Note: These minutes are in draft form pending approval by the Board at its next public meeting.
Minutes of the 763rd Meeting
April 17, 2015
The 763rd 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 April 7, 2015. All background materials for the agenda items to be acted on had been provided to all Board members by 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 that 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 March 27, 2015, meeting. Executive Director Texel had one recommended change. On page 6, the very first sentence reads, “The executive director conveyed to the group that the PRB opposes removal of the ROFR and sees is as unrelated to the CREF statute.” There was some uncertainty among those reading the minutes about whether that sentence meant the PRB opposed removing the language in LB 407 repealing the State’s ROFR (right of first refusal), or if the PRB opposes repeal of the existing ROFR statute. He recommended the sentence be replaced with the following: “The executive director conveyed to the group that the PRB opposes repeal of Nebraska’s existing ROFR statute and sees ROFR as unrelated to the CREF statue.” Mr. Morehouse moved to approve the minutes as amended. 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 – abstain. The motion carried 4 – 0 with one abstain.
The next agenda item was acceptance of the expense report for the month of March. The March expenses were $19,644.66 in personal services, $17,655.34 in operating expenses, and $1,321.23 in travel expenses. The total expenses were $38,621.23. Mr. Haase moved to accept the expense reports. Vice Chairman Reida 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 whether the Board will reimburse the executive director and general counsel for the costs to attend the 2015 Nebraska Wind and Solar Conference. The conference will be held in Omaha. The executive director stated that he believes he has attended all but one of the previous conferences. The costs would consist of the registration and mileage. The executive director had spoken with one of the organizers and they are discussing the Executive Director Texel giving two presentations conference. One presentation would outline the findings in Nebraska Renewable Energy Export Study prepared by The Brattle Group pursuant to LB 1115 last year. The other presentation would provide a description of what the PRB does, how it functions, and its jurisdictional limitations. Mr. Morehouse moved to approve authorizing reimbursement of the travel and registration costs for the executive director and any Board members interested to attend the 2015 Wind and Solar Conference. Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Grennan – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.
The next item on the agenda was the executive director’s report. The Board members had a copy of the March activities update from JK Energy Consulting regarding its Southwest Power Pool (SPP) activities. Chairman Lichter stated that the SPP will be holding one of its upcoming quarterly meetings on July 27-28 in Kansas City. The location of the meeting makes it easier for any member who wants to attend to do so. Mr. Grennan stated that he would like to attend this meeting. Executive Director Texel also stated that he usually attends the quarterly meetings when they are held in Kansas City. Chairman Lichter stated that SPP is also planning an RSC (Regional State Committee) Retreat just prior to the quarterly meeting. It is not officially set up yet, so we will need to check the SPP’s website for the details as July gets closer. He also recommended that those interested in attending the quarterly meeting register through the SPP’s website, by going to the activities calendar and clicking on the July 27 date, or by going to the RSC tab.
The executive director then updated the Board on current legislation. He only discussed the bills that were still active or were enacted, and not those that had been indefinitely postponed (i.e., killed).
LB 407 was introduced by Senator Ken Haar. This bill would amend the certified renewable export facility (CREF) statute. The bill was referred to the Natural Resources Committee. It would strike several requirements from the certified renewable export facility approval process. Senator Haar designated this bill as his priority bill. The bill removes the requirement that an applicant offer up to 10% of the facility’s output to Nebraska’s public power utilities, removes the requirement that the applicant have a power purchase agreement with a customer outside Nebraska for 90% of the facility’s output, removes the definition of “stranded asset” in section 70-1001.01, removes the requirement that the applicant have a memorandum of understanding or other written indicia that they are negotiating with a customer for a power purchase agreement, and repeals the right of first refusal for transmission facilities in section 70-1028. Senator Haar submitted AM 1183. The amendment would replace the original bill. The executive director had sent a copy of the bill and Senator Haar’s letter to each Board member prior to the meeting. AM 1183 removes the provision repealing Nebraska’s right of first refusal in section 70-1028. It removes the requirement in section 70-1001.01 that the applicant have a power purchase agreement (PPA) for 90% of the output of the facility with a customer located outside Nebraska (this was in the original version of the bill, also). The amendment leaves in the definition of the term “stranded asset” in section 70-1001.01 that had been removed in the original version of LB 407. As was in the original bill, it removes the requirement that the applicant have a memorandum of understanding or similar written evidence of intent to negotiate a PPA from the conditional approval criteria, and removes the requirement that the applicant offer Nebraska’s public power utilities up to 10% of the facility’s output. The amendment leaves in the criteria that there is no demonstration that the proposed facility will result in a substantial risk of creating stranded assets or cause rate increases (the original bill had removed this language). Finally, it clarifies that a Nebraska utility must raise the issue that the proposed facility may cause stranded assets. Senator Haar sent a letter to the Natural Resources Committee members asking them to adopt AM 1183 and place the bill on General File.
The executive director said that an important provision is that the amendment removes the requirement that the applicant have a PPA with a customer located outside Nebraska. This means that the bill would not require the output from a CREF be exported to customers outside Nebraska any longer. The bill does set up a process for developers with a relatively easy approval criteria. As amended, the bill would make, or maintain, the PRB as the “gatekeeper” to ensure that Nebraska’s existing electric utility assets are not stranded, and that the proposed facility will not have a materially detrimental effect on retail electric rates. The executive director said he knew the Board had expressed some concern about removing the PPA requirement, but in AM 1183 the PRB would have the ability and duty to review the facility to protect Nebraska’s ratepayers. The Board members briefly discussed the amendment, but determined that since the PRB would retain oversight to protect Nebraska’s electric ratepayers, no further action was needed on the bill.
LB 412 was introduced by Senator Mello. This bill amends the Community Based Energy Development (C-BED) statutes. The bill was referred to the Natural Resources Committee. The bill would limit the requirement that the local county board vote to support a C-BED facility to only those counties that have adopted zoning regulations requiring that a C-BED be approved by the planning commission or county board. It would also require that developers provide notice of the incentives for local ownership in a C-BED project to each person that owns property where a turbine will be located, as well as to the elected governing body of each municipality or other political subdivision in whose jurisdiction a turbine will be located. This bill is on General File, but has not been designated as a priority bill.
LB 423 was introduced by Senator Nordquist. This bill changes the renewable energy tax credit for C-BED facilities. C-BED developers would be able to choose between an increased renewable production tax credit or a one-time tax credit of up to thirty percent of the total cost of the facility. This bill was referred to the Revenue Committee. Senator Nordquist designated LB 423 as his priority bill.
LB 424 was introduced by Senator Davis. This bill amends the provisions relating to the nameplate capacity tax. It expands the nameplate capacity tax to all renewables instead of only wind facilities. This bill is on General File, but is not prioritized.
LB 469 was introduced by Senator Smith. This bill requires that the Nebraska Department of Environmental Quality (NDEQ) study and develop a state plan for regulating carbon dioxide emissions. The bill was amended to have the Nebraska Energy Office conduct the report on the EPA’s clean carbon rules under section 111(d) of the Clean Air Act instead of the NDEQ. This bill is on General File and is Senator Lindstrom’s priority bill. Also, LB 583 was amended into LB 469. LB 583 is Senator Schilz’s bill to create a State energy plan. The bill has appeared on the legislative agenda this week. The executive director had heard that the Governor might have some concerns about the size of the fiscal note.
LB 475 was introduced by Senator Davis. This bill amends the PRB’s jurisdiction under 70-1012. As written, the bill limits the PRB’s approval jurisdiction to generation facilities that result in an increase in capacity or have a total cost of $150 million. As discussed at previous PRB meetings, Senator Davis told the executive director that the inclusion of the word “only” that created the limitation of the PRB’s jurisdiction was unintentional and would be removed in an amendment. The bill is not prioritized, so it is doubtful the bill would go anywhere this year.
Executive Director Texel spoke about giving a briefing to the Natural Resources Committee members about the PRB. There are five new members on the Committee that are not familiar with the Board, and he thought it might be helpful to explain what the Board does, its jurisdiction, etc. He had contacted the Committee’s legal counsel to see if Senator Schilz, who chairs the Committee, has a preference how this was done. The executive director could offer to meet with each committee member, or he could do an informal presentation. He has not heard back yet from the Committee counsel.
The Board also discussed issuing the new request for proposal for the Southwest Power Pool consultant contract. The current contract expires at the end of this year. The executive director told the Board that the business manager (Rebecca Hallgren) had asked if the new contract period could be made to coincide with the State’s fiscal year instead of on a calendar year basis. This would make it easier to follow what has been paid in the PRB’s fiscal year, and make the budget process easier. This would require making the initial term of the contract a six-month term, and thereafter an annual term from July 1 to June 30 of the next year. Right now the contract term begins January 1 and ends December 31 of each year. Mr. Morehouse agreed that an initial six-month contract followed by annual extensions following the State’s fiscal year not only made sense, but is a definite improvement. The other issue is whether to put an exclusion in the contract to address potential conflicts of interest with utilities. The contract could limit the contractor’s ability to work on other projects for Nebraska utilities. This might deal with potential conflict issues well, but it would likely increase the compensation level offered in the RFP. Chairman Lichter said that the amount of work required has increased a great deal from the original RFP, and there may be a need in the future to have the SPP consultant be a staff member instead of a contract consultant. Currently the Chairman spends a quarter to half of his work time on SPP activities. The current and immediate past Chairman have had the ability to dedicate considerable time to participate in SPP activities. This may not always be the case in the future. The executive director also asked how many renewal periods the Board would like to build into the new RFP. He also needed some direction when drafting the new scope of work. The Board members unanimously agreed to form a committee to assist the executive director in drafting the RFP. The committee members would be Chairman Lichter and either Vice Chairman Reida or Mr. Grennan. Vice Chairman Reida and Mr. Grennan will determine whose schedule is more conducive to committee membership and let the executive director know.
The Board recessed the meeting at 10:52 a.m. The Board reconvened its public meeting at 11:03 a.m. All Board members were again present. The next item on the agenda was a presentation by Scott Benson, Lincoln Electric System’s Manager for Resource and Transmission Planning. The presentation was developed for State senators to explain the process LES uses when evaluating RFP bids for wind generation resources. Executive Director Texel noted that the PRB currently has an application before it for a solar facility that was a result of an RFP. The solar facility is not part of this presentation, and no questions or discussion will be allowed concerning solar facilities or the Holdrege Solar Center. Mr. Benson gave an informative presentation on the evaluation of hypothetical bids for wind farms. The Board members expressed their appreciation for the insight into the wind farm evaluation process. The Board thanked Mr. Benson for his presentation.
The Board scheduled its 2015 meeting dates for the fourth Friday of each month unless otherwise specified. The meetings will be held in the Liquor Control Commission Hearing room, 5th floor, State Office Building, 301 Centennial Mall South, Lincoln, Nebraska. The next three meetings are scheduled for May 22, June 19 and July 24, 2015.
Mr. Morehouse 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 12:25 p.m.
Timothy J. Texel
Executive Director and General Counsel