Measures affecting electric bills, company property taxes move ahead

April 9, 2015, 5:53 a.m. ·

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The Nebraska Legislature advanced bills Thursday that supporters say will ultimately help electric ratepayers and treat property taxpayers more fairly, despite concerns about unintended consequences.


The bill dealing with electricity is sponsored by Sen. Ken Schilz. It would allow public power districts to set up separate entities called "mandated project bond issuers." Those entitites, rather than the power districts, would issue bonds to cover the cost of improvements, like pollution control equipment, mandated by the federal or state governments. The cost of repaying those bonds would appear be a separate item on electric bills and they would continue to be repaid, even if the public power district went bankrupt.

Sen. Sue Crawford said ratepayers would bear the risk. Schilz said they would also get the benefit, because bonds issued by the separate entity would be rated higher, and thus get a lower interest rate, than bonds issued by the power district itself.

Schilz gave the example of the costs over 30 years of installing scrubbers to remove sulfur dioxide emissions from Omaha Public Power District’s coal-fired generating station at Nebraska City. "It would be $1.3 billion with a(n) AA rating, and $847 million with a(n) AAA rating. So it really is a cost savings for exactly those ratepayers that Sen. Crawford was talking about," he said.

Sen. Robert Hilkemann asked Schilz who would be responsible if OPPD’s financial condition deteriorated.

In: At some point we could have an OPPD that has a great financial status, and that could go down. But … who’s ultimately on the hook for these bonds?" he asked.

"Whether this goes into place today or not, the ratepayer is ultimately responsible for any bonding that’s done by these power companies," Schilz replied.

Sen. Paul Schumacher said the bill might be needed in the short run. But pointing to the power of the separate entities that could be created, Schumacher said the wording of the bill may need to be changed. "The idea that this side board, elected by no one...got authority to make all these very, very powerful decisions as to negotiating the interest rates, and determining maybe a call on the mother company to increase the fees to the consumer, maybe influencing bankruptcies, rights of other bondholders – we need to think, tighten this up a whole lot," Schumacher said.

Schilz said the "side board" of the bond-issuing entity would be made up of members drawn from the elected boards of the public power districts. OPPD officials promoting the bill said it could be useful for other power districts and other projects – for example, if the federal push for lower carbon emissions results in the need to convert power plants from coal to natural gas. The bill got first round approval on a vote of 36-0.

On another subject, senators divided over a proposal to exempt organizations known as fraternal benefit societies from property taxes. The bill is sponsored by Omaha Sen. Burke Harr. Harr said it would save Woodmen of the World about $800,000 on the part of its Woodmen Tower in downtown Omaha that’s used for the organization’s insurance operations. He said it would also benefit about 30 smaller organizations as well, including the Knights of Columbus.

Harr said Woodmen employs more than 550 people at an average salary of more than $62,000. He said different counties have different policies about taxing such organizations, and portrayed his bill as an effort to treat all of them equally. Sen. Dave Bloomfield supported the bill. "We have gone out of our way to give tax breaks to people that may bring in 50 to 100 employees. We have here a great corporate sponsor for the state of Nebraska. They donate freely. They provide good jobs. And should we give them a tax break? I think maybe we should," he said.

Other senators noted that Woodmen is currently appealing its tax bill to the Nebraska Tax Equalization and Review Commission, and said the Legislature should not intervene. And Sen. David Schnoor said by intervening, senators were adding to a problem of how their actions are being perceived by the public. "The perception is that we’re giving breaks to the big companies," he said. "The zoo got a big break – and that’s not just in Omaha. But zoos and aquariums got a big tax break. And now the perception is that we’re giving another tax break to another big company," he said.

Schnoor was referring to a bill advanced earlier this week that would exempt zoos and aquariums in Omaha, Lincoln and Scottsbluff from paying sales taxes. Thursday’s bill dealing with property taxes got first round approval on a vote of 29-14.

The action comes at a time when a proposal to lower the taxable value of agricultural land by 10 percent remains bottled up in committee over concerns that it wouldn’t accomplish much. The Appropriations Committee is expected to include another proposal to increase a property tax credit fund by $60 million in its budget recommendations. If that increase had been in effect last year, it would have saved the owner of a $100,000 house about $30.