Minutes

Minutes of the 810th Meeting

NEBRASKA POWER REVIEW BOARD

Minutes of the 810th Meeting

May 11, 2020

 

 

           The 810th meeting of the Nebraska Power Review Board (“the Board” or “PRB”) was held via Webex in accordance with the health restrictions due to the COVID-19 pandemic, and pursuant to Executive Order 20-03.  The roll was called at 9:14 a.m. and present were Chairman Reida, Vice Chairman Hutchison, Mr. Grennan, Ms. Hilyard, and Mr. Moen.  Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on May 5, 2020.  All background materials for the agenda items to be acted on were provided to all Board members prior to the meeting.  A copy of the materials was available to the public on the Webex document list.  Instructions to join the meeting via Webex or by telephone only was provided in the public notice and on the meeting agenda available on the Board’s website.

 

            The Board first considered the draft minutes from its March 9, 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 March 9, 2020 meeting.  Mr. Moen 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 next agenda item was acceptance of the expense reports for the months of March and April.  In March there was $23,389.04 in personal services, $17,254.29 in operating expenses, and $0 in travel expenses.  The total expenses for March were $41,877.20.  In April, there was $22,161.77 in personal services, $17,612.95 in operating expenses, and $0 in travel expenses.  The total expenses for April were $39,774.72.  In March the Board received one reimbursement check in the amount of $981.67 for Mr. Grennan’s SPP related travel.  The expenses were incurred in March, so there was no net expenses for travel.  Executive Director Texel noted that as of the end of April 83.5% of the fiscal year had passed, and the agency has used 79.5% of its cash fund, not including the reserve funds.  Mr. Grennan moved to accept the March and April expense reports.  Ms. Hilyard 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 next item on the agenda was to consider approval of the dismissal of formal complaint C-54.  On January 22, the City of David City filed a formal Complaint against Butler Public Power District.  The basis for C-54 was that Butler PPD’s recent increases in its wheeling rate were unfair and unreasonable.  The complaint was filed under the provisions of Nebraska Revised Statute Section 70-1018.  Under 70-1018, if power suppliers are unable to resolve a dispute concerning rates for service, a dispute can be submitted to the PRB.  The PRB’s settlement recommendation is advisory only, though.  A hearing was set for March 9.  On February 20, Butler PPD filed its Answer to the Complaint.  A request for Continuance was filed and both parties agreed to reschedule the hearing for April 13.  On March 30, David City filed a Motion to Dismiss, without prejudice.  Without prejudice means that the complaint could be refiled.  Pursuant to the PRB’s Rules of Practice, Chapter 3, section 14, the PRB must vote to approve a request to withdraw any pleading once it is filed.  The executive director told the Board the parties came to an agreement and wish to dismiss the complaint.  Vice Chairman Hutchison moved to approve the dismissal of formal complaint C-54 as requested, without prejudice.  Mr. Moen 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 next item on the agenda was approval of the PRB’s assessment figure for fiscal year 2020-2021.  The Board members received the assessment information by e-mail.  The final gross revenue certificate was received on May 5.  The staff had requested to collect $540,000 for next year.  The Governor’s budget analyst informed the staff that she would only recommend approval of $530,000.  Using the $530,000 number will still allow the PRB to maintain a reserve fund of $135,000.  The gross revenue from the consumer-owned power suppliers in 2018 was $4,148,808,694.29.  The gross revenue in 2019 was $4,040,570,473.42.  Based on these figures, the gross revenue during calendar year 2019 decreased from 2018 by $108 million.  Last year’s assessment figure was 12.5337184 (cents per $1,000 gross revenue.)  The proposed assessment for fiscal year 20-21 is 13.116596 (cents per $1,000 gross revenue).  The Board discussed the potential effects of the pandemic on the gross revenue for the upcoming year, and reasons why the revenue decreased from 2018 to 2019.  Some of the reasons discussed were the flooding, irrigation load and cooler summer weather, which decreased the demand for electrical usage.  Mr. Grennan moved to approve an assessment figure of 13.116596 cents per $1,000 gross revenue for fiscal year 2020-2021.  Ms. Hilyard 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 Governor will now need to approve the assessment figure.

 

            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 July.  SPP has stated that this meeting will be conducted by video conference.  Mr. Grennan talked about conference calls that have been conducted by SPP and the RSC. 

 

            The next discussion item was the legislative update.  Executive Director Texel stated that this was included on the agenda as a place-holder.  The Legislature is currently recessed until further notice.  The executive director said he was leaving the update on the agenda in case the Legislature would reconvene shortly before the PRB meeting and address any bills of interest to the agency.

 

            The executive director then went through the findings and recommendations as a result of the agency audit conducted in March to May 2020 by the State Auditor’s Office.  The audit covered the period from July 1, 2018 to December 31, 2019.  The formal published audit report contained two formal findings.  The Auditor’s office characterized it as one finding related to “Revenue Internal Control Issues”, with two subparts.

 

            The first finding was there is a lack of segregation of duties over the Board’s collection of reimbursements and related accounts receivable.  This is a typical scenario in a small agency.  The Auditor’s office claimed one individual was able invoice, apply receipts, and perform deposit entries without a secondary individual involved.  The agency response was that the SPP reimbursements are now a moot point, as the SPP now deposits its reimbursements directly with the State Treasurer’s Office through an ACH transfer.  The other accounts receivable are reimbursements for the notice the PRB places in the local newspapers for public power district charter amendments.  The agency response pointed out that one individual does not invoice, apply receipts and perform deposit functions.  The paralegal invoices the districts and the executive director approves the deposits.  The auditor’s rebuttal was that one individual is able to do all the steps, not necessarily that one individual does do all the steps now.  The executive director said the Auditor’s rebuttal was a little baffling, since the business manager does not send out the invoices, and does not even know when the notices are placed or the invoices are sent out.  She also is unable to approve the deposits in the State’s system.  Only the executive director can approve the deposits.  Apparently the Auditor’s staff does not understand the PRB’s process and the State’s accounting system, even though the PRB staff explained it to them.  In order to address the finding, PRB will create an office policy where the paralegal will keep a copy of notice invoices and give a copy to the executive director.  The paralegal and executive director will keep the invoices until the director approves the reimbursement deposit in the State’s accounting system.  The Auditor’s staff indicated that would appropriately address the issue.

 

            The second formal finding was that the PRB does not confirm that gross revenue amounts reported by power suppliers are actually correct.  The proposed corrective action is to create an office policy where staff will confirm the gross revenue figures of the three largest utilities each year (Lincoln Electric System, Nebraska Public Power District and the Omaha Public Power District).  The staff will also randomly select one other utility from each supplier category (public power district, municipality and cooperative) and compare their gross revenue figure against the supplier’s financial audit report.  The Auditor’s staff said that would address the issue.  The Auditor’s staff stated that audits for all municipalities are available on the Auditor’s website.  According to the Auditor’s staff neither of the formal findings were serious in nature.

            In addition to the formal findings in the final report, there were five issues reported only to the agency.  The executive director characterized these as “informal” findings.  The first informal finding was a lack of documented review of capital assets reports.  The corrective action will be for the PRB staff to run all the capital asset reports and document a secondary review by having both the business manager and the executive director sign the report.

 

            The second informal finding was that there was an incorrect journal entry.  A $721 reimbursement deposit was coded to the wrong account code in the state accounting system, although the funds were deposited into the PRB’s account.  This was an oversight.  To avoid this issue in the future the PRB will run a general ledger report and both the business manager and executive director will sign it.  The coding error will not be reversed in order to correct the situation as the Auditor’s staff recommended.  Rebecca Hallgren (the Board’s business manager) spoke with the State Accounting Administrator, who instructed her not to reverse the entry.  The error occurred in a prior fiscal year, which would create a new error.  Coding the entry to the wrong account code is not a material error, and the amount was not material, so the State Accounting Administrator said to leave it be.

 

            The third informal finding consisted of three payroll issues.  The first was that the PRB files were missing a federal I-9 form in the business manager’s personnel file.  When the business manager was hired, she transferred from another State agency.  The other agency did not transfer her original I-9 to the PRB.  To correct this Ms. Hallgren created a new I-9 form and placed it in her file.  The second issue was that the Auditor’s staff believed there was insufficient documentation to support the business manager’s adjusted service date.  The service date had been adjusted many years earlier at the previous agency, and the PRB has no records regarding the adjustment.  The executive director asked the previous agency for its personnel records on Ms. Hallgren, which they provided to the PRB.  The file had no information about the adjusted service date.  This issue was not created by the PRB, nor can the PRB create documentation that does not exist, so no corrective action can be taken.  The executive director will prepare a memo explaining the situation and place it in the business manager’s personnel file.  The last payroll issue was that the executive director’s sick leave balance was off by 11 hours at the end of 2018.  At the end of the year the director’s sick leave hours were automatically adjusted down to 1,440 hours.  The director had used 11 hours sick leave in the last pay period of 2018, and the 11 hours should have been added back in to the director’s sick leave balance.  The corrective action is simply that the executive director and business manager will need to be aware of the leave balancing issues and be more careful at the end of each year.

 

            The fourth informal finding were two excessive per diems and reimbursements for the Board members.  The first issue was that former member Rick Morehouse attended two PRB meetings that ended by 11:15 a.m.  Mr. Morehouse spent the night in Lincoln and drive home in the morning.  The Auditor believes that he should have driven home that day to avoid the extra hotel night and an additional meal or two.  The executive director agreed to create an office policy setting out what time PRB members must return home when a meeting or other activity ends early in a day.  The second issue occurred when all five board members were given two per diem days, but they were only supposed to receive one per diem day.  The executive director had sent an email to the business manager authorizing each board member to receive a per diem day on “the 12th or 13th” of that month.  The business manager misread it as authorizing a per diem day on the 12th and 13th.  The additional day was not caught when the business manager and executive director reviewed payroll hours.  Going forward, the business manager and executive director will need to be more careful in reviewing the per diem days authorized.  The Auditor recommended making the PRB members reimburse the agency for one per diem day.  The issue of having received an extra per diem day payment was discussed.  One issue is that one of the Board members is no longer with the Board.  Another is that the payment was during a prior year.  To collect the extra day now would create issues with each of the Board members’ federal and state taxes.  Due to these issues, and the fact that the Board members did nothing to create the issue, the executive director recommended that the agency not collect the extra per diem payment from the Board members.  The Board members pointed out that amending their tax returns for such a small amount might cause them to incur significant additional expenses.  The Board members also pointed out the overall amount involved was not material in an accounting sense ($60 per Board member, and $250 for the SPP RSC representative).  All five Board members agreed that the agency should not collect the mistaken overpayment. 

 

            The fifth informal finding pertained to the annual assessment invoices.  The PRB does not maintain a copy of the letters sent to the utilities telling them the amount each utility owes as an assessment.  The Auditor refers to the letters as “invoices”.  The PRB staff keeps the gross revenue, assessment figure, and amount owed by each utility on an Excel spreadsheet.  When the assessment checks arrive, the dollar amount is compared to the amount shown on the spreadsheet.  Both the business manager and the executive director have printouts to verify the correct amount is being paid.  In the past if there was any discrepancy the utility would be contacted and asked to send a new payment.  The corrective action recommended by the Auditor’s staff was to keep either hard copies or scanned copies of all 162 letters.  The executive director said he thought making 162 copies each year seems wasteful.  If the Auditor only conducts an audit of the PRB every six or eight years, then the agency would have to store over 1,000 sheets of paper to give the auditors for review, for numbers that can be verified from the Excel spreadsheet.  After a discussion, all five Board members agreed that the letters should be copies, but it was up to the staff to determine if it would be easier to make and keep physical hard copies or electronic scans of the letters.

 

            The executive director then updated the Board on a proposed application that the Omaha Public Power District plans to submit.  OPPD’s plan previously was to submit the application in time for the May meeting.  However, OPPD informed the executive director that the district now plans to submit the application in June and request a hearing date in conjunction with the July 13 PRB meeting.

 

            The executive director then updated the Board on a legal opinion regarding providing guidance on the acceptable level of deviation from the ideal when considering public power district population apportionment plans.  At the March 9 meeting, the Board discussed a memo the executive director had prepared on the topic.  The Board asked to have the memo rewritten as an agency legal counsel’s opinion.  The executive director had provided the opinion to the Board members prior to the meeting so they could review it.  The executive director believed the districts and their legal counsels would want to know if the Board supports the legal opinion, even though that would fall short of the Board adopting the opinion as the Board’s official position.  The Board thought the opinion covers the issue of reapportionment well.  All five Board members said they agree with and support the conclusions set out in the legal opinion.  The executive director stated that he would send the opinion to all the public power districts so they would have it before the 2020 census figures are released.

 

            The next item was discussion of the Board Office Policy 6.  Board Policy 6 covers approval of travel plans for Board members.  The issue relates to the informal finding in the Auditor’s Report regarding when a Board member should be eligible to have lodging and meals paid when a PRB meeting or other activity ends early enough for the member to return home at a decent hour.  The executive director recommended that if a PRB meeting adjourns by 2 p.m. the Board member would not be eligible to stay overnight that night without documenting the reason why staying the night was necessary.  Reasons warranting an extra night’s stay even though a meeting ended early in the day might include inclement weather, illness, mechanical failure of the member’s automobile, or other similar scenarios.  Ms. Hilyard addressed the situation since she was the one who will have to drive the furthest to attend the meetings.  She believed that it would not be necessary to spend the additional night if the meeting was over prior to 3 p.m.  Vice Chairman Hutchison stated that instead of basing the policy on the time the event ends, it should be drafted based on what time the person should be able to reasonably arrive home.  He felt that 9 p.m. would be an appropriate time for arriving home after a meeting.  Joe Lang, Director of Energy Regulatory Affairs at OPPD, thought it might be helpful to specifically address the possibility of inclement weather in the policy, as that is not an uncommon situation in Nebraska.  The Board members also preferred using the term “Board business” instead of “Board meeting.”  There could be situations where a member attends a conference and is unable to drive home due to circumstance beyond his or her control.  If this would happen then the Board would need to document the reason requiring the additional night’s stay and include it with the expense reports.  Executive Director Texel stated that he would draft the changes to the policy and have Chairman Reida and Ms. Hilyard review it prior to the June meeting.

 

            The next meetings will be June 8, July 13, and August 10.  Depending on the circumstances, the executive director though it might be helpful to plan to hold the June 8 meeting either by Webex or by video conference.  Using Webex would depend on the circumstances at the time, and if Executive Order 20-03 might be extended.  It might be safer to plan for the Webex or video conference meeting, especially since the agency cannot make hotel reservations for Ms. Hilyard at this time.

 

            Vice Chairman Hutchison moved to adjourn the meeting.  Mr. Grennan 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.

 

 

 

________________________________

Timothy J. Texel

Executive Director and General Counsel