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LAUREL — Cedar-Knox Public Power District and the city of Laurel have signed a new electrical lease agreement.
This agreement will ensure the delivery of safe, affordable, and reliable power to the community while securing a long-term partnership aimed at delivering innovative, high-quality power with an unwavering commitment to customer service, said CKPPD General Manager Mike Lammers.
Under this agreement, CKPPD will manage the electrical infrastructure in the Laurel city limits, while implementing a costly 3–to 5-year improvement plan to rebuild much of the aged distribution infrastructure.
By leveraging CKPPD’s proven expertise, extensive equipment fleet, and advanced technology, the agreement will also seek to lower energy costs over time while improving the overall power quality to the town, Lammers said.
The partnership aims to achieve multiple goals for the town, including:
• Safety: Safety is paramount for both CKPPD and the community. While CKPPD has already addressed some areas of concern, the district remains committed to upholding the highest safety standards in the distribution of power. This includes annual system checks, continuous maintenance, and ongoing safety improvements to the electrical system.
• Affordable Rates: CKPPD has some of the lowest rural electric utility rates in the state, historically being in the top three lowest in both residential and overall.
The agreement will include a collection of a 12% lease payment to the city to operate and offset the revenue loss from the electrical system margins, while reducing all electrical related expenses; such as linemen, trucks, equipment, materials, power delivery cost, insurance, and more.
The billing will also include a state statute-mandated requirement of a 5% Gross Revenue Tax (GRT) that is passed on to the county, which is largely returned to the school district and city.
CKPPD does not retain or charge any administrative fees for collection of these fees.
Projections show the energy rates for Laurel will need to decrease compared to those of other current town customers. Although the collection of the Lease and GRT will raise the overall bill, CKPPD is proposing to lower rates by 3% immediately to help offset the increase for customers. As CKPPD completes a cost-of-service rate study and rate component data is gathered, they intend to lower rates over the next few years. The 12% Lease and 5% GRT model is identical to agreements used with all seven other towns within the district and with NPPD in Hartington.
• Reliability: CKPPD’s 3–5-year work plan of upgrades in Laurel will bring value to both entities and will include options of distribution back feeds once completed. This will allow power to be provided by several circuits of CKPPD’s current distribution system if issues arise. While the city’s generation facility is not part of the agreement, the added infrastructure will reduce risk of downtime and ensure that customers are provided resilient, dependable power.
This arrangement provides the City of Laurel value in receiving much-needed system upgrades, while reducing both current debt and large future cost for infrastructure upgrades. The lease payment and GRT will come in as revenue to offset margin loss and eliminate all the city’s future electrical-related costs.
CKPPD will benefit from increased reliability to the existing grid and added capacity options for the rural surrounding areas.
“While this capacity is not needed immediately, it will offer growth options in the future,” Lammers said.
The utility is a non-profit-based locally controlled public power system and this agreement should help control operational fixed costs by spreading those costs across an expanded customer base.
“We are excited to jointly enter into this agreement with the City of Laurel,” Lammers said. “Our mission statement is ‘Dedicated to providing innovative, safe, reliable, affordable service to our customers’. The board consistently emphasizes the importance of customer service and that is exactly what we intend to do. All we do is power, and we believe we do it very well.”
Laurel City Administrator Dan Kuhlman said this agreement is good for both entities.
“Through this new lease agreement, the City of Laurel and CKPPD are reinforcing our shared commitment to providing reliable, safe, and affordable, power to our community. This partnership will help ensure that our residents and businesses continue to have access to the high-quality energy services they need to thrive now and in the future.”
The new electrical lease agreement is set to take effect April 25th, 2025 and will continue to serve as a model for strong, collaborative relationship between City of Laurel and CKPPD.
