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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 775th Meeting

May 27, 2016

The 775th 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, and Mr. Haase. Mr. Morehouse had informed the Board previously that he would not be able to attend today’s meeting. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on May 17, 2016. All background materials for the agenda items to be acted on had been provided to the 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 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 April 22, 2016 meeting. The PRB staff had no changes to recommend to the draft minutes. Mr. Grennan moved to approve the minutes. 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 – absent. The motion carried 4 – 0 with one absent.

The next agenda item was acceptance of the expense reports for the month of April. The expenses for April were $20,305.63 in personal services, $15,869.09 in operating expenses, and $106.38 in travel expenses. The total expenses were $38,750.70 Mr. Haase moved to accept the expense report for April. 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 – absent. The motion carried 4 – 0 with one absent.

The next item on the agenda was to consider the Polk County Rural Public Power District’s (Polk County RPPD) Petition for Charter Amendment 9. Polk County RPPD filed its petition on April 11, 2016. The proposed amendment would amend section 6 of the District’s charter in order to include the Village of Polk in Subdivision II as part of the District’s chartered territory. It would also update the list of the board of directors. As required by law, the Board published notice in two local newspapers with general circulation in the District’s territory for three consecutive weeks. Notice was published in the Polk County News and the Central City Republican-Nonpareil. The dates for the publication of notice were April 21, 28, and May 5 in both newspapers. No protests or objections were filed. Jim Papik, legal counsel for Polk County RPPD, was present and explained the reasoning for including the Village of Polk. He told the Board that the Village was previously a wholesale customer of Nebraska Public Power District. In February 2016, the Village became a wholesale customer of Polk County RPPD. There was also discussion how the population was divided among the directors. The Board noted the population is divided well among the directors. The executive director recommended waiver of the hearing and approval of the Petition. Vice Chairman Reida moved to waive the hearing and approve Polk County RPPD’s Petition for Charter Amendment 9. 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 – absent. The motion carried 4 – 0 with one absent.

The next item on the agenda was consideration of the Board’s assessment figure for fiscal year 2016-2017. The PRB is entirely cash funded, which means its operating expenses are paid by assessments levied against Nebraska’s electric power suppliers. The PRB does not receive any general tax revenue. Each power supplier pays a pro-rata share of the Board’s operating budget based on each utility’s gross income from electricity and related sales during the preceding calendar year. A certificate of gross revenue was sent to each supplier to fill out. Once all the certificates are received, the Board’s business manager calculates the cumulative total of all the power suppliers’ gross revenue. The Board must then decide how much of the PRB’s unused funds from the current fiscal year will be retained as a reserve fund. After removing that reserve amount, the Board credits the remaining balance against what the utilities owe, and then the Board collects the remainder of the assessment amount from the power suppliers to fund the Board’s budget for the new fiscal year. The Governor must approve the Board’s proposed assessment amount before the PRB can collect the assessments. The reserve funds are used for the agency’s operations in an unanticipated emergency. The Board’s biennial budget was approved as part of legislative bill 657e (2015). The State’s fiscal year runs from July 1 to June 30.

Although normally it does not take very long after the start of the fiscal year for the Governor to approve the assessment figure the Board will use, there have been rare instances where it has taken several months to negotiate an assessment figure that the Governor finds acceptable. For example, in 2010 the Board operated on its reserve funds for a little over three months while the PRB and the Governor negotiated an assessment figure that was acceptable. The Board’s business manager, Rebecca Hallgren, prepared a memorandum explaining the PRB’s financial situation and providing information on the reserves necessary to cover the PRB’s expenses for two, three and four months. In her memo, she explained that the estimated remaining unused balance in the PRB’s account at the end of the current fiscal year will be approximately $228,000. In the past, it had been recommended that the PRB retain about $70,000 in reserves. The situation is quite different now that the Board’s budget has increased to pay for the Southwest Power Pool consultant. That contract increased the PRB’s monthly expenses by $13,500 per month. The Board needs approximately $37,000 per month on which to operate. The four-month reserve scenario would require retaining $152,000 in reserves, allowing the remaining $76,001 to be used to offset the assessments. Under that option, the Board would collect $545,344.84 from the power suppliers, and the assessment figure would be 13.237236 cents per $1,000 gross revenue. The three-month reserve scenario would retain $114,000 in reserve and the assessment figure would be 12.314856 cents per $1,000 gross revenue. In the past the Governor’s office expressed concern about the fluctuation of the PRB’s assessment figure that occurred as a result of the consultant’s expenses. The figures show that the Board has leveled out the assessment figure fluctuations, as it predicted would happen. In her memo, Ms. Hallgren recommended that the Board retain the four-month reserve. Executive Director Texel agreed with her recommendation.

Vice Chairman Reida asked if it was possible the reserve funds could be taken for use in the State’s general fund. Executive Director Texel said that it is possible. If the Legislature decided it wanted to take the remaining balance from the PRB or from all cash-funded agencies, it could do that. The Legislature has only taken part of the cash balance from cash funded agencies on two previous occasions, both in the recent past. Several years ago the Legislature had all cash funded agencies transfer ten percent of their funds into the general fund. Some of the agencies, such as the agricultural commodities boards like the corn board, as well as other cash funded agencies that receive funds from specific segments of the population or a specific industry, argued that taking part of the cash balance is a double tax on the regulated people or entities that provide the funding for the cash funded agencies. The cash funded agencies acknowledged the difficult budget situation due to the recession, but indicated they would object if it became a normal occurrence to take the remaining cash balances and move it to the general fund. Mr. Haase said he was comfortable with a four-month reserve partly based on the fact that the electric utilities will receive the funds back as a credit on the next year’s assessment if they are unused. Mr. Haase moved to approve the Board keeping four-months expenditures in reserve, which is $152,000, and adopt an assessment figure of 13.237236 cents per $1,000 of gross income. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Grennan – yes, and Mr. Morehouse – absent. The motion carried 4–0 with one absent.

The next item on the agenda was to consider a proposed amendment to Board Policy 2. Board Policy 2 sets out the PRB’s employee and Board member recognition policy. The State of Nebraska allows for an “employee of the year” award. The PRB needs to have a policy in order to award a staff member the employee of the year award. This amendment would add a provision setting out details for the award. The award is limited to plaques, pins or a cash award of no more than $500. The policy clarifies that the executive director is not eligible and that the award is not required to be given each year. Chairman Lichter moved to approve the amendment to Board Policy 2. Mr. Grennan seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice

Chairman Reida – yes, Mr. Haase – yes, Mr. Grennan – yes, and Mr. Morehouse – absent. The motion carried 4–0 with one absent.

The next item on the agenda was to consider whether the Board will reimburse the executive director and general counsel or any board members for the costs to attend the 2016 Nebraska Wind and Solar Conference. The conference will be held in Lincoln. The executive director stated that he believes he has attended all or all but one of the previous conferences. The cost for the executive director would consist only of the registration, since the conference is in Lincoln. Chairman Lichter moved to approve authorizing reimbursement of the travel and registration costs for the executive director and any Board members interested to attend the 2016 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 – absent. The motion carried 4 – 0 with one absent.

The next item on the agenda was approval of expenses for the legal seminar given by the Nebraska State Bar Association’s (NSBA) Government and Administrative Law Practice Section. The legal seminar will be held in Lincoln at the UNL College of Law on June 10. The seminar will be a half day. The topics to be covered are Government contract law and ethics, who is a government lawyer’s client, confidentiality, and responsibility when responding to the public. The cost is $240, or $180 for members of the NSBA. NSBA members can also take two 2 hours of ethics training without cost, which brings the executive director’s cost to $90. The executive director reminded the board that Vice Chairman Reida, who is the Board’s attorney member, is also able to attend the seminar. Mr. Grennan moved to reimburse both the executive director and the Board’s attorney member for the costs to attend the legal seminar. 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 – absent. The motion carried 4–0 with one absent.

The next item on the agenda was the executive director’s 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 SPP approved the reserve margin in the SPP market from 13.6% to 12%. Chairman Lichter spoke about the RCARII report. The return percentage is due in July and the ARCARII committee has worked out the .8 return level. LES is now at .8 and OPPD is approximately at .84.

The executive director told the Board that a formal complaint has been filed by Twin Valleys Public Power District against Southern Public Power District. Notice of Filing and Hearing Date was sent on May 6. Southern PPD asked for a continuance due to conflicts in meeting dates. The continuance would be to August 26. The executive director reminded the Board that ex parte rules apply since the hearing notice was sent.

The Board discussed the Omaha Public Power District’s announcement that management had recommended to the OPPD board to shut down Fort Calhoun Nuclear Station. The executive director stated that the statutes creating the Board’s jurisdiction do not give the PRB any authority with regard to retiring a generation facility.

The executive director told the Board he has been in communication with NPPD to set up a tour at the Doniphan control center. The Board would plan to hold a public meeting in the nearby area, likely Grand Island, and then take the tour afterward.

The executive director announced that Marv Schultes, General Manager for Hastings Utilities, would be retiring in July. Executive Director Texel stated that it had been a pleasure to work with Mr. Schultes over the years. He has always been respectful, honest and easy to work with, even when he disagreed with the opinions and rulings issued by the executive director. The Board and the executive director wished him all the best in his retirement.

The Board’s next meetings are scheduled for June 24, July 22, and August 26, 2016. The 2016 meetings have been scheduled for the fourth Friday of each month, unless a holiday falls on that day. The 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. 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 – absent. The motion carried 4– 0 with one absent. The meeting was adjourned at 11:05 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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