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2016
powering 50 years
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A message from our CEO

For 50 years, Lincoln Electric System has been more than a power company, and 2016 continued that tradition. Local people serving local people, delivering reliable power with safety and integrity — that's who we are. We're community-owned and make every decision with our customer-owners in mind.

In an increasingly energy-dependent world, we stand on the leading edge of reliability and efficiency so that you have power when you need it. We believe in sound decision-making that's mindful of our environment and reflects the values of our community, because public power is responsible to the people it serves. We are striving to be the world's best energy company, and to better serve our family, friends and neighbors.

A lot goes into keeping the lights on, and we're proud of a half-century spent providing outstanding service to Lincoln and our surrounding communities.

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Kevin G. Wailes
Chief Executive Officer
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50 years

Celebrating

50 years

LES was founded in 1966 because Lincoln wanted more control of its energy future. The goal was a semi-autonomous, city-owned entity that could bring innovative leadership and improve both the efficiency and reliability of Lincoln's electricity. For five decades, our history has been shaped by an enduring commitment to keeping our customer-owners first and foremost in our mission. We strive to bring our ratepayers the best possible service so they can have the best possible quality of life. Here's to the past 50 years of public power in
Lincoln — and to the next 50.

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Dependable power: Our customers count on it.

In 2016, we focused our efforts on the Southeast Reliability Project, supporting residential and commercial growth in our city. This initiative centers on a new 115-kilovolt power line, substation and switching station to improve reliability in Southeast Lincoln and the entire service area. We spent the year finalizing construction and acquisition plans while contacting landowners along the 8-mile path of the overhead power line.

In May, we completed our Mobile Meter Reading project ahead of schedule and $4 million under budget. In partnership with our meter installation contractor, Utility Partners of America, nearly 137,000 analog meters in our service area were replaced with mobile meter-reading technology. The upgrade streamlines our ability to read meters wirelessly and greatly reduces the need to enter customers’ properties.

We also reached the midway point of our 10-year Duct Installation Project. For the last five years, we’ve been addressing Lincoln's aging underground power delivery system, and the new ducts help crews repair and replace existing cables faster while minimizing the impact on customers. In 2016, new underground duct was installed in South Lincoln, and areas in West Lincoln will be addressed in 2017.

Overall, we maintained our outstanding service reliability of 99.99 percent. The average customer was without power for just 29.89 minutes (not including major event outages, such as very severe storms) in 2016, well below our service reliability goal of 60 minutes or less.

Just as other utilities came to our aid in the snowstorm of 1997, we also rose to the challenge to restore power when disaster struck. Through the American Public Power Association’s mutual aid network, we lent a helping hand to utilities on the East Coast when Hurricane Matthew struck, deploying 13 LES employees and seven trucks to help respond to power outages caused by the storm. Even after 16-hour workdays and missing family and friends, deployed crews let nothing get in the way of restoring power to hurricane-ravaged areas of Florida and South Carolina.

Back in Lincoln, remaining crews picked up the slack from being short-staffed and continued to provide our customers with the same outstanding service.

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A purpose-driven utility with an eye on the future.

We know we're responsible for making important choices to improve our community, so we build trust through disciplined decision-making time and time again.

In 2016, we balanced our generating capacity portfolio to roughly one-third coal, one-third natural gas and one-third renewable energy. Thanks to multiple partnerships in varied locations spanning the region, we've cultivated an abundant and geographically diverse supply of generation resources that continue to help mitigate risk and reliably serve our customers.

By adding more renewable generation capacity — 173 megawatts of wind energy and 5 megawatts locally through the LES community solar facility — to our mix of energy sources, we produced an equivalent of 48 percent of our total retail energy sales with renewable resources in 2016, one of the highest percentages in the country.

Environmental responsibility is one of our strategic priorities. It's how we've exceeded our sustainability goals, offsetting our projected power demand growth with sustainable power generation from our new wind and solar assets and demand reduction resources.

We received one of the Electric Power Research Institute's 2016 Technology Transfer Awards for our 2015-16 Smart Thermostat and Load Control Relay Switch Demand Response Pilot Study, which aims to improve the effectiveness of web-enabled thermostats and cellular switches to control air conditioning run time during peak summer days.

In November, we were chosen for the Lincoln-Lancaster County Environmental Leadership Award for Government for our role in sustaining our surroundings through our efforts to produce more clean energy.

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Local people serving local people.

We're committed to energizing our community as a driving force of positive change because we're a part of it.

Each board member is an LES customer, and our employees are the families, friends and neighbors of our customers. We want and expect a high level of service.

After two years without rate increases, customers will see a relatively small increase in 2017 — an average rate adjustment of about 3 percent. The increase largely stems from increases in net power costs, which are driven by low natural gas costs in the marketplace.

Still, our projected rates are anticipated to remain among the lowest in the country thanks to a refinancing of $120 million in revenue bonds in August which resulted in $19 million in present value savings, allowing us to lower the 2017 rate adjustment.

We also worked to give our customers an opportunity to invest in more clean energy in our community.

It started with a commitment from customers through the SunShares program. Giving a few extra dollars on their monthly bill led to the creation of the LES community solar facility right here in Lincoln, culminating with our September ribbon-cutting celebration.

Then, in November, we provided customers another option to reap the rewards of the very power they helped bring into the LES service area. Through our new Virtual Net Metering program, customers can now invest in “virtual” solar panels — representing a portion of the energy generated by the solar array — and receive monthly energy credits for the 20-year life of the program.

Yet again, every cent in our Sustainable Energy Program's budget was used. More than 1,100 residential and 600 commercial customers tapped into its $3 million of energy-saving incentives and helped add to the program's environmental benefits. Since 2009, the Sustainable Energy Program has taught customers how to save money, and in turn, it has helped save the equivalent annual electricity consumption of 12,500 average homes in LES' service area.

This kind of education is at the core of what we do.

We took over The Railyard in downtown Lincoln for our sixth-annual Sustainable Living Festival in August. This brought nearly 30 organizations together with more than 700 community members to grow their knowledge of sustainable and energy-efficient living. Families learned about solar power and ways to save on their energy bills while kids raced solar cars and ate solar-popped popcorn.

The festival was just one of roughly 250 community events — from presentations to demonstrations and tours to recruiting events — that helped us reach tens of thousands in our community in 2016. We donated around 1,000 items to local charities, and employees gave $80,000 to support Community Health Charities, the Community Services Foundation and United Way.

Dependable power: Our customers count on it.
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A purpose-driven utility with an eye on the future.
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Local people serving local people.
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Financial highlights

LES by the numbers

Balanced energy

In 2016, LES balanced its generating portfolio to roughly one-third coal, one-third natural gas and one-third renewable energy.

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Natural Gas
Renewables
Coal
13th lowest
A nationwide study revealed LES' rates average 13th-lowest overall among the 100 cities surveyed.
$12.4 million
In 2016, LES paid more than $12.4 million to the Lincoln Public School District, city of Lincoln, Lancaster County and the city of Waverly in its annual payment in lieu of tax. LES has given more than $260 million back to the community in its 50-year history.
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26% less
LES residential customers pay 26% less than the national average.
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9.4 cents
per kWh
LES residential customers pay 9.4 cents per kilowatt-hour, lower than the national average of 12.7 cents per kWh.
Powering 50 years

LES from then to now

LES fleet
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Top: LES trucks were primarily orange in the 1970s.
Bottom: Today's LES fleet vehicles are white with orange, black and/or gray stripes, and hybrid vehicles are in use.
LES fleet trucks
LES system control
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Top: Two employees monitor system control in 1973.
Bottom: Today's system control is more complex, with digital technology and more employees monitoring service reliability.
LES offices
Ribbon cutting
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Top: In 1966, LES celebrated its opening of the new Havelock office.
Bottom: In 2016, LES unveiled its community solar array, dedicated with the help of customer donations through the SunShares program.
LES ribbon cuttings
Community safety
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Top: Safety demonstrations, like this one from 1986, used small-scale models that focused on how power was delivered.
Bottom: Today's safety demonstrations are simplified and easier to teach, and line technicians serve as the instructors, talking about both electricity and careers in the energy industry.
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Line technicians
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Top: Our line technician crews were tight-knit groups in 1972.
Bottom: Today's line crews are carrying on the same tradition and continuing to maintain LES' high standards for reliability.
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LES service area
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Top: LES' service territory in 1966 was 188 square miles with Lincoln's city limits accounting for 42 square miles.
Bottom: Fifty years later, the service territory has expanded to 207 square miles with Lincoln's city limits growing to include 94 square miles.
LES service area maps
Meters
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Top: In 1987, LES used dial-type analog meters.
Bottom: In 2015-16, LES upgraded to digital meters with mobile-meter reading technology.
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Energy efficiency
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Top: The extent of LES' energy-efficiency promotions in 1979 was a booth at Lincoln's Home Show.
Bottom: Now, LES dedicates an entire event — the annual Sustainable Living Festival — to promoting energy efficiency.
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Operations center
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Top: LES' original service center — used through 1980 — was downtown on 9th Avenue, next to Lincoln's K Street Power Plant.
Bottom: In 2016, designs were approved for the future LES Operations Center in Southeast Lincoln near 98th Street and Rokeby Road. Occupancy of the first phase is expected in spring 2019 and second phase occupancy is expected in early 2021.
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Innovation
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Top: The ice storage inlet air cooling system at Rokeby Generation Station (pictured during construction in 1990) was the first of its kind and was named as one of the top six engineering achievements in the U.S. in 1991 by the National Society of Professional Engineers.
Bottom: Lincoln Mayor Chris Beutler (far right) awarded LES the 2016 Lincoln-Lancaster County Environmental Award for Government, noting the utility's efforts to add more efficiency and renewable energy — like wind and solar — to its power generation mix.
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The nine-member board is comprised of local citizens who are appointed by the Lincoln Mayor and confirmed by the City Council. They are charged with overseeing the operations and finances of LES. However, the Lincoln City Council has final approval of LES' rates, budget and debt financing.

Our Mission

LES is a progressive leader, partnering with the community to maximize energy value and quality of life in an environmentally responsible manner.
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Learn more about one of the nation's best public power utilities.
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We are an employer of choice.
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We are proud to present our 2016 Financial Report.