NEBRASKA POWER REVIEW BOARD
April 20, 2018
The 793rd meeting of the Nebraska Power Review Board (“the Board” or “PRB”) was held in the Liquor Control Commission hearing room, Nebraska State Office Building, 301 Centennial Mall, Lincoln, Nebraska. The roll was called and present were Chairman Reida, Vice Chairman Morehouse, Mr. Grennan, 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 April 10, 2018. All background materials for the agenda items to be acted on had been provided to all Board members prior to the meeting and a copy 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 north wall of the room for the public to review, and another copy was available in a three-ring binder on a 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.
The Board first considered the draft minutes from its March 23, 2018, meeting. The staff did not have any recommended changes. Vice Chairman Morehouse moved to approve the minutes. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – 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 month of February. In February, there were $22,648.84 in personal services, $21,453.20 in operating expenses, and $853.14 in travel expenses. The total expenses for March were $44,955.18. Vice Chairman Morehouse moved to accept the expense report for March. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – yes, Mr. Hutchison – yes, and Mr. Moen –yes. The motion carried 5– 0.
The next item on the agenda was to consider reimbursement for the 2018 Wind and Solar Conference expenses for the executive director and any interested Board members. This is the 11th Annual Nebraska Wind and Solar Conference. The event will be held in the Cornhusker Marriott Hotel in Lincoln, Nebraska. The only expenses that would be incurred by the executive director would be the registration of $125. Registration increases if paid in October or later. If any of the Board members would want to attend there would be mileage reimbursement and possibly lodging. Mr. Morehouse moved to approve the executive director’s expenses and any Board members who would want to attend. Mr. Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – yes, Mr. Hutchison – yes, and Mr. Moen –yes. The motion carried 5– 0.
The next item on the agenda was to consider PRB-3886. This is an application filed by the Elkhorn Rural Public Power District for authority to construct 3,100 feet of underground 34.5 kilovolt (kV) line. The application was filed on March 29, 2018. The line was already constructed approximately one year ago. The purpose of the line was to have an alternate feed connecting the City of Madison’s substation and Elkhorn RPPD’s substation 71-05 located northwest of Madison. Madison submitted a Consent and Waiver form consenting to the construction and waiving a hearing. The Board had not consulted with the Game and Parks because the construction was already completed. Elkhorn RPPD did submit additional information that confirmed that they had consulted with the U.S. Fish and Wildlife Service prior to construction of the line. The U.S. Fish and Wildlife Service found that the “Topeka Shiner” fish inhabited waterways in the project area. The Service suggested methods to mitigate any land erosion of the creek banks and any disruption of habitat the construction activities might cause for the portions of the line crossing waterways. The Service also stated there were no known eagle nesting sites recorded in the project area, so the project would not pose a problem for eagles. Chairman Reida asked about the Game and Parks Commission consultation letter. He wanted to have the staff contact them and make sure that the construction did not harm any threatened or endangered species. Mr. Grennan moved to approve application PRB-3886, conditioned upon receiving a letter from the Game and Parks Commission and the applicant taking any action recommended in the letter. Vice Chairman Morehouse seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – yes, Mr. Hutchison – yes, and Mr. Moen –yes. The motion carried 5 – 0.
The next agenda item was to consider the Board’s assessment figure for fiscal year 2018-2019. The Board tabled the item until later in the meeting in order to accommodate the guests waiting to present and hear the presentation on Southwest Power Pool issues.
The next item on the agenda was a presentation on the Southwest Power Pool’s cost allocation mechanisms when interconnecting new wind generation facilities. At the Board’s March meeting there was a discussion about the costs incurred by the Nebraska Public Power District (NPPD) to construct a transmission line dedicated to providing interconnection with a new wind farm. NPPD offered to give the PRB a presentation on the SPP’s rules and policies for interconnection costs involving renewable generation facilities. The NPPD official giving the presentation were Tom Kent, Vice President and Chief Operating Officer, Paul Malone, Director of Transmission Policy, Robert Pick, Energy Market Strategies Senior Manager, and Joel Dagerman, Senior System Planning and Transmission Business Manager. After the conclusion of the presentation the Board members thanked NPPD for taking the time to provide the Board with the presentation.
The Board next considered the Board’s assessment figure for fiscal year 2018-2019. The PRB is entirely cash funded, which means its operating expenses are paid by assessments levied against Nebraska’s electric power suppliers. The PRB does not receive any general funds from tax revenue. Each power supplier pays a pro-rata share of the Board’s operating budget based on each utility’s gross income from electricity and related sales during the preceding calendar year. A certificate of gross revenue is sent to each power supplier to certify its gross revenue from electricity and related sales during the previous calendar year. Once all the certificates are returned, the Board’s business manager calculates the total of all the power suppliers’ gross revenue. The Board must then decide how much of the PRB’s unused funds from the current fiscal year will be retained as a reserve fund. After removing the reserve amount, the Board credits the remaining balance against what the utilities owe, and then the Board collects the assessment amount from the power suppliers on a pro rata basis to provide the funding for the Board’s budget in the next fiscal year. The Governor must approve the Board’s proposed assessment figure before the PRB can begin collecting the assessments. The reserve funds are used for emergency expenditures or for the agency’s operations during a new fiscal period when there is a delay in collecting the new fiscal year’s assessment amount. The executive director, Rebecca Hallgren (the Board’s business manager) and Vice Chairman Morehouse met with representatives from the State Budget Office on Thursday, April 19 regarding the assessment figure. The budget office will allow the Board to have a reserve of $114,000, which is approximately three months of expenses. The budget office determined that the Board could levy an assessment to collect $500,000. The Board cannot collect its entire appropriation approved by the Legislature. The budget office does not like that the Board in the past has an operating reserve in addition to the cash reserve amount. The budget office wants the Board to eliminate the operating reserve. Vice Chairman Morehouse spoke about the meeting and stated that Ms. Hallgren showed that three months of expenses would likely be more than the $114,000 amount, but the budget office will only allow the Board to collect an assessment based on the $114,000 reserve figure. Next year the staff will submit information to the budget office to allow for inflation in the reserve amount to get it closer to the actual expenditure amount during a three month period. Mr. Grennan also spoke about the Board’s participation in SPP that could affect the expenses. Based on what the Budget Office will allow, the assessment figure would need to be 12.3775373 cents per $1,000 gross revenue. Mr. Hutchison moved to approve the Board’s 2018-2019 assessment figure of 12.3775373 cents per $1,000 gross revenue. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – 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 discussed was an update on Southwest Power Pool (SPP) activities. Mr. Grennan spoke about numerous issues at the SPP. He told the Board about RCAR 3 (Regional Cost Allocation Review) and how the model would be slightly different than originally planned. The Board’s notebooks contained copies of several letters and emails sent by SPP member utilities raising concerns about the process and proposed concessions involved with the Mountain West Transmission Group joining the SPP. The Nebraska utilities expressing such concerns were the Lincoln Electric System, Municipal Energy Agency of Nebraska, Nebraska Public Power District, and the Omaha Public Power District. The SPP RSC and Board of Directors will hold their quarterly meetings starting Monday, April 23, in Kansas City, Missouri. Mr. Grennan also updated the Board about the newly created HITT (Holistic Integrated Tariff Team), which is a new team or task force that will engage in a holistic look at many of the issues facing the SPP region. Mr. Grennan is a member of the HITT group. Mr. Grennan told the Board the SPP and RSC July quarterly meetings will be in Omaha, Nebraska. This is a good opportunity for the other Board members to attend SPP and RSC meetings with minimal travel expenses.
The executive director then discussed the bills affecting the Board or the electric industry during the 2018 Nebraska Legislative session. The 2018 session ended on April 18. This was a short session, so any bills not passed during the session will not carry forward to the 2019 session.
LB 1008 was a small “omnibus” bill. The provisions of three other bills related to issues under the jurisdiction of the Natural Resources Committee were amended into the original LB 1008. One of the bills amended into LB 1008 was the Board’s bill to provide a mechanism allowing private developers of renewable generation facilities to miss a statutory deadline requiring notice to the PRB at least 30 days prior to commencement of construction activities if the developer pays a fine. The Board’s renewable generation bill was originally LB 820. Another provision in LB 1008 was a section that allows both public power entities and the Board to withhold from public disclosure proprietary and commercial information that would give an advantage to competitors. This was a change in response to the Nebraska Supreme Court case Aksamit Resource Management v. Nebraska Public Power District (299 Neb. 114) that was issued on February 23, 2018. LB 1008 included an emergency clause for the PRB’s renewables section and the public records section. On Friday, April 6, LB 1008 was passed by a 42-4 vote. Governor Ricketts signed this bill on Wednesday, April 11. Since the provisions affecting the Board had the emergency clause, both those provisions became effective on April 12, the day after the Governor signed the bill.
LB 948 was introduced by Senator Murante at the request of the Governor. Executive Director Texel explained that had hoped at least the portion of the bill making the model rules of practice and procedure applicable to all agencies through the Administrative Procedure Act would be enacted. Unfortunately, the bill was not passed. He hopes that at least the part of the bill dealing with the model rules would be introduced again next year. The section of interest to the Board would eliminate the need for agencies to adopt the Attorney General’s model rules of practice and procedure and instead make the model rules applicable to all State agencies as part of the Administrative Procedure Act. Agencies needing to modify specific sections to accommodate the particular needs of that agency could create exceptions to the model language if the agency could show a need to do so.
LR 464 was submitted by Senator Wayne on March 27. This legislative resolution was referred to the Natural Resources Committee. The purpose is to study issues related to public power’s structure, generation and transmission of energy, the Southwest Power Pool, energy markets and regional transmission organizations. The Committee will determine what is done on a legislative resolution, so we will have to wait and see what the Natural Resources Committee decides to do regarding this study. They could take actions such as holding a hearing to accept testimony, hold multiple hearings, or take no specific action on the study.
Due to the enactment of LB 1008, all developers that fail to provide notice to the Board under the privately developed renewable energy generation facility requirements in section 70-1014.02 would be required to either pay a $500 fine (allowing the 30 day period to be essentially waived), proceed to hearing under section 70-1014, or obtain approval from the Federal Energy Regulatory Commission under its PURPA regulations. Executive Director Texel sent a letter to all 165 power suppliers operating in Nebraska were contacted prior to the passing of the bill requesting them to notify the Board about any renewable generation facility interconnected with the utility’s grid system other than net metering facilities. The purpose was to identify any renewable facility eligible to use the certification process under section 70-1014.02 prior to enactment of LB 1008. The executive director wanted to give private developers the opportunity to submit a certification for their renewable facility before the mandatory fine went into effect. Executive Director Texel had informed the Legislature that he had told developers he would waive the requirement that notice be provided 30 days prior to construction if they submitted their certifications prior to passage of the new legislation. Although the legal basis for the waivers was questionable, the executive director believed it followed the Legislative intent of the current language in section 70-1014.02. But the executive director told the developers and the Legislature that he would only take that action until the Legislature either passed the bill making the change, or failed to enact it. That would provide him with clear direction regarding the certifications. All the facilities that the utilities told the Board about either submitted a notice under 70-1014.02 before April 12, or filed for federal approval under the FERC PURPA process. Several developers had what were determined to be self-generation under PRB’s ruling, one facility was located across the border in another state and therefore is outside the PRB’s jurisdiction, and a couple of facilities were located on Native American tribal property and owned by the tribe. It is unclear whether the Board has any jurisdiction over such tribal areas. Until that is clear, the executive director does not want to assert jurisdiction in tribal areas. The executive director also contacted the group “Nebraskans for Solar” to see if the organization would put information on their website notifying the public about the PRB’s certification requirement for renewable generation facilities. He has not heard back from the group yet.
The executive director then told the Board that the agency’s new website went live on March 26. So far the feedback has been very positive. On the administrative side, it is much easier to update the website with the new operating system.
The executive director told the Board that he was told the Liquor Control Commission Hearing Room is going to move from the 5th floor to the 1st floor of the State Office Building. The area on the 5th floor will be taken over by the Department of Health and Human Services. Another reason is the Liquor Control Commission has a high amount of public foot traffic. State Building Division would like the agencies with high foot traffic to be located on first floor if possible to make it easier for the public to find and access agencies. It also relieves congestion on the elevators. The square footage of the hearing room would be similar, and actually is expected to increase a small amount. The change would not occur for at least several months. The staff will keep the Board informed as more details are worked out.
The executive director raised the issue of whether the Board has jurisdiction over generation and transmission facilities constructed or installed on tribal property. He contacted the Attorney General’s Office about this issue and has been working with them for a couple months. He asked the Board if it would be supportive of submitting a request for an Attorney General’s opinion on the topic. That way the Board would have some authority to either act on the facilities on tribal land, or could cite the opinion when declining to assume any jurisdiction over such facilities. Chairman Reida said perhaps the question could be phrased as whether a developer would need to obtain PRB approval or submit required certifications if a facility is to be located on tribal land or owned by a tribe. All Board members agreed that they would support the executive director submitting a request for an Attorney General’s opinion on the topic. Several members commented that it would be good to have an understanding exactly what the Board’s jurisdiction is when it comes to electric facilities on tribal property or owned by a tribe.
Executive Director Texel told the Board that the official remand paperwork from the Supreme Court decision in the Neligh v. Elkhorn RPPD case had been received. Due to this, the Board has now reacquired jurisdiction over the proceeding. The Court did not provide any further guidance in the remand paperwork regarding how to proceed. The executive director will set up a meeting with both counsels and find out what their positions are, try to identify the issues that need to be resolved, and what will be the procedure moving forward. Right now the plan is to schedule a new hearing, depending on what the counsels say in the meeting.
The executive director noted that the Board’s next meeting dates are May 18, June 22, and July 27, 2018.
Mr. Grennan moved to adjourn the meeting. Mr. Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan – yes, Mr. Hutchison – yes, and Mr. Moen – yes. The motion carried 5 – 0. The meeting was adjourned at 12:00 p.m.
Timothy J. Texel
Executive Director and General Counsel