NEBRASKA POWER REVIEW BOARD
January 24, 2020
The 808th 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 January 14, 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.
The Board first considered the draft minutes from its December 20, 2019, meeting. The staff did not have any recommended changes and no one had contacted the staff to request any. Vice Chairman Morehouse moved to approve the minutes from the December 20, 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 December. In December, there were $31,870.52 in personal services, $16,434.20 in operating expenses, and $674.58 in travel expenses. The total expenses for December were $48,979.30. Executive Director Texel told the Board that the personal services category is considerably higher than normal because the staff received three paychecks during December. The Board received two travel reimbursement checks from the Southwest Power Pool (SPP) for Mr. Grennan’s SPP travel expenses. One check for $1,488.28 was for Mr. Grennan’s travel that occurred in October 2019. The other check, in the amount of $1,001.74, was for Mr. Grennan’s SPP travel in July 2019. Since the Board had no commercial transportation expenses in December, the commercial transportation category shows a positive balance of $448.60 for December. The Board also received and paid four bills for Vice Chairman Morehouse’s hotel stays in December. Without the payments for Vice Chairman Morehouse’s hotel stays, the Board and Lodging category would show expenses of $718.17. Vice Chairman Morehouse pointed out that the cash balance sheets show that the Board has used 50% of its cash on hand, and approximately 60% of the fiscal year has gone by, so the Board seems to be in good shape regarding its finances. Vice Chairman Morehouse moved to accept the December expense report. 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 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 SPP Cost Allocation Working Group, and serves as advisor to the PRB’s member that serves on the Regional State Committee (RSC). That member is currently Mr. Grennan. The contract was originally signed in 2015. The state allows contracts to have five renewals before a new request for proposals must be issued. This would be the fifth and therefore final renewal on this contract. The Board will need to issue a new request for proposals for a new contract for the period from July 1, 2021 to June 30, 2022. The current contract ends June 30, 2020. The contract period the Board is considering would be 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 a an increase in compensation after the initial 2 years of the contract. An increase request cannot be more than 5%. Last year there was no change in the compensation. JK Energy submitted a letter requesting an increase of 3% for the contract renewal beginning July 1, 2020. This increase would change the monthly amount from $13,900 to $14,300 and the annual amount would go from $166,800 to $171,600. The letter explains his reasoning for the price increase, which is primarily due to health insurance increases. There is also a price increase for calendar year 2020 that the Board previously approved due to Mr. Krajewski becoming chair of the CAWG. It is expected that when a commissioner from a state is elected chair of the RSC, the staff member serving on the CAWG will become the chair of the CAWG. 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. Due to this, JK Energy’s compensation would be $14,950 per month from July 1, 2020 to December 31, 2020, then $14,300 per month from January 1 to June 30, 2021. Mr. Krajewski was available to answer any questions and explained his justifications for the increase. He explained the basis for the increase is mostly due to healthcare costs for private insurance. Mr. Grennan spoke about the RSC meetings and what the members have been working on. Executive Director Texel then told the Board members that since the Governor’s budget office will only allow its historical spending and not allow collection of the entire Legislative appropriation, there is very little flexibility in the budget now. If additional assignments occur at SPP that JK Energy may need to handle, the Board will likely not have the cash on hand to pay for the extra work. In the next assessment the PRB will need to request additional funds to address any new work and to allow some flexibility for bids received under the new request for proposals. Mr. Hutchison said that given the enormous expenses that Nebraska and the SPP face with transmission costs, and that Nebraska needs to be at the table when these issues are addressed at the SPP, it would be short-sighted to not fund this contract and allow for some flexibility. Executive Director Texel agreed, but said it is no longer within his control. The Governor’s budget office has indicated it will only allow collection of what was spent during the past year or two. Based on recent history it may be very difficult to get the Board’s budget analyst to understand the importance of funding this contract. Mr. Hutchison moved to approve renewal of contract 69810 04 with JK Energy Consulting, LLC from July 1, 2020 to June 30, 2021 with a compensation level of $14,950 per month from July 1, 2020 to December 31, 2020 and $14,300 per month from January 1, 2021 to June 30, 2021. Vice Chairman Morehouse seconded the motion. Joe Lang, Director of Energy Regulatory Affairs with the Omaha Public Power District, commented that right now is an opportune time for Mr. Grennan to be the chairman of the RSC and Mr. Krajewski to become chair of the CAWG, with the HITT team recommendations being issued and acted on. 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 application PRB-3914. This is an application filed by the Nebraska Public Power District for authority to construct 2.2 miles of 69-kilovolt (kV) subtransmission line in Buffalo County, Nebraska. The project will upgrade an existing 34.5 kV line to 69 kV. If the district were just reconductoring at the same voltage the application would not be necessary. The district needs to obtain the Board’s approval due to the increase in the voltage. This gives the utility with the service area rights to the project location the ability to file either an objection or a consent and waiver. The application was filed on December 13, 2019. The executive director explained that this is part of the Nebraska Public Power District’s plan to upgrade its 115 kV Elm Creek substation. Last month the Board approved Southern PPD’s request to upgrade an existing line that connected to the substation. The bay that Southern PPD’s line it connects to will be upgraded from 34.5 kV to 69 kV. Southern PPD and Dawson PPD both submitted a Consent and Waiver form waiving the need for a hearing and consenting to the approval of the project. The Board consulted with the Nebraska Game and Parks Commission as required by Neb. Rev. Stat. section 37-807(3). In a letter dated December 26, 2019, the Commission determined the project is in the range of the endangered Interior Least Tern and Whooping Crane, and the threatened Piping Plover, Northern Long-Eared Bat and River Otter. There is suitable habitat in the project area for all the mentioned species. The Commission provided conservation conditions that NPPD should implement to ensure no harm comes to the species or their critical habitat. The Commission determined that if NPPD implements the conservation conditions set out in the letter, the project “May affect, but is not likely to adversely affect the mentioned species,” and with those conditions, the Commission did not object to the approval of PRB-3914. Mr. Grennan moved to approve PRB-3914 with the condition NPPD, to the best of its ability, abide by the conservation conditions set out in the Game and Parks Commission’s letter dated December 26, 2019. 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 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 next week. There will be an educational session on Monday and then the RSC meeting. Tuesday is the SPP Board meeting. He mentioned that the SPP’s CEO, Nick Brown, is retiring. Carl Monroe, the Chief Operating Officer, is also retiring at the end of the month. Executive Director Texel told the Board members that the SPP has asked to give its annual informational presentation to the Board, as it does to all the State Commissions with a member on the RSC. The SPP wanted to wait to schedule the presentation until after the new member that will replace Vice Chairman Morehouse is confirmed and seated.
Executive Director Texel informed the Board that a formal complaint had been filed on Wednesday of that week. The complaint was filed by the City of David City against Butler Public Power District. A Notice of Filing and Hearing Date is being prepared and will be sent early next week. The hearing date will be set for March 9, 2020.
The next discussion item was the legislative update. Executive Director Texel only went over the new bills introduced. He did not go over the carryover bills. He said if the Board members had any questions about any carryover bills to please ask.
LB 749 was introduced by Senator Blood. This would adopt the Anti-Terrorism Act. The term “critical infrastructure” is defined in section 4. Energy equipment is defined under current law as “Equipment or facilities used or useful to generate, produce, transmit, or distribute power, heated or chilled water, or steam for use by the [public power] district or the district’s commercial and industrial cusomters.” This is in section 70-601. The bill includes penalties for engaging in terrorist acts. The protected targets include critical infrastructure.
LB 818 was introduced by Senator Brewer. The bill would adjust the nameplate capacity tax for inflation. The tax would increase each January by the same percentage as the consumer price index.
LB 823 was introduced by Senator Brewer. This bill provides for a special election prior to the exercise of eminent domain for transmission lines in certain circumstances. Municipalities, public power districts the Municipal Energy Agency of Nebraska (MEAN), and all other political subdivisions of the State of Nebraska would have to hold a special election to authorize the use of eminent domain on behalf of an out-of-state third party for purposes of building a transmission line. In MEAN’s case, a special election would need to be held by each of its voting members.
LB 857 was introduced by Senator Lowe. This requires state agency review of rules and regulations. If an agency adopts new rules or regulations during 2021 or the following seven years, the agency would have to submit a report to the Clerk of the Legislature ten years after the adoption of the rules or regulations assessing whether the rule or regulation is accomplishging its statutory purpose or needs to be revised.
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 brought the bill to Senator Hughes.
LB 878 was introduced by Senator Walz. This bill redefines the definition of “immediate family” for conflicts of interest purposes under the Accountability and Disclosure Act. Under current law “immediate family” includes children that are residing in the same household as the person. The bill would remove the limitation that the children have to reside in the same household. It appears the bill would make the conflict of interest provisions apply to gifts to a person’s adult children living separate from the government official.
LB 899 was introduced by Senator Hughes. This bill provides certain power to public power districts relating to biofuels and biofuel byproducts. The bill was introduced at NPPD’s request and is supported by the Nebraska Power Association. It allows a public power district to develop, manufacture, use, purchase or sell biofuels and byproducts, as well as other fuels which help reduce greenhouse gas emissions. At the hearing, Black Hills Energy opposed the bill due to concerns over competition with private entities, even though existing statutory language on page four of the bill already prohibits public power districts from engaging in natural gas services.
LB 933 was introduced by Senator Crawford. The bill changes the provisions relating to discontinuance of utility service. The bill limits disconnection fees to the actual and reasonable costs incurred by the utility. It also requires a utility to publish disconnection information on its website and to mail its policies to a person upon request. The PRB has no statutory authority over disconnections, but the staff does receive numerous calls on the topic.
LB 925 was introduced by Senator Chambers. The bill changes the provisions related to the standing required to file a petition for a declaratory judgment. Current law requires that in order to challenge the validity of a State agency’s rules or regulations the person must show that the rule or regulation interferes with or impairs their legal rights or privileges. LB 925 would expand standing to include “any Nebraska taxpayer”.
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 area contiguous, the date of the new annexation is treated as the operable date of annexation starting the one-year deadline for purposes of taking over the originally annexed territory under section 70-1008.
LB 1132 was introduced by Senator Wayne. This bill changes provisions relating to net metering. The bill creates a new list of fuel sources that qualify for net metering. The new list allows net metering for a facility that “uses any form of technology as its energy source, such as geogtermal, solar thermal,” etc. This language appears to allow any fuel source to quality for net metering, not just renewable. The other major change is that the bill repeals the 25-megawatt limit for net metering and allows net metering of any capacity, based on 110 percent of the customer’s average annual usage. The bill allows for an application fee to interconnect a net metering facility.
LB 1195 was introduces by Senator Morfeld. This bill changes provisions regarding access to public records. The bill expands the language authorizing access to public records from “all citizens” to “all citizens and residents.”
LB 1205 was introduced by Senator McCollister. This bill adopts the Renewable Energy Standards Act. The bill requires Nebraska’s public power utilities to meet a renewable energy standard of 35% by the end of 2022, 50% by 2026 and 75% by 2030. The basis for the capacity percentage is based on a supplier’s “median annual generation for the preceding two calendar years prior to the deadline.”
On a personal note, Executive Director Texel mentioned LR 299, introduced by Senator Bolz, which congratulated his son Mitchell Texel on achieving the rank of Eagle Scout.
The next item on the agenda was to elect the 2020 Chair and Vice Chair. The Board tabled this item until the next meeting so the new member can participate.
The next meetings are scheduled for February 10, March 9, and April 13, 2020. Executive Director Texel said starting with the February 10 meeting the Board will be switching its monthly meetings from the fourth Friday to the second Monday of each month.
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 10:36 a.m.
Timothy J. Texel
Executive Director and General Counsel