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Note: These minutes are in draft form pending approval by the Board at its next public meeting.

Minutes

Minutes of the 777th Meeting

August 26, 2016

The 777th meeting of the Nebraska Power Review Board (“the Board” or “PRB”) was held in the Liquor Control Commission Hearing Room, 5th floor, Nebraska State Office Building, 301 Centennial Mall, Lincoln, Nebraska. The roll was called and present were Chairman Lichter, Vice Chairman Reida, Mr. Grennan, Mr. Haase, and Mr. Morehouse. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on August 16, 2016. All background materials for the agenda items to be acted on had been provided to the Board members prior to the meeting via e-mail 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 north wall of the room for the public to review, and another copy of the Open Meetings Act was available in a three-ring binder on a table in the back of the room. A copy of all materials the Board would consider was available for public inspection on the table in the back of the room, as well as extra copies of the agenda.

The Board first considered the draft minutes from its June 24, 2016 meeting. The PRB staff had no changes to recommend to the draft minutes. Vice Chairman Reida moved to approve the minutes. Mr. Grennan seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next agenda item was acceptance of the expense reports for the month of June and July. The June expenses were $20,508.58 in personal services, $15,364.69 in operating expenses, and a credit of $859.65 in travel expenses. The travel expenses are a credit to the account because the Board had received reimbursement from the Southwest Power Pool (SPP) for the PRB Regional State Committee (RSC) representative’s travel expenses. The new process is for the PRB to pay the RSC representative’s travel expenses, and then the SPP reimburses the PRB for the expenses. The total June expenses were $35,013.62. The July expenses were $23,211.37 in personal services, $19,282.57 in operating expenses, and $977.77 in travel expenses. The total July expenses were $43,471.71. Mr. Haase moved to accept the expense reports for June and July. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next item on the agenda was the 2016 Load and Capability Report. Jason Fortik, Vice President for Power Supply for the Lincoln Electric System and Chair of the Nebraska Power Association’s (NPA) Joint Planning Subcommittee, gave a presentation on the report. The PRB many years ago designated the NPA as the representative organization to prepare this report pursuant to Neb. Rev. Stat. 70-1024. The report covers statewide utility load forecasts and resources available to satisfy the loads in Nebraska over a 20-year period. Over the 2016 through 2035 study period, the average peak demand growth rate for the State is projected to be .29% per year. This is down from las year’s report, which projected .75% growth for the twenty year period ending in 2034. Based on existing and committed generation resources a statewide deficit is not projected until 2035. By the end of 2016 the State is expected to have 1,143 megawatts capacity of commercially operating renewable generation resources. That figure is expected to grow to 1,564 megawatts of renewables by the end of 2018. The Board asked about the lower growth rate. Mr. Fortik responded that the evidence indicates demand side management programs and customer use of more efficient appliances and other devices are achieving their goal of reducing usage and demand growth. The Board thanked Mr. Fortik for the presentation and the discussion. Mr. Morehouse moved to accept the 2016 Annual Load and Capability Report. Mr. Grennan seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The Board considered SAA 7-16-A. This is a joint application to amend retail service area agreement 7. The Nebraska Public Power District and Southern Public Power District filed the application on July 29, 2016. NPPD does not have any facilities in the vicinity of the unincorporated community of Murphy. NPPD agreed to transfer its service area rights to Southern PPD. Southern PPD agreed to accept the territory in and around Murphy into its service area. The executive director told the Board this is a rather straightforward service area amendment and recommended approval. Chairman Lichter moved to approve SAA 7-16-A. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next item on the agenda was to consider SAA 400-16-A. The City of Neligh filed the application to amend its service area based on an annexation. On July 13, 2016, the City of Neligh filed the application to incorporate the annexed territory into its service area. The annexed territory is currently part of Elkhorn Rural Public Power District’s service area. There is at least one customer in the annexed territory. Elkhorn RPPD filed a protest objecting to the service area transfer. The application also requests that the PRB determine the compensation Neligh would need to pay Elkhorn RPPD for the loss of the customer and the facilities in the annexed territory. The matter was set for hearing on August 26, but Neligh requested a continuance, which was granted by the hearing officer. The hearing on the merits was continued to October 28, 2016. Battle Creek Farmers Cooperative filed a Petition for Intervention. The PRB will hold a hearing during a recess in its public meeting to accept oral argument on the issue of whether the proposed Intervenor has standing. The parties will submit briefs following arguments. All Board members agreed to table this item until later in the meeting.

The Board then considered approval of reimbursement of expenses for the executive director/general counsel and the Board’s designated attorney to attend a legal seminar. The Nebraska State Bar Association’s Government and Administrative Law Practice Section sponsored an all-day legal seminar in Lincoln on August 16. Due to the timing the PRB could not approve of the expenses prior to the seminar. Both Vice-chairman Reida and the executive director/general counsel attended the legal seminar. Topics covered included procedures for adopting, amending and appealing rules and regulations, the history of administrative law, how to conduct administrative hearings, and how to handle appeals of administrative decisions. The costs to attend the seminar were paid by Vice Chairman Reida and the executive director/general counsel, and they are requesting reimbursement. The costs for registration was $270 for the executive director/general counsel and $360 for Vice Chairman Reida. The cost is less for Executive Director Texel because he is a member of the State Bar Association, while Vice Chairman Reida is not. Vice Chairman Reida’s costs will also include mileage from and back to Omaha. Lunch was provided so there is no expense for the meal.

Chairman Lichter moved to approve reimbursement of the costs for Executive Director Texel and Vice-Chairman Reida to attend the legal seminar. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – abstain, Mr. Haase – yes, Mr. Grennan – yes, and Mr. Morehouse – yes. The motion carried 4–0 with one abstaining.

The meeting was then recessed to hear oral arguments on the Petition for Intervention in SAA 400-16-A. The meeting reconvened and all Board members present prior to the recess were again present. Oral arguments were heard during the recess. The matter was taken under advisement and the Board decided that briefs on the standing issue will be simultaneously submitted, and are due by closed of business (5 o’clock p.m.) on September 2. Chairman Lichter stated the agenda item on SAA 400-16-A that was tabled would need to be tabled until the October 28 public meeting. Mr. Morehouse asked if the ruling on standing would be issued prior to convening the hearing on the merits. He pointed out that the parties would need to know the results and the Intervenor would need to know if it will be able participate as a full party. Executive Director Texel stated that the parties will know prior to the hearing what the Board decides on the standing issue. The Board set up a date after the briefs are due for a conference call to deliberate on the standing issue.

The executive director then gave his report. The first item was the update on Southwest Power Pool (SPP) issues. The Board had copies of JK Energy Consulting’s monthly activities update. Mr. Grennan stated that he attended the Regional State Committee’s quarterly meeting in Texas on July 18. The next meeting will be in October. The meeting will include celebration activities for SPP’s 75th year anniversary. Mr. Grennan spoke about the peak load in the SPP region that was experienced July 21. The coal generation across SPP footprint covered 48% of the demand. This is interesting and should be considered when the U.S. Environmental Protection Agency’s Clean Power Plan is considered and how it is implemented if it is upheld by the courts. Chairman Lichter talked about the RCAR II report being done by the SPP’s RARTF (Regional Allocation Review Task Force) committee. There was discussion about how the cost and benefit analysis is performed. One or two members of the SPP Board of Directors believes that if a member utility receives benefits under the formula that is less than .8 in multiple study periods, action should be taken to remedy the shortfall. There are only one or two member utilities in this situation, so it should not be difficult to address the situation. Chairman Lichter said membership in the SPP should be a benefit to all members.

Executive Director Texel next apprised the Board about an informal legal opinion he had prepared in response to a request submitted by the Municipal Energy Agency of Nebraska (MEAN). The opinion dealt with the process required for MEAN to sell generation facilities and the equipment from a power plant, specifically a wind farm. The focus of the opinion was interpretation of language in two key statutes. It was the executive director and legal counsel’s opinion that MEAN cannot sell an operable generation facility, including a wind farm, to any private party. If the facility was decommissioned and no longer functional as a generation facility, then it was his opinion the remaining assets could be sold. The assets cannot be sold to a private, for-profit entity that is engaged in the business of generating or distributing electricity, though. Chris Dibbern, general counsel for MEAN, addressed the Board. She said that MEAN is looking at the possibility of decommissioning its Kimball wind farm, and possibly investigating if another entity would want to develop a wind farm at or near that location. MEAN is looking at all the different options for the use of this area. She said MEAN appreciated the Board’s general counsel providing MEAN with the opinion, since the statutes appear to be subject to some interpretation. Executive Director Texel pointed out that the informal opinion is applicable only to MEAN because it is the only entity formed under the Nebraska Interlocal Cooperative Financing Act. The Board asked to have a copy of the opinion sent to them electronically.

Chairman Lichter noted that the Board’s preparation of the executive director’s annual performance evaluation was on the agenda. In the past the Board has delegated the duty to prepare the performance evaluation to the chairman, who then prepares the evaluation and discusses it with the executive director. The other Board members agreed to delegate the duty to complete the executive director’s performance evaluation to Chairman Lichter.

The Board then discussed the biennial budget. The staff had prepared a draft budget, broken out by each separate account category. Board members received a copy of the draft biennial budget, and a copy was in their notebook. Executive Director Texel told the Board the budget has no significant changes from the previous budget. There are no large “issues” to request as the Board has in other years when it needed to complete the online interactive digital service area map project, or purchase new furniture for the office, or the hiring of the SPP consultant. The executive director asked the Board if he should go through each individual account category with them. The Board members said no, they just want an update on the overall budget and categories that would change significantly from previous years. Chairman Lichter noted that it appears there are only six account categories that will change. Executive Director Texel stated most of the categories with changes are related to salaries or other categories that will change due to requirements set out in the budget instructions, such as health care and the building maintenance fund, etc. Overall, the draft budget would increase the Board’s budget by .93% in the first year, and .92% in the second year of the biennium. He told the Board that in the past biennium the Board’s budget request included an increase of about one percent, also. The executive director spoke about the spending authority needed due to the new process to reimburse the Southwest Power Pool representative for travel expenses. As stated previously in the meeting, the numbers in the travel expenses will be different because although the PRB is reimbursed for the expenses and in the end the net effect on the Board’s account is zero, the agency still needs the authority to spend the money to get reimbursed. The amount spent on travel will necessarily be higher than previous because the Board is initially paying for the travel costs. The Board’s travel appropriation does not “reset” just because the SPP reimburses the PRB for the travel costs. Vice Chairman Reida asked what the communications expense category included. Executive Director Texel and Ms. Hallgren, the Board’s business manager, explained that the communications expenses account was merged into the data processing account, so all those expenses under both accounts is now handled in one account. The data processing account is the new account, and covers communications service expenses, use of the State’s information technology (IT) helpdesk, internet service, phone service, and if new computers are purchased, setting up the system and accounts on the new computers. The Board told the staff that the budget numbers look good to them. The budget submission is due September 15. The Board asked about the assessment collections. As of August 26, there were five power suppliers that still needed to submit their assessment payment. The forty-five day deadline for payment is September 1.

The Board’s next meetings are scheduled for September 23, October 28 and November 18, 2016. The November meeting is being scheduled to coincide with a tour of the Doniphan Control Center for the Board members. The location of the public meeting will be at the Grand Island City Council Chambers. All other meetings will be held in the Liquor Control Commission Hearing room, 5th floor, State Office Building, 301 Centennial Mall South, Lincoln, Nebraska, unless otherwise specified on the agenda.

Chairman Lichter moved to adjourn the meeting. Mr. Grennan seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5– 0. The meeting was adjourned at 11:55 a.m.

________________________________

Timothy J. Texel

Executive Director and General Counsel

Nebraska Power Review Board
301 Centennial Mall South
P.O. Box 94713
Lincoln, NE 68509-4713
PH: (402) 471-2301
Fax: (402) 471-3715

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