Page 8 - Norris Electric News Dec 18
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 8 2019 OPERATING BUDGET
Building the Budget
    Michelle Junker
Manager of Finance and Accounting
The District’s annual budget is the framework for the coming year and is a comprehensive outline of expected revenues, expenses, assets and liabilities. The budget forms the structure of how we operate the District day to day, month to month and year to year. With these parameters, we are better prepared to react to change and to reach our strategic goals for the future. The 2019 Operating Budget, Capital Improvements and Business Plan demonstrates in numbers the District’s commitment to fulfilling its mission.
The Norris Public Power District’s mission is to safely provide elec- tricity and related services to cus- tomers at competitive prices, in the most reliable, efficient and en- vironmentally responsible manner.
Rates
The budget process begins by determining the District’s revenue requirements and is the foundation that the rest of the budget is built upon. A key piece of this process is setting customer rates that are fair, reasonable and non-discriminatory. In 2019, we
will enter the second year of a five-year transition plan to move legacy Seward County customers to the appropriate corresponding Norris rate schedules. The 2019 budget year represents the sixth consecutive year without an overall rate increase for District customers and the second consecutive year that customers will see a slight overall rate decrease.
Operating Revenues
The 2019 budget for operating revenues is $84.9 million with budgeted energy sales of 1.01 billion kilowatt-hours. Operating revenues or revenue requirements are like the floor of the structure. They must be solid enough to support the costs of the District. The District has a desirable customer mix made up of residential, irrigation, commercial and large industrial customers. Determining the amount of energy that will be consumed by customers in the budget year is a process that considers historical consumption averages, weather patterns, expected number of new customers and any known planned expansions or energy reductions for our largest industrial customers. The expected energy consumption is then multiplied by the applicable customer rate to determine total budgeted revenues.
Purchased Power
The 2019 budget for purchased power is $60.1 million. Purchased power costs consume 70% of the revenue collected from customers, are the District’s single largest expenditure and can be equated to the main framework of the structure. The District purchases 98% of its power from Nebraska Public Power District (NPPD) and the other 2% from Lincoln Electric System (LES). The District will incur no overall increase in wholesale rates for 2019 from its power suppliers. Stable wholesale rates from the District’s power suppliers result in stable rates for the District’s customers. NPPD will utilize a Production Cost Adjustment (PCA) over the 12 month period from February 2019 to January 2020 to refund excess funds in a Production Rate Stabilization Account which will reduce power costs by 3.3% in 2019.
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