NEBRASKA POWER REVIEW BOARD
March 8, 2021
The 817th 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. Although the scheduled start time was 9:00 a.m., due to computer technical difficulties that would not allow the meeting to be broadcast on Webex, the meeting began with the roll call of those in physical attendance at 9:30 a.m. Mr. Moen and Ms. Loutzenhiser were participating through videoconference on Webex, pursuant to the provisions of Executive Orders 21-02 and 20-36, but they were unable to join the meeting when it started due to the technical difficulties. Those in attendance were Chairman Reida, Vice Chairman Hutchison and Mr. Grennan. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on February 26, 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. 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, and 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 February 8, 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 all the Board members. Mr. Grennan 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 – unavailable, and Mr. Moen – unavailable. The motion carried 3-0 with two members not voting due to the technical difficulties.
The next agenda item was acceptance of the expense report for the month of February. In February there was $27,132.30 in personal services, $19,261.42 in operating expenses, and $418.08 in travel expenses. The total expenses for February were $46,811.80. During the discussion of the financial report the Webex issues were resolved and everyone on Webex was able to view and participate in the meeting. Mr. Moen and Ms. Loutzenhiser therefore joined the meeting shortly after 9:40 a.m. Executive Director Texel noted that the Board has used 67.6% of its cash fund (not including the emergency reserve) and 67% of the fiscal year has passed. Chairman Reida asked Ms. Loutzenhiser, as the Board’s accountant member, if she had any questions or concerns about the financials. Ms. Loutzenhiser said she had reviewed them. She said all the financials appeared to be in order and the Board’s funds were on track for where we are in the year. Vice Chairman Hutchison moved to accept the February 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 a presentation by representatives of the Southwest Power Pool. Those representatives from SPP that were speaking and available to answer questions, were Lanny Nickell, Sam Loudenschlager, Lee Elliott, Ben Bright, and Richard Dillon. The SPP representatives provided the Board with a briefing of what happened during the polar vortex and power interruptions that occurred February 14 to 19. The SPP officials had a power point presentation that outlined the situation. A good deal of time was spent on the SPP’s order for its member utilities to shed load (reduce electricity consumption) on an emergency basis, and the rolling blackouts that occurred in Nebraska as a result. The SPP officials noted that although it was undesirable to all involved, what happened were controlled, short-term blackouts in limited areas, compared to an uncontrolled total blackout. There were a number of questions and considerable discussion about why the Nebraska utilities had to shed load when Nebraska’s SPP member utilities were generating more electricity than their customers needed. The SPP officials explained that SPP was following its policies that required all SPP member utilities to shed load in such an emergency on a pro-rata basis. Mr. Grennan expressed that although these issues need to be examined and addressed, he acknowledged that SPP needed to follow its protocols. In the middle of an emergency is not the time when an organization can change its operating procedures. He said that in his opinion SPP did a commendable job of managing the crisis and making sure that the entire system did not experience a cascading collapse. If the entire system had collapsed it could take several days to restart the system. During a polar vortex with subzero degree temperatures that situation would have been catastrophic and would likely have cost some people their lives. As upsetting and disruptive as the rolling blackouts were, they were minimal compared to the overall transmission grid, and SPP achieved its primary mission to ensure that the entire SPP grid system did not collapse.
Mr. Nickelll expressed that SPP was thankful for the cooperation and all the support that occurred among the utilities and SPP’s staff. The blackout event was the first time in SPP’s 80-year history that this has happened. Mr. Nickell discussed the reliability of the grid and how power was being imported into the SPP system from neighboring areas to meet the demand. The level 3 alert was issued because SPP was no longer able to maintain the necessary operating reserves and was no longer able to supply the demand. The load demand was very high due to the cold temperatures, and the generation availability was not meeting that demand. During the event SPP set a new record for its highest winter peak demand. Mr. Grennan made a comment on the lack of fuel supply. He said that there needs to be a hard look at what fuel sources were dependable during the emergency. He went through the numbers, noting that coal has throughout the year been the most dependable resource in terms of availability when needed. During this extreme cold the wind resources dropped to approximately 5% of their capacity. Meanwhile, coal provided just under 50% of the electricity in the SPP footprint during the emergency. Mr. Nickell confirmed that the coal provided a major part of the power supply during this polar vortex, followed by natural gas. There was much discussion about the different fuel sources, operating capacity and reserve margins. After further discussion Mr. Nickell stated that one of the most important issues that needs improvement is the communication among SPP and its member utilities. Chairman Reida pointed out that with regard to accreditation of the capacity for a generation facility, both coal and nuclear have a supply of their fuel source stored on site. This removes their susceptibility to supply disruptions that natural gas facilities faced such as pipeline congestion, lack of supply, or well-heads freezing. He also talked about the dual fuel facilities that can use alternate sources in times such as this when there is a demand on natural gas. There needs to be some acknowledgement of these abilities when accrediting generation facilities. Vice Chairman Hutchison supported Chairman Reida’s suggestion regarding accreditation of generation facilities. Those incentives may help make it financially viable for utilities to not shut down reliable facilities that are having a hard time competing due to the way the SPP market operates. Mr. Nickell stated that there will be considerable research into this event so that we can better understand what happened and how to prevent it in the future. The Board then went on to discuss with SPP about the definition of electric storage resources.
After Mr. Nickell finished the presentation on the polar vortex and power interruption issue, Richard Dillon gave a presentation regarding how SPP is addressing energy storage resources (ESRs). Mr. Dillon spoke about FERC orders 841 and 2222. He explained that the term “multi-use” is used for facilities that co-locate renewables with an ESR, while the term “hybrid” is used for an ESR that will or is expected to operate with characteristics of both a generation and transmission resource. SPP plans to issue its guidelines on how energy storage resources will be handled in August 2021, in compliance with FERC order 841. SPP requested an extension for filing its response with FERC until the first quarter of 2022. The Board members thanked SPP for their presentations.
The Board has a draft guidance document to address issues related to ESRs. The guidance document was sent to the Nebraska Power Association (NPA) and to two attorneys that represent private developers for comments. David Levy, an attorney representing NextEra, was present and addressed the Board. He recommended changing the PRB’s draft to coincide with how SPP and FERC define the terms “hybrid” and multi-use”. Mr. Levy explained that it is his understanding that developers that build an ESR along with a renewable generation facility will only use the ESR in conjunction with the renewable facility. He explained the financing background of the facilities and did not believe that the private developers would risk their financing if a facility would not operate within its guidelines and risk being shut down by the PRB. The Board also discussed the capacity and how production tax credits were applied to ESRs. Shelley Sahling-Zart, general counsel for LES and secretary for the NPA, requested that the Board not approve the draft document yet. The utilities would like to have more time to review the document and to provide comments. The utilities have been dealing with the polar vortex and power interruptions issue and had not had much time to review the draft guidance document on ESRs. The Board stated that after today’s discussion and the material from SPP it felt that the guidance document should be edited to include the topics discussed. The Board members wanted to hear NPA’s view on the guidance document. The Board said its plan will be to receive additional input on the draft guidance document to consider at its April meeting, then approve the document at the May or possibly June meeting. The Board wants to have the guidance document in place before the first application for approval of an ESR might be filed. Executive Director Texel noted that the PRB had been using the term “hybrid” to refer to facilities that operated with characteristics of both a generation and transmission facility, and he would correct that in the draft. He will also make several other changes in response to comments he had received. The Board tabled agenda item 7 until the April 12 meeting.
The next item discussed was the Custer Public Power District’s Petition for Charter Amendment 5. The petition was filed on December 4, 2020. The primary amendment would amend paragraph 7 of the Second section of the District’s charter to correct errors in the description of the District’s chartered territory. The amendment would also update the list of the District’s current directors in the Sixth section of the charter. Executive Director Texel explained that the Cherry County Clerk had reviewed the District’s chartered territory description in Cherry County and found errors such as incorrect precinct names. She then contacted him and Custer PPD and pointed out the errors. This amendment will correct the errors. The Power Review Board is required by state law to publish notice of a proposed charter amendment in at least two local newspapers with general circulation in the District’s territory for three consecutive weeks prior to acting on the charter amendment. The notice was published in the Custer County Chief newspaper on January 28, February 4, and 11, 2021. The notice was also published in the North Platte Telegraph on January 26, February 2, and 9, 2021. The notice explained that any interested party could file a protest or objection by close of business on March 4. The Board did not receive any protests or objections. Since the Board did not receive any protests or objections, the state law allows the Board to waive a hearing. The executive director recommended the Board waive the hearing on this petition and he recommended approval. Vice Chairman Hutchison noted that the petition was filed on December 4, but we are acting on it on March 8. He asked why it took so long for the Board to act on it. Executive Director Texel explained that he had noted a couple of issues that needed to be addressed in the proposed charter language prior to publication of the notice. The attorney who handled the petition for the district was unavailable for several weeks and it took some time to address the issues he had raised. Vice Chairman Hutchison moved to waive the hearing and approve Custer Public Power District’s Petition for Charter Amendment 5. 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 consider PRB-3939. This is an application filed by the Nebraska Public Power District (NPPD) for authority to construct .566 mile of 115 kilovolt transmission line in Lancaster County. The line is located approximately one mile north of the Village of Hallam. The project would relocate a portion of an existing line to accommodate construction work at the Monolith company facility site. The application was filed on February 24, 2021. The line is located in Norris Public Power District’s retail service area. The line interconnects to a Lincoln Electric System substation. Both utilities filed a Consent and Waiver form. The PRB consulted with the Nebraska Game and Parks Commission as required by Neb. Rev. Stat. section 37-807(3). Executive Director Texel said the Game and Parks Commission had performed its review with a very quick turn around to accommodate the NPPD’s desire to begin construction as soon as possible. In a letter dated February 25, 2021, the Commission determined the project is in the range of the threatened Northern Long-Eared Bat and the Western Prairie Fringed Orchid. The Commission stated that there are mature trees in the project area the bats could use for maternity roosting. NPPD confirmed to the Commission that it would avoid any tree removal during the bat maternity roosting period of June 1 through July 31. With NPPD’s assurance, the Commission determined that the project “May affect, but is not likely to adversely affect” any state-listed threatened or endangered species and did not object to the Board’s approval of the project. Executive Director Texel recommended the motion include a requirement that NPPD not remove any trees in the June 1 to July 31 time frame. Since NPPD wants to start on the project as soon as possible, that should not present a problem for NPPD. Mr. Grennan moved to approve PRB-3939 with a provision in the order that NPPD abide by the Commission’s guidelines regarding tree removal. 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 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 the activities occurring in SPP. The RSC will hold its monthly call at 2:30 p.m. today. Chairman Reida asked about the update report in John’s report. On the bottom of page 2 it talks about removing the RPS (renewable portfolio standard) table from a report. There was discussion about the RPS and which SPP states have an RPS standard. Vice Chairman Hutchison stated that he was not sure if this should be something used by SPP. It makes it appear if SPP is trying to help those states with a RPS to meet those objectives. That is not SPP’s role. Most Nebraska utilities have taken a position on RPS and set their own goals for renewables. Mr. Grennan was not sure why the RPS was being removed from the report. He will he will ask John Krajewski, the Board’s SPP consultant, about this.
Executive Director Texel next told the Board that potential bidders for the Board’s SPP consultant contract had submitted five questions to be answered. He had drafted suggested responses to provide to the State Purchasing Bureau to post on its website to respond to the questions. All the question deal with conflicts of interest. He asked the Board to review the draft answers and confirm if those responses were acceptable to the Board. The PRB’s responses need to be submitted to State Purchasing Bureau by this Wednesday so the Department of Administrative Services legal division could review them prior to posting. The next step in the request for proposal (RFP) process will be the virtual bid opening on March 29. The current contract will end on June 30, 2021. The RFP caps the bids at an amount that is approximately three percent above the current contract compensation amount. All Board members indicated the draft answers were acceptable. Executive Director Texel added that it has been a pleasure to work with the State Purchasing Bureau personnel and the DAS legal division on this RFP, which was not always the case on past RFPs.
The next item discussed was the draft letter to all Nebraska electric power suppliers with a retail service area reminding them of their obligation to engage in joint planning. This was discussed at the last two Board meetings. The draft letter took into account comments and concerns received during those meetings. Mr. Grennan moved to approve the letter written to all power suppliers concerning their joint planning obligation. 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.
Vice Chairman Hutchison asked about the statutory requirement of the long-range coordinated power supply plan and if the Board should have this report done. Due to the recent power outages, should the Board look at doing this report? Once SPP has more information available concerning the outages the Board should take a look at the information available and see if the Board needs to look at calling for the report. Mr. Grennan stated this is a good discussion for another meeting after the utilities and SPP have a more complete picture of all the data.
The next agenda item was to discuss the bills introduced in the Legislature this session. Executive Director Texel said not much action had happened on the bills the PRB staff are tracking. The Legislature was holding full-day hearings on bills, so nothing had really happened regarding moving bills forward yet. He said the Board members have a copy of the Board’s bill tracking document and unless they have any questions, he does not have much else to add.
Executive Director Texel then told the Board about a decision issued by the U.S. Eighth Circuit Court in LSP Transmission Holdings, Inc. v. Sieben, et al., case number 18-2559. At the June meeting he had briefed the Board on a decision issued by a Minnesota federal district court that upheld Minnesota’s state law providing for a right of first refusal for incumbent transmission utilities. LSP Transmission Holdings had challenged the law, claiming it violated the U.S. Constitution’s dormant commerce clause. The U.S. Supreme Court denied certiorari, which means it declined to accept the appeal and the 8th Circuit’s decision is now final. That is important because Nebraska is within the 8th Circuit’s jurisdiction. The decision will therefore be precedent regarding state laws allowing for a right of first refusal. Nebraska has a right of first refusal, and our statute is similar to Minnesota’s.
The Board’s next public meetings will be April 12, May 10, and June 14, 2021.
Mr. Grennan moved to adjourn the meeting. 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 meeting was adjourned at 12:45 p.m.
Timothy J. Texel
Executive Director and General Counsel
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