also described medium- and long-term capital pressures: MEAN projects $7.4 million in capital for the current fiscal year, cited a five-year average near $4.3 million, and said preliminary forecasts showed multi-year averages rising to about $6.2 million with a larger, preliminary $9.0 million figure in a year tied to a potential coal-to-gas conversion at one plant.

Board members asked how Waverly customers benefit from the expansion and whether the rate increase would be a one-time correction or recur. Kyle said the expansion and diversification can increase stability over time but that he could not promise no future increases; timing of federal or regulatory changes and capital decisions by joint-ownership plants remain uncertain. He characterized the SPP-related implementation as primarily one-time, while capital costs and transmission increases could affect rates beyond the current fiscal year.

MEAN staff and board members discussed how wholesale increases flow to retail customers: MEAN’s costs make up a large portion of Waverly’s purchased-power and transmission bill, and the board’s power-cost-adjustment (PCA or ECA) mechanism passes many wholesale costs through to customers. Kyle emphasized the utility should consult its rate consultant on base-rate and PCA structure questions.

MEAN representatives said they expect to rely on power purchase agreements rather than additional bond-funded owned generation in the near term, and that any decisions about owned assets or fuel conversions will depend on board appetite, regulatory environment and long-term planning.

The presentation concluded with a discussion of volatility and planning: MEAN called the industry into a period of rapid change and urged members to account for implementation costs, capital planning and transmission pressures when setting rates.