Nebraska AG sues OPPD, targets North Omaha power plant changes and ‘net-zero’ plan

An aerial view of North Omaha Station in Douglas County. (Courtesy of Omaha Public Power District)

LINCOLN — Nebraska Attorney General Mike Hilgers sued the Omaha Public Power District on Thursday, seeking to stop a plan to retire three of five power-producing units at the utility’s North Omaha Station and switch the other two coal-fired units to natural gas. 

The 46-page lawsuit, filed in Douglas County District Court, seeks to stop the changes planned for the North Omaha Station, as well as prevent OPPD from pursuing any policy that prioritizes considerations other than price or reliability, including “environmental justice.” Residents had fought to get OPPD to modify the plant, citing health concerns. 

Hilgers said data doesn’t support the assertion that the plant harms neighbors’ health.

In a midday announcement, he said he wants to focus the publicly owned utility on what he says state law requires: reliability and affordability. He said OPPD’s plan for the North Omaha plant would retire 240 megawatts of electricity production as OPPD sees skyrocketing increases in demand. Though the local power district’s plan says moving forward is contingent on opening new power-generation facilities this year, Hilgers said the changes wouldn’t add power capacity and would only help OPPD “tread water.”

“We should not be taking one electron off the grid,” Hilgers said.

OPPD declined to comment because of pending litigation. Multiple board members could not be reached for comment.

Targeted in the lawsuit are OPPD, its CEO and president and six of eight elected OPPD directors. It was not immediately clear why board members John Hudson and Michael Cavanaugh are not named in the lawsuit. One of the elected members, Sara Howard, served with Hilgers in the Legislature, where she chaired the  Legislature’s Health and Human Services Committee.

North Omaha State Sens. Ashlei Spivey and Terrell McKinney said they adamantly disagree with Hilgers’ decision. Both said energy rates might rise, partly due to unregulated data centers requiring more power or other power demands, but not because of the North Omaha Station plan.

Spivey, a member of the Legislature’s Appropriations Committee, called the lawsuit a “witch hunt” she said is meant to “strong-arm” OPPD into following state leaders’ political whims.

“We have seen the AG’s Office do that a number of times on a number of divisive political issues,” Spivey said. “It’s a waste of taxpayer dollars.”

‘Delays are at an end’

In 2014 and 2016, OPPD directors agreed to a plan that, by 2023, OPPD would retire the three North Omaha units in operation since the 1950s and switch the other two in operation since the 1960s from coal to natural gas. The oldest three units switched to natural gas in 2016.

The plan was delayed in 2022 and then made contingent upon the construction of two new power-producing stations: Standing Bear Lake and Turtle Creek. Combined, OPPD has said those facilities would produce 600 megawatts, more than all of the units operating now in North Omaha.

The timing could be tied to OPPD, which appears ready to move forward with the North Omaha Station plan during a “procedural” meeting next week, Spivey said.

Hilgers, too, said he feels “the delays are at an end” and that’s part of why the lawsuit came now. He said it takes a lot of work to decommission power plants, a process he said is also hard to unwind.

Supply and demand

Part of the AG’s concern comes as OPPD hopes to achieve a greener-energy goal of “net-zero” carbon emissions by 2050, a plan the utility board approved in 2019. OPPD leaders are balancing the desire to meet that goal, which was set when demand for electricity was fairly flat, with rapid recent increases in consumer demand for power. 

“Ultimately, it is a supply and demand issue,” Hilgers said. “It would defy reality and economics to suggest that taking 200-plus megawatts offline, given this demand environment we’re in, will do anything other than increase the cost to [OPPD] ratepayers.”

On health concerns, Hilgers said he checked the air quality in North Omaha on his phone just hours before his afternoon event. The quality was at 29, he said, on a metric that considers any number under 50 “great.” He said he’s not dismissing air quality as a concern, nor is he saying local control doesn’t matter.

However, Hilgers argued that taking energy production offline would undermine the utility’s key legal guideposts of affordability and reliability. He argued OPPD directors elevated “environmental justice” as equally or more important in violation of a 1963 Nebraska law that the state “provide for dependable electric service at the lowest practical cost.”

Nebraska is the only state with exclusively publicly owned utilities providing power.

Nebraska Gov. Jim Pillen was among those praising Hilgers on Thursday, calling it “foolish” for any power district to avoid coal, a resource he called “the single most affordable means of energy production known to mankind.” He pointed to coal reserves in neighboring Wyoming as a plus and said coal production is cleaner today than before, with “science is on our side.”

“Foreign adversaries have sped up their own coal production, most notably China and Russia,” Pillen said in a statement. “It is unfathomable why we would take any action that would slow or stop our own expansion of coal-driven energy.”

OPPD serves about 1 million Nebraskans, Hilgers said, in a service area that spans 13 eastern Nebraska counties, including much of the Omaha area.

‘Stop acting like a dictator’

The two North Omaha state senators said they see a different health reality on the ground, including on Wednesday, when they hosted a town hall with OPPD Director Eric Williams, whose district includes North Omaha. Most questions were for Williams and sought more information about the North Omaha plant transition, Spivey said.

McKinney said his constituents have faced respiratory problems, with Spivey noting her oldest son has asthma and that the concerns impact whether her constituents can achieve the “good life.” McKinney said a daycare owner close to the power plant annually cleans residue left behind, and McKinney argued state leaders “only care about dollars and cents.”

“It’s time for Hilgers to stop acting like a dictator and let our public power utilities do their job: providing affordable, reliable and clean energy for the people who actually own it,” McKinney said.

McKinney said that to say coal isn’t harmful is “ignorant, to say the least.” McKinney said that if Hilgers is focused on affordability and reliability, “he should build a coal plant in his backyard and let it burn on his property and see how he feels.”

Hilgers said there are “plenty of avenues” for the public to work with OPPD and find solutions without shutting down an “enormous amount of power.” Spivey said the community has already worked with OPPD for the solution at hand.

‘True cost’ of ‘net-zero?’

Part of Hilgers’ lawsuit relies upon and cites information gathered this summer and fall as part of Legislative Resolution 234, an interim study from freshman State Sen. Jared Storm of David City and 19 other lawmakers into the “true cost” of “net-zero” carbon emissions plans.

Storm could not be reached for comment Thursday.

The Legislature’s Natural Resources Committee hosted a Sept. 5 hearing on Storm’s LR 234, in which State Sen. Danielle Conrad of Lincoln accused Storm and his cosponsors — including five of Conrad’s fellow committee members — of each being a “climate denier or a climate skeptic.”

Storm told Conrad he knows the climate is constantly changing and that his resolution was about keeping power affordable and maintaining jobs and the community. He wanted an “off-ramp” for consumers. His resolution could hint at legislation for the 2026 legislative session.

“I’m all for green energy, if it can stay affordable, reliable and doesn’t sacrifice Nebraska jobs,” Storm told Conrad.

State Sen. Tom Brandt of Plymouth, the Natural Resources Committee chair who was among those signing onto Storm’s resolution, reached out to OPPD and three other utilities in July in preparation for LR 234. Brandt specifically asked OPPD about its North Omaha plans.

OPPD CEO and President Javier Fernandez told Brandt that while OPPD’s system is forecasted to be reliable under federal and regional regulations, “it is reasonable to say the system would have more margin and better reliability/resiliency had the assets [at North Omaha Station] remained in service with applicable maintenance and life extension work.”

One of the tables Fernandez provided Brandt suggests, based on current OPPD plans, that the agency could hit a wall by 2028 and have consumer demand outpace supply. This includes plans by 2029 to bring on 900 new megawatts in natural gas production. Fernandez indicated OPPD is looking to address the “unprecedented load growth” but faces execution and timing challenges with permitting, supply chains, workforce availability and regulatory approvals.

Hilgers, echoing those challenges, said there is a “world of difference” between planning and what actually will happen with any additional new plants or contracted power coming online.

‘Not in the best interests’

The lawsuit posits that maintaining the status quo in North Omaha could reduce or stabilize OPPD consumer rates for power even as demand increases.

In response to another Brandt question as part of the interim study, Fernandez said delaying the plans by five years could net savings of $36 million with potential revenue growth, or $439 million if delayed by 15 years. He testified in September that keeping the status quo would make for better affordability and enable economic growth for consumers, though “slower progress” toward “net-zero.”

In an Oct. 1 email on additional questions from Storm, Fernandez said the North Omaha Station plan was “primarily based on environmental considerations.”

Brandt repeated that he is unaware of any study or data showing health concerns because of the North Omaha energy production. Fernandez told Storm he had no scientific evidence to the same and that emissions are strictly regulated at the state and federal levels.

While Pillen defended coal production, Hilgers said he might be more open to an alternative, such as moving all of the North Omaha units to natural gas but keeping all five operational. Hilgers said he hopes OPPD comes to the table and that he is open to ideas and a possible settlement.

Brandt, reached Thursday, said: “In a time when the state needs all the generation it can possibly get, it is not in the best interests of the utilities and the state to shut down generation.”

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