Minutes

Minutes of the 809th Meeting

NEBRASKA POWER REVIEW BOARD

Minutes of the 809th Meeting

March 9, 2020

 

 

            The 809th meeting of the Nebraska Power Review Board (“the Board” or “PRB”) was held in the First Floor hearing room, Nebraska State Office Building, 301 Centennial Mall, Lincoln, Nebraska.  The roll was called and present were Chairman Reida, Mr. Grennan, Ms. Hilyard, Mr. Hutchison, and Mr. Moen.  Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on February 28, 2020.  All background materials for the agenda items to be acted on were provided to all Board members prior to the meeting and a copy of the materials was in each Board member’s notebook.  The executive director announced that a copy of the Nebraska Open Meetings Act was on display on the south wall of the room for the public to review, and another copy was available in a three-ring binder on the table at the back of the room.  A copy of all materials that the Board would consider was available for public inspection on a table in the back of the room, as well as extra copies of the agenda.

 

            Executive Director Texel took a moment to introduce the Board’s new member.  Elizabeth Hilyard from Gering, Nebraska was appointed by the Governor on September 19, 2019 as the Board’s designated accountant member.  She will replace Mr. Morehouse.  Although Mr. Morehouse’s term ended on December 31, 2018, he continued to serve until a replacement could be appointed and confirmed.  Mr. Morehouse submitted a letter of resignation effective Thursday, March 5.  When a seat become vacant, an appointee becomes an “acting” member until the Legislature either confirms or denies the applicant.  Ms. Hilyard took her oath of office prior to the meeting.

 

            The Board first considered the draft minutes from its January 24, 2020, meeting.  The staff did not have any recommended changes and no one had contacted the staff to request any.  Mr. Grennan moved to approve the minutes for the January 24, 2020 meeting.  Mr. Moen seconded the motion.  Voting on the motion:  Chairman Reida – yes, Mr. Grennan – yes, Ms. Hilyard – yes, Mr. Hutchison – yes, and Mr. Moen – yes.  The motion carried 5 – 0.

 

            The next agenda item was acceptance of the expense report for the months of January and February.  In January, there were $22,893.52 in personal services, $24,456.16 in operating expenses, and $951.54 in travel expenses.  The total expenses for January were $48,301.49.  In February, there were $23,679.64 in personal services, $17,605.15 in operating expenses, and $949.45 in travel expenses.  The total expenses for February were $42,234.24.  Executive Director Texel noted that at end of February 67% of the fiscal year had passed, and the agency has used 64% of its cash fund, not including the reserve funds.  The Board did not receive any reimbursement checks during January and February from the Southwest Power Pool for Mr. Grennan’s SPP-related travel.  Mr. Grennan moved to accept the January and February expense reports.  Mr. Hutchison seconded the motion.  Voting on the motion:  Chairman Reida – yes, Mr. Grennan – yes, Ms. Hilyard – yes, Mr. Hutchison – yes, and Mr. Moen – yes.  The motion carried 5 – 0.

 

            The next item on the agenda was to reconsider renewal of contract 69810 04 with JK Energy Consulting, LLC.  This is the Board’s contract for the consultant that represents the PRB and the State of Nebraska on the Southwest Power Pool’s (SPP) Cost Allocation Working Group (CAWG), and serves as advisor to the PRB’s member that serves on the Regional State Committee (RSC).  That member is currently Mr. Grennan.  The Board approved an increase at January’s meeting.  Unfortunately, there was a miscommunication between the executive director and the contractor and the dollar amounts stated for approval were incorrect for the first half of the contract period.  The original contract was signed in 2015.  The state allows contracts to have five renewals before a new request for proposals must be issued.  This will be the fifth and therefore final renewal on this contract.  The Board will need to issue a new request for proposals for the new contract period from July 1, 2021 to June 30, 2022.  The current contract ends June 30, 2020.  The contract period the Board is considering is for July 1, 2020 to June 30, 2021.  The contract follows the State’s fiscal year period.  The current contract amount is for $13,900 per month, or $166,800 annually.  The contract allows the contractor to request an increase in compensation after the first two years of the contract.  An increase request cannot be more than five percent.  Last year the contractor did not request any increase in the compensation.  For the contract under consideration the contractor submitted a letter requesting an increase of three percent for the contract renewal beginning July 1, 2020.  The contractor is JK Energy Consulting, LLC.  John Krajewski is the principal for JK Energy.  The increase involved for the new contract period would change the monthly compensation from $13,900 to $14,300 and the annual compensation from $166,800 to $171,600.  JK Energy submitted a letter explaining the reasoning for the price increase, which is primarily due to significant private health insurance increases.

 

            Another issue involved is that Mr. Krajweski became the chair of the CAWG on January 1, 2020.  It is expected by SPP that when a commissioner from a state is elected chair of the RSC, the staff member serving on the CAWG from that same state will become the chair of the CAWG.  SPP found this greatly facilitates the efficiency and working relationship between the RSC and CAWG chairs.  Mr. Grennan was elected chair of the RSC for calendar year 2020.  Thus, Mr. Krajewski was expected to become CAWG chair.  This creates an increase in workload for JK Energy that is beyond the scope of the contract, so there was a corresponding compensation increase for calendar year 2020.  Mr. Krajewski had provided his requested compensation level that included compensation for his CAWG chair duties, and the PRB previously approved the increase.  Mr. Krajewski had intended for the three percent base raise to apply to the entire calendar year 2020.  Executive Director Texel thought the compensation figure Mr. Krajewski had provided for the first second six months of 2020 was the final figure.  Due to this, in January the Board approved the compensation level as $14,950 per month from July 1 to December 31, 2020, and $14,300 per month from January 1 to June 30, 2021.  Mr. Krajewski had meant the three percent base raise to be calculated in first, then the increase for the CAWG chair duties to be in addition.  That would make the compensation level to be $15,350 per month from July 1 to December 31, 2020, and $14,300 per month from January 1 to June 30, 2021.  Mr. Krajewski did not catch the discrepancy when Executive Director Texel read the compensation figures to the Board in the Board’s proposed motion.  Mr. Hutchison commented that it has been discussed that this contract is very important for the State and the utilities.  The position is unique and there are only a few individuals in the state that have the background and knowledge to do what JK Energy provides.  Executive Director Texel commented that aside from those currently employed by the utilities, there are only several engineers in the state who have the expertise and experience to allow them to step up and do this job without on-the-job training.  Mr. Hutchison moved to rescind the previous approval of the renewal of contract 69810 O4 approved on January 24, 2020 due to an error, and instead moved to approve renewal of contract 69810 O4 with JK Energy Consulting, LLC from July 1, 2020 to June 30, 2021 with a compensation level of $15,350 per month from July 1, 2020 to Dec. 31, 2020, and $14,300 per month from January 1, 2021 to June 30, 2021.  Voting on the motion:  Chairman Reida – yes, Mr. Grennan – yes, Ms. Hilyard – yes, Mr. Hutchison – yes, and Mr. Moen – yes.  The motion carried 5 – 0. 

 

           The next item on the agenda was to consider the Municipal Energy Agency of Nebraska’s Petition for Charter Amendment 35.  The amendment would add the town of Oak Creek, Colorado and remove the City of Wood River, Nebraska as voting members of MEAN, and update the list of MEAN’s current directors.  The Board published notice of the petition in the Steamboat Pilot & Today newspaper on February 9, 2020, and in the Shelton Clipper newspaper on February 13, 2020.  The Steamboat newspaper is the closest newspaper with circulation in the town of Oak Creek.  Statewide notice in Nebraska was published in the Omaha World Herald on February 12, 2020.  Under Neb. Rev. Stat. section 18-2433, the Board must provide written notice to interested parties and consider a public hearing, which may be held at the option of the Board.  Written Notice was sent to the Western Area Power Administration (WAPA), Tri-State Generation and Transmission Association, Inc. and Nebraska Public Power District, as those entities have wheeling or wholesale contracts with MEAN.  Written notice was also sent to the Mayors of Oak Creek and Wood River.  No protests, objections or interventions were filed.  As required by Neb. Rev. Stat. section 18-2427, MEAN provided the Board with a certified copy of MEAN’s resolution approving the addition of Oak Creek and removal of Wood River as voting members of MEAN, a copy of ordinance 654 passed by the Oak Creek town board demonstrating the town’s decision to join MEAN as a voting member, the list of names and addresses of the current MEAN directors, and a copy of ordinance 561 passed by the Wood River city council demonstrating the city’s decision to withdraw as a member of MEAN.  Executive Director Texel said Neb. Rev. Stat. section 18-2433 sets out the approval criteria the Board is to use when deciding on approval of the petition.  The statute says that proposed amendments to the charter shall be approved if the Board determines the statements in the petition are true and conform to the public convenience and welfare, so long as the plants, systems and works, the operation of the same, the exercise of powers, and the assumptions of duties and responsibilities of, or on the part of, such agency, do not nullify, conflict with, or materially affect those of any other district or a corporation organized under the provisions of Chapter 70, article 6 or 8, or the Electric Cooperative Corporation Act, or those of any part of such district or corporation.

 

            Chris Dibbern, general counsel for MEAN, addressed the Board to describe Oak Creek.  She had provided a power point slide with facts about Oak Creek prior to the hearing, a copy of which was in each Board member’s notebook.  Oak Creek has a 1.3 megawatt electric load.  It owns a CAT (Caterpillar) diesel generator.  The town has been associated with MEAN for 21 years, but not as a voting member.  Ms. Dibbern said she was aware one or more Board members were interested to know what were the reasons a community typically joins MEAN.  Ms. Dibbern explained that some of the communities receiving services from MEAN are “Schedule M” members.  There are eight communities with that type of membership.  MEAN has through some legislative actions taken steps to streamline the benefits of being voting members.  It was suggested to these communities that they consider becoming full voting members.  This would give the towns more voice in MEAN’s decisions that affect them.  Then there is the question of why a municipality would withdraw as a member of MEAN.  Wood River has been receiving its power from Southern Public Power District for the last eight years.  Due to this the MEAN Board asked the town to consider stepping down from its voting membership.  MEAN has other changes going on, but they do not interfere with the Charter language.  There is currently a bill before the Nebraska Legislature that would change some of MEAN’s authority, including the ability to sell its generating assets to other public power entities.  There was some discussion about the decommissioning of the Kimball Wind Farm and how MEAN conducts its meetings.  MEAN has members in four states.  There are approximately 40 members.  The contracts MEAN has with the communities do not have an end date.  Ms. Dibbern offered to give a presentation about MEAN’s organization to the Board.  The Board thought that would be very helpful.  Mr. Hutchison moved to waive a hearing and approve MEAN’s Petition for Charter Amendment #35.  Mr. Grennan seconded the motion.  Voting on the motion:  Chairman Reida – yes, Mr. Grennan – yes, Ms. Hilyard – yes, Mr. Hutchison – yes, and Mr. Moen – yes.  The motion carried 5– 0.

 

            The next item on the agenda was the executive director’s report.  The first item was the Southwest Power Pool (SPP) update.  Mr. Grennan gave an update on what is happening at the Regional State Committee (RSC).  The next RSC meeting is in April.  There was follow up information on the HITT in the reports.  Mr. Grennan discussed the cost allocation for transmission line costs over the SPP footprint.  He discussed the transmission that was built to deliver the power from renewable generation facilities.  This largely involved a situation in Kansas.  There will be an RSC call in April to go over the agenda prior to the quarterly meeting in Little Rock, Arkansas.  There was a brief  discussion about the booklet SPP produced on the history of the RSC.  Mr. Grennan thought the booklet would be a good background information resource for Ms. Hilyard.  He also suggested that at some point it might be beneficial for other Board members to attend one of the RSC’s quarterly meetings.

 

            The next discussion item was the legislative update.  Executive Director Texel only reviewed the bills from the 2020 session that had a priority designation.  He did not cover carryover bills.  He said if the Board members had any questions about any bill, they had the tracking document showing all bills being monitored by the Board’s staff, so please just ask about any bill on the list.  The Legislature is currently on day 37 out of the 60-day session.

 

            LB 858 was introduced by Senator Hughes.  This bill changes the provisions of the Municipal Cooperative Financing Act.  It was the executive director’s understanding that this bill was requested by MEAN to clean up some issues in its statutes.  It would allow the agency to establish membership classes in its bylaws, to create a procedure to expel members, and would allow the agency to sell a power plant or distribution lines to any public power entity.  The bill requires that the property sold shall never become the property of or controlled by a private, for-profit electric utility.  Chris Dibbern, MEAN’s general counsel, confirmed that MEAN had asked Senator Hughes to introduce the bill.  Ms. Dibbern discussed some of what the bill does during the charter amendment.  The bill is a Natural Resources Committee priority bill.  The bill advanced to Final reading just last Friday.

 

            LB 899 was introduced by Senator Hughes.  This bill authorizes public power districts to “develop, manufacture, use, purchase or sell biofuels and biofuel byproducts and other fuels which help reduce greenhouse gas emissions.”  The bill was introduced at NPPD’s request and is supported by the Nebraska Power Association.  The bill on now on Select file.  This is Senator Moser’s priority bill.

 

            LB 1003 was introduced by Senator Walz.  This bill provides annexation powers to cities of the second class and villages for relocation due to catastrophic flooding.  If a village or second class city needs to relocate due to catastrophic flooding, it can annex noncontiguous land.  On page 4, lines 6-16 is the important language to the PRB.  If an annexation of noncontiguous land occurs, the current electric service provider would still hold the service area rights to the annexed territory.  If the village or city annexes territory making the new area contiguous, the date of the new annexation is treated as the date of annexation of the area where the city or village moved for purposes of the city or village taking over the service area of the originally acquired territory for purposes of section 70-1008.  The bill is on General file.  The Urban Affairs Committee designated LB 1003 as one of its priority bills.

 

            The next item on the agenda was to elect the 2020 Chair and Vice Chair.  After a short discussion, Mr. Grennan moved to nominate Frank as the Chair and Chuck as the vice chair for 2020.  Mr. Moen seconded the Motion.  Voting on the Motion:  Chairman Reida—yes, Mr. Grennan—yes, Ms. Hilyard—yes, Mr. Hutchison—yes, and Mr. Moen—yes.  The motion carried 5-0.

 

            The Board then discussed a memo Executive Director Texel wrote concerning advice to the Board on charter amendment population apportionment.  The memo addresses what deviation from the mathematically ideal is allowable, and what guidance or presumptions the Board might be able to provide to the public power districts when they address redistricting after the 2020 federal census.  The Board talked about different charter amendments and the reasoning for population deviation.  The Board asked executive director Texel to convert the memo into a legal opinion.  Executive Director Texel asked if the Board would like acceptance or approval of the legal opinion placed on the agenda for the next meeting.  The Board members did not want the matter placed on the agenda.  They preferred receiving an update at the next meeting and they could indicate whether they are generally supportive of the conclusions.  The Board members wanted the advice to remain as the legal counsel’s opinion.

 

            The next meetings are scheduled for April 13, May 11, and June 8, 2020.     

 

            Mr. Grennan moved to adjourn the meeting.  Mr. Hutchison seconded the motion.  Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison—yes, Mr. Grennan – yes, Ms. Hilyard—yes, and Mr. Moen – yes.  The motion carried 5 – 0.  The meeting was adjourned at 11:16 a.m.

 

 

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Timothy J. Texel

Executive Director and General Counsel