NEBRASKA POWER REVIEW BOARD
Minutes of the 819th Meeting
May 10, 2021
The 819th 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 Hutchison, Mr. Grennan, Ms. Loutzenhiser, and Mr. Moen. Mr. Grennan and Ms. Loutzenhiser were participating via videoconference on Webex. Executive Director Texel stated that although the Governor’s executive order waiving some provisions of the Open Meetings Act expired, legislative bill 83 had been signed by the Governor. LB 83 amended Nebraska Revised Statute section 84-1411(2), which is part of the Open Meetings Act. LB 83 had an emergency clause, so it is already in effect. The new statutory provisions allow public meetings by video conference and other electronic means and sets out requirements for those meetings. The Board has met those requirements. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on April 30, 2021. The Board also made the meeting available to the public through Webex. The Webex log-in information was available on the Board’s website and was published in the Lincoln Journal Star notice. The agenda on the Board’s website also includes 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 wanted to speak, they could click on the “raise your hand” icon. At that time they would be unmuted, they could announce who was speaking, provide an address and if they represent an organization. Then they could offer their comment or 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 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 black 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 April 12, 2021, public meeting. The Board did not receive any comments recommending changes to the draft minutes. The staff did not have any changes to suggest, either. The minutes were sent electronically to the Board members. Mr. Moen moved to approve the minutes. Vice Chairman Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – yes, and Mr. Moen – yes. The motion carried 5-0.
The next agenda item was acceptance of the expense report for the month of March. In March there was $25,140.76 in personal services, $16,503.67 in operating expenses, and $380.30 in travel expenses. The total expenses for April were $42,024.73. Executive Director Texel noted that the Board has used 82.28% of its cash fund (not including the emergency reserve) and 83.3% of the fiscal year has passed. He pointed out that the publication and print expense account was at 529.5% of its budgeted amount. This is due to the publication of the notices for the recent public power district charter amendments. The notices were published and the reimbursements from the districts have been received, but they were not posted yet when the reports were prepared. State law requires the district filing the petition to amend its charter to pay for the notices. Once the reimbursements are posted the percent over budget in the publication account will be considerably reduced. Ms. Loutzenhiser, as the Board’s accountant member, was asked if she had any concerns about the expense report. She did not. Mr. Grennan moved to accept the April expense report. Ms. Loutzenhiser seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – yes, and Mr. Moen – yes. The motion carried 5-0.
The next item on the agenda was to consider the McCook Public Power District’s Petition for Charter Amendment 8. This item was tabled at the April meeting. The application was filed on January 25, 2021. The amendment reduces the number of directors from seven to six and redistributes the District’s chartered territory into six subdivisions. The Board is required by state law to publish notice in at least two local newspapers for three consecutive weeks prior to acting on a charter amendment. A notice of the amendment was published in the Frontier County Enterprise on February 18, February 25, and March 4, 2021, and in the McCook Gazette on February 11, 18, and 25, 2021. The notice stated that any interested parties could file a protest or objection by close of business on April 5. No protests or objections were filed. Since there were no protests or objections the Board is allowed to waive a hearing. McCook PPD chose to draw its new subdivision lines under the provisions in Neb. Rev. Stat. section 70-612(1)(b). Under subsection (b), a PPD can form its subdivision boundary lines without regard to population if certain requirements are met. The requirements are that the District’s territory includes all or part of two or more counties, that more than fifty percent of the District’s users of electricity are rural, and that the PRB must find that the interests of the District’s rural users of electricity will not be prejudiced by the amendment. In McCook PPD’s case the District does operate in two or more counties, and the District had confirmed in its Petition that more than fifty percent of its customers are rural. Although the District is proceeding under subsection (b), Executive Director Texel had asked the District to provide the Board with the population information. The population numbers in each subdivision were: 1 – 509, 2 – 535, 3 – 321, 4 – 769, 5 – 899, 6 -512. The numbers were based on 2010 Census data. At the April meeting the Board members said they had insufficient information on which to base a finding that the rural users of electricity in the District’s territory would not be prejudiced by the new subdivision boundaries. Since there is a considerable difference in population, especially between the proposed subdivisions 3 and 5, the Board wanted more information showing that the District’s rural users of electricity would not be prejudiced by the amendment. Alexa Davidson, McCook PPD’s attorney, spoke to the Board about the population variation. She stated that the McCook PPD Board of Directors discussed this issue at their meeting last week. The District’s board members expressed their belief that the population distribution did not prejudice the rural customers, although the finding was not made by a formal vote. The two divisions that had higher population (4 and 5) were more urban in nature. Subdivision 5 includes subdivisions on the outskirts of the City of McCook. A highway runs through subdivision 4, and there are quite a few people that live along the highway. Subdivision 3, with the smallest population, did not have any municipality in it and was mainly irrigation customers. She also told the Board that since subdivisions 4 and 5 have higher populations and are more urban in nature, the District’s board believed that the customers in those Districts would be more comfortable with a director representing an overall more urban district. Likewise, it is believed that the primarily rural customers in the other subdivisions, especially subdivision three, would be uncomfortable having a director from a more urban area representing their interests. The Board asked if the subdivisions were divided by load and had equal loads. Clint Bethel, the District’s general manager, stated that when the subdivisions were set up, the loads were considered. Each subdivision has a similar load capacity, so each director represents an area with approximately equal electric use based on the megawatt load. Vice Chairman Hutchison asked if the board had a unanimous vote when it voted to file the petition to amend its charter. Ms. Davidson stated that the board did vote unanimously to file the petition. Chairman Reida expressed that it was important for his decision that the McCook PPD Directors reviewed the petition charter numbers twice and agreed unanimously that the charter amendment is needed and specifically that the rural customers would not be prejudiced by the amendment. Mr. Grennan moved to waive a hearing and find that the interests of McCook Public Power District’s rural users will not be prejudiced by approval of the Petition, and that McCook PPD’s Petition for Charter Amendment 8 be approved. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – yes, and Mr. Moen – yes. The motion carried 5-0.
The next item on the agenda was to consider PRB-3943. This is an application filed by the City of Hastings Utilities for authority to construct .89 mile of 13.8 kilovolt distribution line in Adams County. The location is in the vicinity of the intersection of Showboat Boulevard and J Street. The map provided is a large CADD drawing showing the entire project area. The project will provide a backup service to several businesses in the area, including the Whelan Energy Center, MPH Racetrack, and Central Community College. The application was filed on April 7, 2021. The line would be located in the service area of Southern PPD. Southern Public Power District submitted a Consent and Waiver form consenting to the project without a hearing. The Board consulted with the Game and Parks Commission as required by Neb. Rev. statute 37-807(3). The Commission found that the project is in the range of the endangered Whooping Crane and the threatened Northern Long-Eared Bat. However, there are no records of those species in the project area, nor is there habitat for them. The Commission determined the project would have “no effect” on either species, and did not object to the PRB’s approval of this project. Vice Chairman Hutchison moved to approve the City of Hastings Utilities’ application PRB-3943. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – yes, and Mr. Moen – yes. The motion carried 5-0.
The next item on the agenda was to review the draft of Guidance Document 14 that would address issues related to electric energy storage resources (ESR). Executive Director Texel told the Board he had sent the draft guidance document to the Nebraska Power Association (NPA) and to attorneys that he knew represent private developers (David Levy, Mike Degan and David Bracht), and attorneys that represent public power utilities for comments. At the April meeting there was at least one issue that was not decided. The original version said that if an ESR was installed after the commercial operation date of an associated generation facility, the ESR falls within the PRB’s jurisdiction and required approval. Mr. Moen believed that an ESR installed with an associated facility but after the commercial operation date was analogous to installation of a fuel storage system, such as a coal pile or a natural gas fuel tanks. As long as the ESR’s capacity does not exceed the associated facility’s capacity, he thought the ESR should be considered part of the associated facility and would not require PRB approval. The Board does not have jurisdiction over fuel storage systems, so it should not in this instance, either. The Board wanted to think about that issue, so the draft Guidance Document issue was tabled to the May meeting. The Board also wanted to ask Mr. Krajewski to review the draft to see if it has any conflicts with SPP or RSC positions, or if Mr. Krajewski sees anything that he believes needs to be corrected. Mr. Krajewski suggested a language change defining when an ESR is a transmission asset. Executive Director Texel thought the definition was not necessary, and it would limit when a facility could be a transmission asset to only those circumstances. The Board may want to allow itself more flexibility than that. The executive director discussed the issue with Mr. Krajewski, and Mr. Krajewski agreed the definition language is probably not necessary.
The NREA contacted the executive director last week. Executive Director Texel participated in a Zoom call with the NREA staff and general managers. NREA had several good points. Under the definition in the draft, capacitors would technically fall within the PRB’s jurisdiction as an ESR and require approval. Capacitors store electricity and inject it later into grid, even though the electricity is usually stored and injected seconds later, often less than one second later. The NREA also pointed out that electric vehicle batteries and battery walls would fall under PRB jurisdiction and require approval. NREA was concerned with the phrase “unless the owner of the facility requests otherwise” at the bottom of page 2. They are concerned it could be misread to mean an owner could request to increase the capacity greater than the associated facility, or to allow the ESR to not be on the same premises or in the immediate vicinity of the associated facility. Executive Director Texel drafted new language to address this concern. The NREA would also like it clarified that an ESR will be considered part of an associated facility, but if the owner later requests to increase the interconnection agreement, the ESR would come under the PRB’s jurisdiction if the interconnection agreement would allow more electricity to be injected onto the grid than the capacity of the associated facility. Executive Director Texel said if the interconnection agreement was for 100 megawatts (MW), and the associated facility has a capacity of 100 Megawatts, then the ESR and renewable facility could only inject that amount and not go over the 100 MW in total at any one time. The NREA also told the executive director that a utility from Colorado, United Power, has a complaint pending before FERC that challenges the characterization of ESRs as either generation or transmission. United Power is asking FERC to create a new rule defining energy storage as a separate category. NREA asked that the Board give the NREA some time to offer additional input to this new document and not approve it until the Board’s June meeting.
James Dukesherer, NREA Interim Director of Governmental Relations, spoke to the Board on behalf of NREA’s member utilities. He talked about the electric vehicle battery walls and the capacitors. He spoke about the Board’s statutory limit that facilities under 700 volts do not fall within the Board’s jurisdiction. At the distribution level there are several types of storage devices that need to be addressed. Mr. Dukesherer spoke about his concerns that an ESR and the associated facility could potentially place their output onto the grid at the same time. Executive Director Texel said it was the Board’s understanding that the limitation in the interconnection agreement would prevent that. SPP would not allow the facility to inject more onto the grid from that location than the agreement allows. If more would be injected into the system then SPP would take corrective action, whether that be a fine or other measures. Mr. Dukesherer also asked about a stand alone unit and how that would be classified. The unit would be a load at times, but would inject electricity into the grid at others. It is not clear if this issue is addressed, and this is one reason the NREA would like the Board to table the approval and provide some additional time to review the draft document.
Vice Chairman Hutchison stated that in his view it would not be good for the PRB to create a fourth category. The draft guidance document will give the Board a construct in which to review and evaluate any ESR that could be submitted to the Board. If there is a new category created by FERC or elsewhere, then the Board could amend the guidance document. Executive Director Texel stated that this document is intended to be interpretive. The Board does not have the authority to create a definition of a new category. That would be more than interpretation, which is beyond what is allowed in a guidance document. It may be necessary for the Legislature to address some of these issues to provide clear direction. Until that happens the guidance document will give the Board and industry some general guidelines to follow. The Board’s statutes obviously do not address ESRs, so there is no clear statutory guidance and the Board is trying to define the steps based on the current statutory language. Mr. Grennan stated that the interconnection agreement outlines how the ESR can operate, and thus whether it falls under the Board’s jurisdiction. If the interconnection agreement is not increased beyond the associated facility’s capacity, then the PRB’s jurisdiction is not needed. Mr. Grennan stated that he agreed with a statement by Vice Chairman Hutchison that there needs to be some definition regarding voltage. Executive Director Texel stated that the reference to 700 volts in the statute pertains to transmission, not generation. He added that the Board would not have jurisdiction over net-metering or self-generation facilities. John McClure, NPPD general counsel, stated that with the technology changing we will never have the right answer. The NPA will be meeting next week and will have a discussion on this topic. He mentioned FERC Order 2222, and how that could be implicated. He also reviewed the language in 70-1001.01 and pointed out that the purpose has to be to “store” the output of the associated facility. That supports the limitation of the capacity to the associated facility and to limit the interconnection agreement. David Levy, an attorney with the Baird Holm law firm representing NextEra Energy, stated that under the definition in 70-1001.01(4), a privately developed renewable energy generation facility includes electrically connected equipment used to store the output of the associated renewable facility. If his clients were to add an ESR to a renewable facility, it is their intent to store the output from the associated renewable facility, which would seem to be consistent with the Board’s interpretation.
Vice Chairman Hutchison asked about Mr. Moen’s suggested language change and whether that would be the final language. Executive Director Texel said it appears the Board’s consensus is that the language expressing Mr. Moen’s position would be added. The Board members agreed. There will need to be some clarification language added to address situations where an owner requests to increase the interconnection agreement capacity beyond the associated facility’s capacity. Initially the executive director suggested language that the primary purpose of the ESR was to store output from the associated facility, since at times an ESR could be taking energy from the grid. Mr. McClure said the statute pertaining to privately developed renewable energy generation facilities is very clear that the only purpose for the storage is to store the output from the associated facility, and that is its sole function. The Board agreed it should follow the language in the statute, which is that the purpose is to store the output from the facility. The Board agreed that language needs to be added to address the NREA’s points about capacitors, electric vehicle batteries, and the clarification language at the bottom of page two. The Board agreed to table the topic to its June meeting. Vice Chairman Hutchison said all parties should understand that the Board does not intend to table the matter again, so a guidance document can be in place prior to any applications or installations of ESRs. Mr. Grennan emphasized that any comments must be submitted at least one week prior to the Board’s June 14 meeting. If a party wants different language on an issue, it must provide specific replacement language. This will facilitate being able to vote on the final version at the June meeting.
The next item on the agenda was approval of the PRB’s assessment figure for fiscal year 2021-2022. The Board members received the assessment information by e-mail. The Governor’s budget analyst informed the staff that she would only recommend approval of $530,000 or less. 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 2019 was $4,040,570,473.42. The gross revenue in 2020 was $4,044,125,045.88. So the 2020 gross revenue increased by $3.5 million from the previous year. Last year’s assessment figure was 13.116596 (cents per $1,000 gross revenue). The proposed assessment figure for fiscal year 2021-22 would be 13.1054305. This is slightly lower than last year’s assessment figure. Mr. Moen moved to approve an assessment figure of 13.1054305 cents per $1,000 gross revenue for fiscal year 2021-2022. Ms. Loutzenhiser 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 to consider reimbursement for the 2021 Wind & Solar Conference expenses for the board members or the executive director. The 14th annual Wind and Solar Conference will be held on November 8 and 9 in Lincoln. The registration is $125 if paid by October 5. The conference is at the Marriott Cornhusker Hotel. One issue is that the Board’s November meeting will be on November 8. Executive Director Texel said that although he almost always attends the conference, he was not planning to attend this year due to the conflict with the PRB meeting. The Board discussed the conference and asked if the agenda was available. Executive Director Texel said to his knowledge the agenda is not out yet. The Board suggested that they table the vote on this item until the agenda is released. It was suggested that the Board could start its meeting a little earlier than usual, such as at 8 a.m., and then attend the rest of the conference. Another option is if the agenda looks very informative the Board could move its November meeting date to avoid the conflict. Mr. Grennan said he has attended the conference in the past. He thought that it would be good for at least one board member or the executive director to attend. Executive Director Texel suggested tabling the matter for now, and leave the issue on the PRB’s agenda until the conference program is issued. All Board members agreed to table the issue until next month.
The next item on the agenda was the executive director’s report. The first item was the Southwest Power Pool (SPP) update. Mr. Grennan said he had a conference call today at 1 o’clock to discuss resource adequacy. He has been very busy with the new AC-DC task force. The western expansion is looking to be a positive development and there will be some benefits for the current members.
Chairman Reida brought up a comment the John McClure had made about accreditation of generation facilities. Chairman Reida discussed how the cooling system is used on a combined cycle to increase the generating capacity. Mr. McClure stated that his reference was to the Beatrice generation facility with a combined cycle. The way it operates allows the actual output to be slightly higher during winter months than during summer. The Polar Vortex situation has pointed out the need to examine how generating units are accredited, and if they can actually deliver their accredited capacity when it is needed. Mr. Grennan discussed the issue of firm capacity, similar to firm transmission rights. This is one reason for the problem during the polar vortex event in February. The SPP wind resources have an accredited capacity, but according to the SPP most of the accredited capacity was not available during the extreme weather event.
The executive director then updated the Board on Legislative bills. He said the only bill tracked by the staff that had significant action was LB 83. As was discussed at the beginning of the meeting, this bill changes the Open Meetings Act to allow for more meetings using virtual conferencing and conference calls. The bill was passed, and the Governor already signed it. Since it had an emergency clause it was already in effect and was followed for this meeting.
The executive director next brought up a proposed amendment to Neb. Rev. Stat. § 70-663 concerning public power charter amendments. The Board had discussed this issue at the April meeting. The executive director told the Board he attended the committee hearing held on May 5 before the Government, Military and Veteran’s Affairs Committee, with members of the Legislature’s Redistricting Committee also participating. Although he was present he did not testify. If this amendment is approved the Board would initially give conditional approval to charter amendments filed by December 31 of this year. Final approval would take place later. To address the charter amendments the Board will likely need to schedule a meeting the last week of December to act on the conditional approvals. The final approval would be voted on if no protests or objections are filed. If an objection or protest is filed, a hearing will need to be scheduled for that District’s charter amendment.
Vice Chairman Hutchison brought up the Annual Load and Capability Report the NPA prepares for the Board. He thinks it would be a good idea to have a section in the report that describes how each utility that has a zero carbon or carbon-free goal plans to meet that goal. How utilities meet that goal will affect the generation resources and thus the future ability to meet the electric load in Nebraska. Executive Director Texel said he had spoken with Jason Fortik about this. Mr. Fortik is the chair of the NPA’s Joint Planning Subcommittee, which is the group responsible for preparing the report. Mr. McClure said that the discussion today is very good. It is important to address how the generation mix will meet the demands of Nebraska’s electric customers. He talked about a call he had with several executives with SPP and other ISO representatives. One individual talked about having 70% renewables, but it is necessary to maintain all the current fossil fuels. Vice Chairman Hutchison said that the February extreme weather event has made utilities examine the reliability of their resources.
The Board asked if there would be any further inquiry by the Legislature into the polar vortex event in February. Executive Director Texel replied that he had asked the Natural Resources Committee staff if there would be a follow-up to LR 48, such as an interim study this summer. He was told at this time there was no study scheduled, but the staff expected there would be some additional action on the topic. Once the end of the session gets closer the Committee may return to this issue and decide if an interim study will be scheduled. Mr. Grennan said he was interested in seeing what will come from FERC as a result of its extreme weather technical conference in docket AD21-13-000, in which the PRB filed responses to the questions posed by FERC.
Executive Director Texel updated the Board on an improvement to the Board’s website. He had added a page that listed orders issued by the PRB in generation and transmission applications, service area agreement amendments, and complaints. He also had added pages that list PRB general counsel opinions, FERC filings, and a general legal documents page. To access the new information, go to the PRB’s home page and click on the word “Legal”. Then on the drop-down menu hover over the “Library” link and select the page you would like to see. The documents are not searchable. Several attorneys had asked if the Board could make its previous orders available, so the executive director is responding to those requests.
The executive director announced that the Board’s next public meetings are scheduled for June 14, July 12, and August 9, 2021.
Executive Director Texel updated the Board on the request for proposals for the new contract for an SPP consultant. There remain some differences in the conflicts of interest section. The bidder had submitted alternative language. Based on the Board’s directions to him, he had prepared responses and sent them to State Purchasing Bureau for processing and submission to the bidder. The Department of Administrative Services’ legal counsel must now review the responses before they are submitted to the bidder. The Board asked if the new contract would be executed by July 1. The executive director thought it would, depending on the negotiations over the conflict of interest language. State Purchasing Bureau had said that if it looks like the contract negotiations would cause the renewal to not be signed by July 1, the State can ask the current contractor to sign an addendum extending the terms of the current contract for two or three months. We are not quite at the point of needing that yet. We will see how far apart we are after the bidder responds to the State’s next set of responses.
Vice Chairman Hutchison moved to adjourn the meeting. Chairman Reida seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison –yes, Mr. Grennan – yes, Ms. Loutzenhiser – yes, and Mr. Moen – yes. The motion carried 5-0. The meeting was adjourned at 12:47 p.m.
Timothy J. Texel
Executive Director and General Counsel