October 1, 2009

Top Plants: Nebraska City Station Unit 2, Nebraska City, Nebraska

Dr. Robert Peltier, PE

Accounting for Electricity

Under a participation power agreement (PPA) with the seven other public utilities, OPPD owns and operates NC2. The PPA required project participants to buy into the project by contracting for the supply of a specific amount of power and paying for the proportionate amount of the plant’s construction cost. Since the plant achieved commercial service, the other participants have purchased electricity from OPPD at the wholesale price or OPPD’s cost to produce the electricity (Table 1).

Table 1.    Participants in Nebraska City Unit 2. Source: OPPD

The accounting methods get more complicated when the different classifications of costs are distributed. Specifically, costs include those related to project construction, operation and maintenance (O&M) after the plant enters commercial service, and the variable cost of fuel. For example, the pro rata share of the initial cost of the project included the engineer-procurement-construction (EPC) contract price, other site improvements made as part of the NC2 project, and the direct costs of OPPD employees assigned to the project.

OPPD, as the owner, also made expenditures that are shared, such as the initial coal inventory, spare parts, upgraded and shared facilities, and other supplies inventory. OPPD also supplied the working capital necessary to finance day-to-day operations. O&M costs — defined as the payroll costs with consulting, legal, and insurance fees rolled into the mix — were also proportionally split. Fuel costs include transportation, maintenance, and fuel handling in addition to the purchase price of the coal and oil start-up fuel.