Minutes

Minutes of the January 19, 2024 Meeting

 

 

NEBRASKA POWER REVIEW BOARD

Minutes of the 849th Meeting

January 19, 2024

 

The 849th meeting of the Nebraska Power Review Board (Board or PRB) was held in the First Floor Hearing Room, Nebraska State Office Building, 301 Centennial Mall South, Lincoln, Nebraska.  The roll was called and present were Chairman Reida, Vice Chairman Hutchison, Ms. Gottschalk, Mr. Liegl, and Mr. Moen.  Chairman Reida and Ms. Gottschalk were both participating via Webex.  Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on January 9, 2024.  The Board also made the meeting available to the public through Webex.  The Webex login information was available on the Board’s website and was published in the Lincoln Journal Star notice.  The agenda on the Board’s website provided links to the agenda items with associated documents the Board will consider, as well as a link to the Nebraska Open Meetings Act.  Executive Director Texel explained that if any member of the public watching the meeting on Webex wanted to speak, they could click on the “raise your hand” icon.  At that time they would be unmuted, they could announce who is speaking, provide an address, and disclose if they represent an organization.  Anyone wishing to comment on an item or ask a question could also type the comment or question in the “chat” function and the Board’s staff would read the question.  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 meeting notebook.  The executive director announced that a copy of the Nebraska Open Meetings Act was on display on the south wall of the room, and another copy was available in a black three-ring binder on the table in the back of the room.  A copy of all materials that the Board would consider was available for public inspection on a file cabinet on the south wall near the back of the room, as well as extra copies of the agenda. 

 

Executive Director Texel introduced David Liegl.  Mr. Liegl was appointed to the Board by Governor Pillen on December 22, 2023 to fill the accountant position on the Board.  Mr. Liegl is an acting board member, pending his confirmation by the Legislature.  Because the accountant position was vacant and the appointment occurred while the Legislature was not in session, he was able to be seated and able to serve until the Legislature acts on his confirmation.  Mr. Liegl took his oath of office prior to the meeting.  The confirmation hearing date has not been scheduled yet.

 

The Board first considered the draft minutes from its December 15, 2023, public meeting.  The minutes had been sent electronically to the Board members.  The staff did not have any recommended changes, and no one had contacted them with any requested changes.  Mr. Moen moved to approve the draft minutes.  Ms. Gottschalk seconded the motion. Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison – yes, Ms. Gottschalk – yes, Mr. Liegl – yes, and Mr. Moen – yes.  The motion carried 5-0.

 

The next agenda item was acceptance of the expense report for the month of December.  In December there was $28,612.89 in personal services, $19,338.00 in operating expenses, and 2,280.94 in travel expenses.  The total December expenses were $50,231.83.  Executive Director Texel explained that the Board has used 52.81% of the agency’s cash fund, and as of December 50% of the fiscal year has gone by, so the Board’s budget is approximately 3% over budget.  There was some discussion with Mr. Liegl about the preparation of the budget sheet.  The budget status is part of the state’s ledger system, and the cash flow worksheet is prepared by the Board’s business manager.  Mr. Liegl also asked about the Board’s income.  There was a brief discussion about how the Board assesses the utilities.  Ms. Gottschalk moved to accept the December expense report.  Mr. Moen seconded the motion.  Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison – yes, Ms. Gottschalk – yes, Mr. Liegl – yes, and Mr. Moen – yes.  The motion carried 5-0.

 

The next agenda item was to consider McCook Public Power District’s Petition for Charter Amendment 9.  This petition was filed in response the Board’s ruling in the Central Nebraska Public Power & Irrigation District’s Petition for Charter Amendment 6.  In its decision, the Board denied Central PP & ID’s petition due to the lack of language required in Neb. Rev. Stat. section 70-604(5).  The statute states that a public power district’s charter shall state that the district lacks the authority to issue general obligation bonds.  The Board found that there were 14 districts where the charter does not have the required language.  McCook PPD’s charter amendment 9 would add the required language to its charter.  McCook PPD filed its petition on November 20, 2023.  The Petition requests that section 5 of the charter be amended to include the additional language regarding general obligation bonds.  As amended, charter Section 5 would read “The proposed district shall have no power of taxation nor shall it have the power to issue general obligation bonds, and all property within said district shall be exempt from the levy of any taxes for the payment of any obligations of the district.”  The Board is required to publish the proposed amended language in at least two newspapers with general circulation within the district’s territory.  The  notice was published in the Frontier County Enterprise on December 7, 14 and 21, 2023 and the McCook Gazette on December 5, 12, and 19, 2023.  The notice stated that any protest or objection must be filed with the Board by January 12, 2024.  The Board did not receive any protests or objections.  Neb. Rev. Stat. section 70-663 allows the Board to approve a charter amendment without a hearing if no protests or objections are filed.  The Board needs to find that the charter amendment will not be contrary to the best interests of the district and will not jeopardize or impair the rights of creditors of the district or of other persons.  Ms. Gottschalk moved to waive the hearing and approve McCook Public Power District’s Petition for Charter Amendment 9.  Mr. Moen seconded the motion.  Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison – yes, Ms. Gottschalk – yes, Mr. Liegl – yes, and Mr. Moen – yes.  The motion carried 5-0.

 

The next agenda item was to consider the renewal of contract 94906 04 with JK Energy.  JK Energy is the consultant that represents the PRB and Nebraska on the Southwest Power Pool (SPP) Cost Allocation Working Group (CAWG) and serves as an advisor the PRB’s Regional State Committee (RSC) member.  The contract was originally issued through the State’s request for proposal process.  The contract is set up to allow five renewals.  This is the standard for the State to avoid perpetual contracts.  The first contract was issued for 2021-2022.  This is the third renewal.  The contract renewal period is for July 1, 2024, through June 30, 2025.  The current payment under the contract is for $14,435 per month.  The contract states that there cannot be any request for a pay increase in the first two years.  We are past the first two years.  The contract limits a pay increase request to 5%.  In a letter from JK Energy, there is a request for a pay increase of approximately 3%.  The Board must review the requests and then its decision will be given to the Department of Administrative Service’s Materiel Division, which processes the paperwork and executes the contract on behalf of the State of Nebraska.  Mr. Krajewski, JK Energy’s principal, participated via Webex.  He explained the reasons in support of the requested pay increase to the Board, and reviewed his duties.  Vice Chairman Hutchison commented on Mr. Krajewski’s value to him and to the utilities.  Mr. Krajewski has been the Board’s consultant for many years and other SPP board members also respect his opinion.  Robert Pick, Energy Markets Strategies Senior Manager with the Nebraska Public Power District, who was on Webex, expressed his support for JK Energy’s contract and his request for an increase.  Robin Spady, Director of Energy Regulation with the Omaha Public Power District, also expressed OPPD’s support for the contract renewal and increase.  Chairman Reida asked about how the solutions to deal with conflicts of interest has been working.  Executive Director Texel stated that the process for reviewing potential conflicts has been working well.  There have not been any problems of which he is aware.  Vice Chairman Hutchison agreed.  Mr. Liegl asked about the support from the power suppliers and noted that ultimately the electric utilities are paying for the contract’s cost.  He also asked about the reason why the Board has the consultant.  Vice Chairman Hutchison answered that each state that has transmission-owning utilities that are members of the SPP can have a member of its state regulatory agency on the RSC.  Each state with an RSC member has a staff member on the CAWG (which provides advice and assistance to the RSC).  This allows each state to have a technical expert on the CAWG.  In the beginning it was overwhelming for the Power Review Board member who served on the RSC.  Having the consultant to provide advice and participate on the CAWG helps the RSC member to better understand and support Nebraska’s interests. Executive Director Texel recommended approval of the contract renewal.  Ms. Gottschalk moved to approve the renewal of contract 94906 04 with JK Energy Consulting, LLC from July 1, 2024 to June 30, 2025 and to approve the proposal to increase the compensation to $14,868 per month.  Mr. Liegl seconded the motion.  Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison – yes, Ms. Gottschalk – yes, Mr. Liegl – yes, and Mr. Moen – yes.  The motion carried 5-0.

 

The next agenda item was the executive director’s report.  First was an update on Southwest Power Pool (SPP) activities.  The Board had a copy of JK Energy’s monthly activities report. Vice Chairman Hutchison stated that he was going to discuss two items that will be voted on at the next RSC meeting.  The topics are about policies and the actual languages for revising the tariff.  One is the backstop policy, which determines who is going to pay, and the outage policy, which will continually be worked on. There is a new RSC president as of the beginning of the new year.  He also spoke about the REAL team membership changes.  The agenda for the REAL team is not out yet for next week’s meeting.  On both the RSC and REAL team, the president or chairperson has considerable influence over topics that are addressed.

 

The next update item was about the annual load and capability report.  At the November meeting Vice Chairman Hutchison raised the issue that the NPA may not have fully addressed a couple of issues in the 2023 report, at least according to how the Board thought the issues would be addressed.  Vice Chairman Hutchison and Ms. Gottschalk met with Jason Fortik and Shelley Sahling via Webex on December 8.  At the meeting they discussed resource adequacy reporting, stress testing and how to present different system stress scenarios, and how a couple of items were described or presented in a chart or graph.  The items that were discussed included section 3 of the Load & Capability Report, including an aggregate calculation based on non-public historical GADS data showing the combined estimated forced outage rate or demand forced outage rate for LES, NPPD and OPPD.  This information is now available and SPP will have the data once the performance-based accreditation rules are approved by FERC.  There was discussion about the varied definitions for committed, planned and studied resources.  During the 2023 presentation of the report there was variance in how data was submitted because utilities have different guidelines for what is defined as committed, planned and studied.  Vice Chair Hutchison and Ms. Gottschalk asked that a uniform definition for each term be used by all utilities.  It was suggested that a pie chart be changed to a graph.  In 2023 the report included stress periods scenarios for both summer and winter peaks.  One scenario was that all natural gas generation in the State became unavailable during an emergency event.  This was not a realistic event and the Board wanted to have a more real-world scenario.  Executive Director Texel said at the NPA Board meeting, one concern expressed by the directors was that if an emergency event occurs and this was not a scenario addressed in the report, the utilities would be criticized for not anticipating the correct scenarios.  The committee suggested that the NPA offer several scenarios and then the PR chooses which scenario to use.  With that process, the utilities could not reasonably be held accountable for the types of scenarios examined, and any criticism would need to be directed to the PRB instead. 

 

The executive director then spoke about a legal decision in City of Lincoln v. FERC.  On January 2, 2024, the U.S. Court of Appeals for the D.C. Circuit issued a decision in a case involving LES and SPP.  The decision does not directly affect the PRB.  FERC ruled against LES and SPP.  The D.C. Circuit affirmed FERC’s decision, finding that it would not be just and reasonable for LES’s costs to be attributed to Wyoming customers just because LES owns or has rights to a portion of the Laramie River Station generation facility in Wyoming, when LES’s retail customers are in eastern Nebraska in and near Lincoln, Nebraska.

 

The legislative bills in the 2024 session was the next issue to be discussed. 

 

Executive Director Texel spoke about an update to a carry-over bill from last year’s legislative session.  LB 399 would change provisions relating to privately developed renewable energy generation facilities.  There is a proposal to significantly amend the bill.  The amendment has not yet been introduced, though.

 

LB 837 was introduced by Senator Lowe.  The bill changes procedures for voting or election precincts for public power districts.  This is a NREA bill to address issues related to how PPD voting subdivisions can be configured.  Executive Director Texel suggested he testify in a neutral capacity to explain issues that have be dealt with when the PRB reviews charter amendments.

 

LB 866 was introduced by Senator Bostelman.  This is the Board’s bill to address PRB member requirements and the per diem amount.  The accountant member requirement would be removed, and it allows a member to have been previously employed within the last four years by a utility, with some voting restrictions.  It also changes the term limit from two to three consecutive terms.  The per diem amount would be increase from $60 to $100.  The bill drafters contacted the office about an amendment.  The drafters want to change the reference to “laypersons” in the current statute to “additional persons.”  There was a fiscal note of $3,500 submitted.  The fiscal note was needed because the amount affects the Personal Services category in the Board’s budget and that is a dollar amount that the Board cannot adjust.  The hearing for this in next Wednesday, January 24, in the Natural Resources Committee hearing room.

 

LB 1218 was introduced by Senator Bostar.  This would provide for a motor vehicle registration of certain vehicles, impose an excise tax on electric energy used at commercial electric vehicle charging stations, provide for regulation of certain charging stations, and provide a sales tax exemption for certain electric energy.  This is similar to another bill about charging stations introduced last year that was strongly opposed.  Executive Director Texel explained that the issue that falls in the PRB jurisdiction is that Nebraska law prohibits anyone selling electricity to a third party inside a utility’s retail service area.  This bill exempts that and gives a right of first refusal to private entities to establish electric vehicle (EV) charging stations in a certain area.  Currently private entities that operate EV chargers are required to charge by unit of time spent charging, regardless of how much electricity is consumed, to avoid the prohibition against selling electricity based on consumption.  The bill is complex and hard to understand.  Executive Director Texel asked to testify in a neutral capacity at the hearing to explain concerns about the definitions and procedures, and that they are very hard to understand.  The Board agreed and authorized the executive director testifying in a neutral capacity concerning the language and definitions.

 

LB 1240 was introduced by Senator Wayne.  This bill provides a restriction on state officials and state employees testifying before the Legislature.  The bill requires state officials and employees providing testimony in their official capacity at Legislative hearings to be categorized as testifying neutral.  They could not testify with a position of support or opposed.  State officials and employees testifying in their personal capacity can testify however they want.  In 2022 the exact same bill was introduced and was indefinitely postponed.

 

LB 1369 was introduced by Senator John Cavanaugh.  The bill requires that agricultural self-generation facilities be interconnected with the local distribution system The language would prohibit local distribution utilities from refusing to interconnect an agricultural self-generation facility.  The bill provides a definition of what constitutes an agricultural facility.

 

LB 1370 was introduced by Senator Bostelman.  The bill provides a requirement for retirement of dispatchable electric generation facilities by an electric supplier.  The Board had concerns about this bill and discussed what testimony the executive director should use when testifying.  Vice Chairman Hutchison asked about the definition of the term “state’s electric grid.”  Ms. Gottschalk spoke about the concept that the utilities already are required to come to the Board for approval of new generation, including those that may take the place of what is being retired.  She thought it made sense that the Board have some role in reviewing when a retirement should take place, also.  Vice Chairman Hutchison brought up the previous year when the Board had discussed whether the PRB should have a role when a generation facility is retired.  At the time the utilities urged the Board to engage in further discussions before introducing language for a new statute regarding retirements.  The Board eventually dropped the discussion for language that would give the PRB some role when a generation facility is retired.  At the time, the Board had expressed that when retiring a dispatchable generation facility, there should be consideration given to replacing it with a facility of similar kind, or at least similar attributes.  The Board felt that it would be good to have testimony that states that the Board wants to assure that the state has sufficient dispatchable resources to ensure resource adequacy.  The Board discussed the lack of enforcement mechanism in the bill.  The Board thought the bill’s provisions should be placed in Chapter 70, article 10 of the statutes.  Three Board members expressed support for authorizing the executive director to testify in support of LB 1370.  Dennis Florom, Manager of Energy & Environmental Operations at the Lincoln Electric System, addressed the Board.  He said he was not authorized to speak for the Nebraska Power Association, but he urged the Board to coordinate with the electric utilities before taking a position in support of LB 1370.  The Board members agreed that the executive director should testify in a neutral capacity, but convey the Board’s concerns over preservation of dispatchable resources.

 

The next item on the agenda was the election of Chair and Vice Chair for the year 2024.  The Board members opted to table this item until all new members are seated and confirmed.

 

Executive Director Texel stated that the next PRB meetings are scheduled for February 16, March 15, and April 19, 2024.

 

Mr. Moen moved to adjourn the meeting.  Mr. Liegl seconded the motion.  Voting on the motion:  Chairman Reida – yes, Vice Chairman Hutchison –yes, Ms. Gottschalk – yes, Mr. Liegl – yes, and Mr. Moen – yes.  The motion carried 5 –0.  The meeting was adjourned at 12:11 p.m.

 

 

Timothy J. Texel

Executive Director and General Counsel