NEBRASKA POWER REVIEW BOARD
August 23, 2019
The 804th 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, 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 August 13, 2019. 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.
The Board first considered the draft minutes from its July 26, 2019, meeting. The staff did not have any recommended changes. Vice Chairman Morehouse moved to approve the minutes from the July 26, 2019 meeting. 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 July. In July, there were $30,332.22 in personal services, $19,171.64 in operating expenses, and ($1,180.57) in travel expenses. The total expenses for July were $48,323.29. The July travel expenses show a negative expenditure due to receipt of reimbursement checks from the Southwest Power Pool for Mr. Grennan’s travel. There were no travel-related expenses in July. Mr. Grennan moved to accept the July expense report. 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.
There was some discussion about the budget and expense reports. The Board’s business manager, Rebecca Hallgren, was present to answer the Board members’ questions. After the July meeting Mr. Grennan had contacted the staff with questions about cash on hand, the budget reports, and appropriated and re-appropriated amounts. The figures in the budget status sheet show what is budgeted in each account category based on the total appropriation. It does not show the actual cash on hand, or how much of the actual cash on hand is available for each of the budget accounts. The budget report shows an appropriated amount of $832,451.75 at the end of 2018-2019 fiscal year. The Legislature sets the total appropriated amount during the biennial budget process. The appropriation is only the maximum amount that the agency can spend. The cash on hand is considerably less than the appropriation. The fiscal year 2018-2019 appropriation was $667,982. The additional amount shown is re-appropriated funds, which is the unused spending authority left over from the previous fiscal year at the end of the first year of a biennial budget period. The 2019-2020 fiscal year (ending June 30, 2020) is the start of a new biennium. The Board’s remaining cash funds at the end of fiscal year 2018-2019 (ending June 30, 2019) was $162,208.27. This shows the cash on hand, and includes the $135,000 in the reserve fund. The Board had an additional $27,208 remaining in its cash fund at end of fiscal year 2019. The numbers are confusing because the Board is not allowed to collect our entire Legislative appropriation, which are the numbers shown on the budget status sheet. The Governor’s Budget office only allows the Board to collect what it has historically spent over the past few years, plus the reserve amount. This is a change from the past fifty or so years, during which the Board collected the entire appropriated amount, then used any unspent funds at the end of a fiscal year to reduce the assessment for the next year. The Board members then asked to further clarify the appropriation number as compared to the assessment and the cash on hand. It was explained that the biennial budget shows the total amount appropriated by the Legislature. This is the Board’s spending limit. At the end of a fiscal year any remaining appropriation is re-appropriated, or added to the Board’s total appropriation or budget amount. This greatly inflates the Board’s budgeted amount on the Budget Status Report, because the Board does not have anywhere near that much cash on hand. The Board members asked that the finance sheets include an additional column showing the actual cash on hand, since the appropriated amount is not very relevant any longer. The Board members asked what if there was a year when the cash on hand were to run low for some reason. Could the Board have a special second assessment and collect the needed funds? The executive director said in his opinion, no. There is no statutory authority to conduct a second assessment. The statutes anticipate the Board will collect its entire appropriation each year. There is no provision allowing for a special assessment due to running low on cash. The only statutory provision for a special assessment authorizes the Board to conduct a special assessment for the funds necessary if the Board would need to pay for a long-range coordinated power supply study. This only demonstrates the lack of authority for a second general assessment. The fact that the Legislature specifically authorized it in one instance indicates it meant not to authorize it for other purposes. This situation has been discussed with the Budget Office. The risk is that if the Board were to conduct a special assessment to collect additional funds, but within its appropriated amount, any utility or another person with standing challenge the Board’s special assessment. Such a challenge would appear to have a significant chance of being successful. The Board and staff discussed what would happen if funds were to run low. Both the executive director and the business manager said the staff would notify the Board members of this development and the Board would need to curtail spending, and may have to use the reserve fund. The staff should be able to see such shortfall coming and take steps to reduce spending.
The next item on the agenda was a presentation of the 2019 Annual Load and Capability Report. Jason Fortik, Vice President for Power Supply for the Lincoln Electric System and Chair of the Nebraska Power Association’s (NPA) Joint Planning Subcommittee, gave the presentation on the report. The executive director stated that many years ago the Board designated the NPA as the representative organization to prepare this report, pursuant to Neb. Rev. Stat. § 70-1024. The report covers the utility load forecast and the resources available and needed to satisfy the forecasted loads in Nebraska over a 20-year period on a statewide basis. The report includes information concerning generation units that are planned, committed, and studied in order to meet the State’s projected load growth. Overall, Nebraska currently has excess generation capacity. Most of the recent construction of generation has been renewable facilities. Over the 2019 through 2038 study period, the average peak demand growth rate for the State is projected to be .7 percent per year. The Board thanked Mr. Fortik for the presentation and the discussion. Mr. Hutchison moved to accept the 2019 Load and Capability Report. 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 was the Southwest Power Pool (SPP) update. There had been discussion related to SPP throughout the presentation of the Load and Capability Report.
Executive Director Texel briefly described a decision issued by the Federal Energy Regulatory Commission (FERC) on August 12, 2019. The decision was captioned City Utilities of Springfield, Missouri v. SPP, Inc. The executive director had prepared a brief of the decision, which had been distributed to the Board members. In the decision, the City of Springfield asked FERC to require that all SPP utilities have at least a 1:1 ratio on their cost to benefit ratio. Since Springfield was one of two utilities under the 1:1 ratio, it asked FERC to calculate Springfield’s overpayments, collect that amount from other SPP members & compensate Springfield for its shortfall. The other utility below the 1:1 ratio was the Omaha Public Power District. FERC denied Springfield’s Complaint, finding that the requested relief would violate the filed rate doctrine the rule against retroactive ratemaking, both of which are prohibited by caselaw decided by the U.S. Court of Appeals for District of Columbia.
Executive Director Texel told the Board he had mentioned at the last Nebraska Power Association board of directors meeting that a replacement was needed for Vice-Chairman Morehouse for the accountant member on the Board. Pat Pope, Nebraska Public Power District CEO, said he would ask the president of the State Chamber of Commerce if he knew of any accountant that might be willing to serve on Board. The president of the State Chamber did know of someone and contacted Executive Director Texel. The executive director contacted the person to describe the Board and its duties. The person did submit an application to the Governor’s office. She is from Scottsbluff. Vice Chairman Morehouse also spoke with her about serving on the Board. One thing she asked about is if the Board would be willing to move its meetings to Monday instead of Friday. This would allow her to attend her children’s school activities, particularly sports, that usually occur on Friday evening. The Board members all said they would be fine with moving the meetings to Monday night once she is seated on the Board. After the applicant spoke with Vice Chairman Morehouse, it works best for both their schedules if Vice Chairman Morehouse continues to serve until the Legislature can confirm her appointment, which would likely be around the February 2020 time frame.
The next item was the Executive Director’s annual performance evaluation. In the past the Board delegated the task of preparing the evaluation to the chairman. The Board members decided to once again delegate the task to the chairman. Chairman Reida asked that the other Board members provide him with any input they wanted over the next couple weeks so he could have the evaluation completed prior to next month’s meeting.
The next meetings are scheduled for September 27, October 25, and November 22, 2019.
Mr. Hutchison moved to adjourn the meeting. 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 meeting was adjourned at 11:42 a.m.
Timothy J. Texel
Executive Director and General Counsel