NEBRASKA POWER REVIEW BOARD
Minutes of the 824th Meeting
October 15, 2021
The 824th 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, and Mr. Moen. Ms. Loutzenhiser had informed the Board that she had a conflict in her schedule that would not permit her to attend the meeting. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on October 5, 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 is speaking, provide an address, and disclose if they represent an organization. Then they could offer their comment or question. Due to the amount of interest in an agenda item all speakers would have a 5-minute time limit. The Board members can ask questions and would not be restricted on the time. 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 made a motion to have agenda item 7 discussed after the current agenda item 9. Vice Chairman Hutchison moved to approve the change in the agenda item 7. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The Board first considered the draft minutes from its September 13, 2021, public meeting. The minutes were sent electronically to the Board members. Executive Director Texel stated that he did not receive any suggested changes or comments. Mr. Grennan moved to approve the draft minutes. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The next agenda item was acceptance of the expense report for the month of September. In September there was $24,909.58 in personal services, $17,149.96 in operating expenses, and $1,070.72 in travel expenses. The total September expenses was $43,130.26. Executive Director Texel explained that the Board has used 24.69% of the agency’s cash fund, not including the cash reserve fund. This is the third month of the fiscal year, which is 25% of the year. The expenses are running almost even with the amount of time that has passed. It is expected that the expenses will start to have a higher percentage than the amount of the year that has gone by as the fiscal year progresses. Mr. Moen moved to accept the September 2021 expense report. Vice Chairman Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The next agenda item was to consider PRB-3957. This is an application submitted by the Norris Public Power District. The application is for authorization to construct .59 mile of 7.2 kV distribution line in Gage County. The location of the service is in section 18, Township 5 North, Range 5 East, which is just North of West Chestnut Road near the Village of DeWitt. The application was filed on September 7, 2021. The line is needed to provide service to a residence, outbuildings and the wheels on a center pivot irrigation system. The line will be in DeWitt’s retail service area. DeWitt submitted a Consent and Waiver Form. The Board consulted with the Nebraska Game and Parks Commission as required by Neb. Rev. Stat. section 37-807(3). In a letter dated September 9, 2021, the Commission determined the project is in the range of the threatened Northern Long-Eared Bat. Because the project area is previously disturbed, and the project will not include any tree removal, the Commission determined the project will have no effect on any bats. The Commission stated that the project is not anticipated to have an impact on any state-listed threatened or endangered species, and the Commission did not object to approval of the application. Exhibit A shows DeWitt has an existing line that runs parallel to the proposed construction. The existing DeWitt line, which is overhead, is old and needs to be replaced. The proposed line will be underground to allow for a center pivot irrigation system. DeWitt’s overhead line will be removed. Executive Director Texel recommended approval. Vice Chairman Hutchison moved to approve PRB-3957. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen –yes. The motion carried 4– 0 with one absent.
The next item on the agenda was to consider withdrawal of application SAA 160-21-A. This was a joint application filed by the City of Kimball and High West Energy, Inc. The intent of the parties was to transfer customers on the west side of Kimball from High West Energy to Kimball. Upon review of the application, it was determined that the territory involved is already Kimball’s service area. High West Energy agreed to transfer the customers in the area to Kimball. No record could be found in the Board’s files where High West Energy filed an application requesting to serve the customers involved. Due to this, High West Energy never obtained the legal right to serve the customers in question. The services were established in the 1960’s, so it is entirely possible there were never any applications filed for High West Energy to serve these customers, and the parties in later years did not know this to be the case. Due to this, Kimball has the right to provide service to the customers without any approval from the Board, because the customers are located in Kimball’s retail service area. After discussing the situation with Kimball and High West Energy, the parties agreed to submit a signed letter requesting withdrawal of application SAA 160-21-A. Kimball will then take over service to the customers involved. Mr. Moen moved to approve the dismissal of SAA 160-21-A. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The next item on the agenda was to consider whether the Board should pursue a legislative change to increase the annual maximum allowable per diem amount for the Board member that represents Nebraska on the Southwest Power Pool’s Regional State Committee. Under Neb. Rev. Stat. section 70-1003(2), Power Review Board members receive $60 per diem for each day in which they are engaged in Board business. The Board member designated to represent Nebraska on the SPP’s Regional State Committee receives $250 per diem. The RSC is a committee comprised of representatives of the state regulatory agencies from each state in the SPP operating area that has SPP member utilities. Attending the required RSC and SPP meetings requires a great deal more time commitment than the other Board members, which is the reason the RSC member receives the higher per diem. The statute caps the per diem amount of the RSC member at $20,000 per year. At $250 for each per diem day, that equals a maximum of 80 days of PRB and SPP business related days per year. The activity level required of the RSC member has increased over the years since Nebraska’s utilities joined the SPP and the Board’s per diem statute was amended. Mr. Grennan, the Board’s current RSC member, has been using 2 to 5 per diem days every two weeks (the State follows a bi-weekly pay period). He has currently used 74 of the allowable 80 days, with two and a half months left in the year. Due to the statutory limit the Board will not be able to pay Mr. Grennan once he reaches the $20,000 maximum. The staff spoke with State Accounting and the Governor’s Budget Office and was told there are no exemptions or waivers available. When the statute was amended, the Board did not anticipate the RSC member would ever reach the $20,000 level. But the SPP’s increasing activities, and the additional meetings to address the issues associated with the Winter Storm Uri event in February 2021, have caused the maximum to be reached well before the end of the year. Once the maximum per diem pay is reached, Mr. Grennan will not be able to attend PRB or SPP meetings. This obviously creates a bad situation for the Board, the Board’s RSC member, Nebraska’s electric utilities, and for the State of Nebraska. The only way to address the situation is to amend the statute to increase the maximum per diem pay allowed for the Board member that represents Nebraska on the SPP RSC. After discussing the situation with representatives of several Nebraska utilities which are SPP members, the recommendation from staff is to increase the maximum per diem from $20,000 to $35,000. The Board does not want to keep returning to legislation to ask for an increase, so it was decided an increase of $5,000 or $10,000 would be too small. Mr. Grennan noted that the SPP and RSC workload is only going up. Mr. Grennan explained the relationship between the SPP board and the RSC members. He said the trust and working relations between the two bodies has become stronger and more collaborative over the last several years. This is good for the SPP and its member utilities, but it tends to create more work due to an increase in meetings. Mr. Grennan described the task forces that are tasked with conducting research and reporting back to the RSC. The RSC member could easily attend several of these meetings a month and possibly more, in addition to the quarterly business meetings and education sessions. Nebraska can choose to step back and not participate, but that would not be beneficial for Nebraska, its utilities, or the ratepayers. Nebraska needs a voice at the table and having the RSC member participate in these meetings provides Nebraska with that voice. Executive Director Texel also noted that the statute has a provision that provides for the increased per diem pay for another Board member who is acting as the designated RSC member’s proxy for a meeting or event. The total aggregate per diem allowed for the RSC member and proxies is $25,000 per year. That number would likewise need to be increased. It is recommended to increase that to $40,000. The aggregate total is currently $5,000 more than the RSC members per diem, and the $40,000 limit would be $5,000 more than the proposed increase in maximum per diem for the RSC member. Shelley Sahling-Zart, LES general counsel and secretary for the Nebraska Power Association, spoke concerning the RSC member’s per diem. She stated that the NPA represents all Nebraska electric utilities and the utilities believe it is in the best interest for the Board to have a representative and to raise the cap to allow the RSC member to attend all needed meetings and not be limited by a low per diem cap. Vice Chairman Hutchison moved to authorize staff to take the actions necessary to obtain a legislative change to section 70-1003 to increase the limit on per diems for the SPP RSC member from $20,000 to $35,000, and to increase the aggregate total for RSC member and proxies from $25,00 to $40,000. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The next item on the agenda was to consider approval of reimbursement for executive director to attend several educational seminars sponsored by the Nebraska State Bar Association during its annual meeting. Executive Director Texel stated that there was not time to receive Board approval prior to registering for the seminars, so he paid for the seminars and is requesting reimbursement. The seminars were held in LaVista on Thursday, October 14. He attended three seminars. An ethics seminar was free of charge, and the other two seminars were $50 each. The other expense would be mileage to and from La Vista. In addition to the ethics seminar, one seminar was a Legislative update, while the other was titled “Developments in New Sources of Alternative and Renewable Energy.” Normally, the executive director would attend the American Public Power Association’s (APPA) legal seminar, which provides him with most or all of the continuing legal education credits he needs for the year. He has done this for approximately 21 of the past 23 years. However, due to the expected cash fund shortfall expected this fiscal year, the executive director decided that the agency could not afford to send him to the APPA legal seminar. Instead of attending the APPA legal seminar, it would be much more cost-effective to attend the Bar Association’s legal seminars in La Vista. Although the Bar Association’s seminars may not be as informative on issues such as national energy and environmental policies, they are far less expensive to attend. Mr. Grennan moved to approve reimbursement of the executive director and general counsel’s mileage and fees to attend the identified sessions at the Nebraska State Bar Association’s legal seminar in La Vista. Vice Chairman Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison – yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
The next item on the agenda was the director’s report. First item was an update on Southwest Power Pool (SPP) items. Mr. Grennan gave an update on SPP activities. He first discussed FERC docket RM21-17-000 which is an Advance Notice of Proposed Rulemaking (ANOPR). The PRB filed comments with FERC on the ANOPR on October 12. Executive Director Texel added that the comments could be found on the Board’s website under the “Legal” tab, then the “Library” tab and then the “PRB FERC Filings” tab. The ANOPR is captioned “Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generation Interconnection.” The RSC members worked together to file one set of joint comments. A few state commissions, like the PRB, filed individual comments, also. The main points in the RSC joint comments was to note the transmission backlog that SPP is already addressing. Mr. Grennan said the RCAR3 taskforce is getting together to review the cost allocation over the last six years. This task should be completed in 2022. The task force does this every six years unless it is requested sooner.
Executive Director Texel then mentioned that the Legislature’s Natural Resources Committee has scheduled a hearing on LR 136. This is an interim study to examine the “causes, impacts and costs of rolling electrical power outages during the extreme weather events of February 2021”. There will also be an evaluation of the differing effects of public power district membership in the SPP and the costs and benefits of SPP membership. The hearing is scheduled for 1:00 pm. on Friday, October 29 in room 1525 of the Capital. The hearing is open to the public, but testimony is by invitation only. Mr. Grennan has been invited to testify in his capacity as Nebraska’s RSC member.
The executive director announced that the Board’s next public meetings are scheduled for November 8 (early start at 8:30 a.m.), and December 13, 2021. He asked if the Board would want to schedule its 2022 meetings. The Board members said they would like the meetings to be on Fridays instead of Mondays. The Board asked if it mattered which Friday of the month. Ms. Hallgren (the Board’s business manager) asked if the Board could schedule the meetings on the third Friday of each month. This allows her more time to complete the budget documents. The Board asked the utilities present if there was a Friday that would not conflict with other utility meetings. The utilities present stated that no matter which Friday is chosen it would conflict with the day one of the utilities holds its board meetings. The Board decided to schedule the meetings on the third Friday of each month. The Board also noted that its November meeting is scheduled to start early to help make sure any Board members attending the Wind and Solar Conference would not be late.
The Board then discussed agenda item 7. This is a discussion about whether the Board should pursue legislation concerning the Board’s jurisdiction over power purchase agreements (PPAs) and decommissioning of generation facilities. Executive Director Texel set out the procedure for public comments concerning this agenda item. The officials representing Nebraska’s electric utilities will address the Board first. After that the Board will hear from officials representing private developers operating in Nebraska. Then any other interested groups or individual citizens will have an opportunity to address the Board. All participants will have a 5-minute time limit on their comments. The Board can ask questions after that. There is no time limit on the questions asked by the Board members. There were several letters and emails providing input on this agenda item. The following parties submitted letters or emails expressing opposition to the Board pursuing legislative changes to give the Board approval authority over PPAs or decommissioning. Those comments were from the Nebraska Chapter of the Sierra Club, submitted by the Club’s lobbyist Al Davis; Roger Wess; attorney David Levy on behalf of several utility-scale renewable energy developers in Nebraska; David Corbin, a member of the Energy Committee Chair for the Nebraska Chapter of the Sierra Club and member of the Advisory Board of the American Public Health Associations Center for Climate, Health and Equity; attorney Michael Degan on behalf of several private energy developers that operate in Nebraska; Sandy Lehr, co-leader of the Citizens’ Climate Lobby of Omaha and a Trustee on the Nature Conservatory of Nebraska; Bryan Hermsen; and David Holtzclaw, President of Transduction Technologies, LLC. A copy of all letters and email comments were provided to the Board prior to the meeting. Executive Director Texel said there has been significant interest in this agenda item and some misunderstanding about its origin. He stated that the impetus for this agenda item was concern on the part of the Power Review Board members about the extreme winter event that took place in February of this year. There are no other parties behind this agenda item other than the Power Review Board members. He also clarified that this is only a discussion item. No final decision has been reached. Even if the Board were to decide it would like to pursue legislative action on this topic, the Board would have to see if a state senator would agree to sponsor a bill, and it would need to be enacted by the entire Legislature before becoming law. The Board cannot implement these changes on its own. At this point this is only a discussion item to decide whether the Board might want to take another step toward requesting a legislative change.
Shelley Sahling-Zart, LES general counsel and administrative coordinator for the Nebraska Power Association (NPA), spoke on behalf of LES and utilities represented by the NPA. She stated that she sends a lot of e-mails to the NPA members and sometimes wonders if the emails are read. She now has the answer to that question because when the e-mail concerning this discussion was sent there was a lot of feedback in a short time period. During her discussion she stated that the technologies we have today are advancing and that we need to look carefully at how those technologies are changing the industry. One example is battery storage. The Board needs to have several informational meetings with the stakeholders in Nebraska to work out the criteria the Board is asking for in this possible legislation. The statutes were created in 1963. With the increase in renewable technology the statutes have been tweaked to create an avenue for this advancement, but it may not necessarily be the best way to address this. Private developers do not necessarily need the same approval that the local public power utilities do. Under this proposal, the public power utilities would have to come to the Board before entering into a PPA to buy power, but the private the developer would not have to get PRB approval for the facility. It seems there are some disconnects in that process if that is how it would be set up. Ms. Sahling-Zart stated that the Board needs to take a step back so all parties can talk about these issues more in depth, but not pursue legislation. This type of change could affect the largest utilities a great deal because there are a lot of different types of contracts out there. NPPD has many wholesale contracts with municipalities. It is really important to get all the stakeholders involved and it may take several years to get a result that could become legislation. Vice Chairman Hutchison explained that he felt a PPA was not dramatically different from building a generator. Both affect a utility’s capacity resources, and both affect the utility’s rates. Ms. Sahling-Zart stated that utilities are not able to get the tax credits that the private developers do, so this process is how the public utilities obtain electricity from renewable resources. It makes more economic sense to let the private developers who get the tax credit build the facility and then have a PPA with the public power utility that directly serves customers.
John McClure, general counsel for the Nebraska Public Power District (NPPD), discussed his concerns about resource adequacy. The February event was due to fuel supply. Nebraska’s utilities implement weatherization in their generators and did not have the supply issues that other states had during the event. Nebraska was a large exporter of power during this weather event. He explained that there would likely be some unintended consequences if the Board were to obtain authority over PPAs. NPPD serves over 60 utilities at wholesale and 77 retail communities. NPPD operates the systems for many of these entities. He said NPPD has power agreements with its partner entities, and those agreements could be considered “power purchase agreements” that would fall under the PRB’s proposed jurisdiction. The Board did not appear to intend to extend jurisdiction over those contracts, so that is an example of an unintended consequence of the draft legislative change that would need to be addressed. He also pointed out Neb. Rev. Stat. section 66-1066. This statute requires public utilities in the state to prepare integrated resource plans, so that is already mandated by law. NPPD looks at diversity, reliability, dispatchability and other factors when it researches what generation assets to acquire. The procedure is to do an integrated resource plan every five years. If it were done sooner, it might be due to a major resource decision. He also mentioned that the SPP market brings a lot of benefits to the state. If there is an unplanned outage, the market has low cost energy available to provide power to that utility in Nebraska. He also stated that utilities train for an incident such as what happened in the February winter storm. There was a set procedure to follow and that is exactly what happened. All the utilities can tell you that the procedures in place for such an emergency were followed and each utility has and will evaluate how the procedure can be made better. Mr. McClure spoke about NPPD’s and Nebraska’s unique loads, especially electric irrigation pumping. NPPD is able to engage in load management with its customers, which saved about 600 megawatts of capacity that did not have to be built.
Joe Lang, Director of Energy Regulatory Affairs for OPPD, spoke about the reliability standards established by the North American Electric Reliability Corporation (NERC). NERC sets reliability requirements and if those requirements are not met it is punishable by a fine of $1,000,000 per day. Mr. Lange spoke about resource adequacy, and that Nebraska performed amazingly well during the February event. He wanted to make sure that we do not create the perception that we can solve our resource adequacy issue easily or Nebraska can do it alone. This is very much a regional issue. Chairman Reida discussed a recent OPPD generation application for two gas generators. He recalled they were located near a major pipeline and will be dual fuel capable. Mr. Lange explained that the recent generation application that was approved by the Board also has the capability to increase or decrease output in response to the current load demand related to renewable output. The Board questioned Mr. Lange about the decommissioning process. Mr. Lange said he was not very familiar with the decommissioning process, so he said he was not the best person to address issues about decommissioning.
Steve Bruckner, legal counsel for OPPD, spoke next. Mr. Bruckner described how a PPA is different from situations involving the construction of generation resources. The funding for the construction is more long-term and is financed over many years, maybe 50 or 60. Construction and ownership of a facility involves land acquisition, contractors, employees and debt. A PPA is a contract that requires the utility to take the energy that is generated. When it comes to the electric industry, who can foresee what type of federal regulations might be put in place that can deter construction of a large generating unit? The industry at this time would not even think about building a coal unit, given the federal government’s regulations. The only real option for a dispatchable resource is natural gas, so PPAs are the best way to get renewables into a portfolio. There are many types of PPAs, so to establish authority over them there needs to be lots of discussion about the effect on each type. That could take years. If the Board is given authority over PPAs, the utilities may be limited to the types of agreements that they can enter into. Also, this could have an effect on the private developers’ decisions to build renewables in Nebraska. He used the example of the Grand Prairie Wind Farm. The transaction involves a lot of confidential information, and whether that might need to be provided to the Board in a public meeting. That might limit the types of low-cost agreements that the utility could obtain. A utility goes through an extensive process before issuing a request for proposals to get bids for the best option to keep the rates low for its customers. OPPD has not had a rate hike in five years, so it is hard to argue that the utility is not doing things right.
David Bracht, an attorney with the Kutak Rock law firm, spoke to the Board. He based his comments on his experience and knowledge dealing with a wide variety of clients that are involved in the energy industry or those developing energy projects. He discussed the uncertainty faced by his clients if the Board would have authority over PPAs. His clients look at the steps that are necessary when they decide to construct a facility in a specific area. Adding an additional approval layer to the mix would add uncertainty to whether Nebraska would be a good option for a developer. Those involved in developing renewables would definitely want to be involved in any discussion as to how this authority should be developed.
David Holtzclaw of Omaha, Nebraska, spoke next. He expressed opposition to the Board pursuing legislation on the PPA issue. He referred to the legislative hearing held on March 3 that dealt with the extreme weather event in February. He also told the Board about the wind and solar conference in November, and suggested the Board should have members attend the conference. Executive Director Texel noted that Vice Chair Hutchison is scheduled to attend the conference. Mr. Holtzclaw spoke about a legislative study to examine transmission infrastructure issues in Nebraska, but the study was never funded.
The Board discussed its options. The Board talked about obtaining information from the utilities regarding resource adequacy and reliability, and that might obviate the need for legislation. Chairman Reida suggested that the Board should meet with the utilities and place the issue on the agenda for another Board meeting, but limit the discussion to one hour. Ms. Sahling-Zart suggested perhaps having a discussion with other utilities that would be an informational session. She also mentioned that she would be at the APPA legal seminar. Chairman Reida was also attending this event, so it might work well for her and Chairman Reida to discuss these issues during free time at the seminar. The Board members liked the idea of Chairman Reida and Ms. Sahling-Zart meeting at the APPA seminar to begin discussions on what information could be provided to the Board regarding resource adequacy to avoid the need to pursue legislation. Chairman Reida asked what the Board needs to do next. He said if we could prepare an outline of what the Board believes should be included in its authority, we could then know what needs to be discussed further with utilities. Vice Chairman Hutchison discussed possibly creating a committee so two Board members could meet with the utilities and discuss the issue of PPAs and decommissioning without creating an Open Meetings Act issue. Executive Director Texel recommended that the Board vote on not pursuing legislation at this time. Since this is an agenda item, and due to the attention on this item, it would be nice to have a clear answer on whether the Board plans to pursue any legislation on the issue of PPAs and decommissioning. Vice Chairman Hutchison made a motion to not pursue legislation on PPAs and decommissioning during upcoming legislative session. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison –yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent.
Vice Chairman Hutchison moved to adjourn the meeting. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Hutchison –yes, Mr. Grennan – yes, Ms. Loutzenhiser – absent, and Mr. Moen – yes. The motion carried 4-0 with one absent. The meeting was adjourned at 1:27 p.m.
Timothy J. Texel
Executive Director and General Counsel