Nebraska Gov. Jim Pillen recently signed legislation that will help preserve current energy production in the state, establish requirements for facilities that want to generate their own power and ensure that customers are not left to foot the bill for the additional usage, Pillen’s office said on June 2.
The new law is supported by Lincoln Electric System, Nebraska Public Power Utility District and the Omaha Public Power District, all public power utilities in the state.
Surrounded by state senators and representatives from public power entities, the Governor signed LB1261, which was introduced on his behalf during the last legislative session by State Sen. Barry DeKay.
“Our state is once again taking a bold and strategic step – one that will create an environment that attracts business and multibillion dollar investment, while legally preserving Nebraska’s unique and consumer-friendly public power model,” said Pillen.
“LB1261 incentivizes private industries, bringing 1000+ MW hyperscale electric loads, to pay the full cost of building and maintaining their energy infrastructure,” added DeKay. “If these new hyperscale loads do materialize, this legislation protects public power by placing the cost burden on the private industry instead of the public -- the owners and ratepayers of public power.”
LB 1261 alters the existing authority given to public power utility districts to exercise eminent domain over privately developed electricity generation facilities.
To ensure quality for this exemption, a facility must strictly meet a multi-part statutory test. The privately funded generation facility must serve a single-user entity with a new electric load exceeding 1,000 megawatts at a single site, and it must be physically located on, or adjacent to, that large industrial customer.
Furthermore, the project requires formal approval from the Nebraska Power Review Board. Parties must execute a long-term contract with the local public power district, and the facility can only be used to serve that specific industrial partner.
Crucially, the law shifts 100% of the financial burden for constructing new energy generation to the large corporation. The industrial customer must pay for all costs, grid upgrade fees, and congestion charges resulting from their project. "This ensures that everyday residential and small-business ratepayers are not subsidizing massive grid upgrades needed for hyperscale facilities," Pillen's office said.
"By balancing innovation with strict regulatory safeguards, this behind-the-meter legislation ensures Nebraska remains highly competitive for future development while safely anchoring the state’s existing infrastructure and protecting consumers for generations to come," the Governor's office said.
Speakers at the signing event highlighted the collaborative effort among private industry, public power and state senators to ensure the new law met the expectations of all involved.
“If the market should shift or if the purpose they’re trying to serve with these mega loads change, we don’t want public power taking that hit,” said State Sen. Mike Moser. “This bill allows public power to negotiate with these big power users to protect the ratepayers. The public power companies are required to serve people who want to use electricity. If we didn’t have this bill, they could be involved in building some really big behind-the-meter project, and then, should something go wrong, ratepayers would have to bail it out and that wouldn't be fair.”
“The public power industry appreciates the collaboration on LB 1261 with Governor Pillen, senators DeKay and Moser and numerous others to protect Nebraska electric consumers while promoting unique economic development opportunities,” added John McClure, the Nebraska Public Power District’s general counsel.
Speaking on behalf of Tenaska, Delette Marengo said LB 1261 represented the right approach for securing new energy resources and growing economic opportunities. Based in Nebraska, Tenaska is one of the largest privately held energy companies in the United States.
“LB 1261 also sends an important message beyond our borders: Nebraska understands the energy demands of the modern economy and is prepared to meet them in a way that protects consumers and respects our public power tradition. That matters when companies are deciding where to invest and where to build.”
