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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 756th Meeting

August 8, 2014

The 756th 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. Haase, and Mr. Morehouse. The executive director reminded the Board that Mr. Grennan had informed the Board at last month’s meeting that he would not be in attendance due to a business commitment. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on July 29, 2014. All background materials for the agenda items to be acted on had been provided to all Board members on the DocLanding electronic distribution system, 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 July 11, 2014, meeting. The staff did not have any recommended changes. Mr. Haase moved to approve the minutes. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – abstain, Vice Chairman Reida – yes, Mr. Grennan – absent , Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 3 – 0 with one absent and one abstain.

The next agenda item was acceptance of the expense report for the month of July. The expenses were $19,753.63 in personal services, $18,387.42 in operating expenses, and $1,547.99 in travel expenses. The total expenses were $39,689.04. Executive Director Texel explained that the budget status included encumbered amounts, making the numbers larger than the annual budgeted amount. This is done so that expenses incurred in the previous fiscal year that ended June 30 can be attributed to the previous fiscal year’s budget, even though they will actually be paid in July or August. The accounts that have large amounts of encumbered funds are the Engineer and Architectural Services and Consultant Services categories. These accounts are for the GIS Workshop contract for digital service area mapping and the JK Energy Consulting contract for work with the Southwest Power Pool. The $200,000 for the Nebraska Renewable Energy Export Study is also shown in these accounts. Mr. Morehouse moved to accept the expense report. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was a presentation on the 2014 Annual Load and Capability Report. This report is required by Neb. Rev. Stat. 70-1025(3). The representative organization the PRB previously designated to prepare the report pursuant to Neb. Rev. Stat. 70-1024 was the Nebraska Power Association (NPA). The NPA delegates preparation of the report to its Joint Planning Subcommittee. Jason Fortik, LES Vice President for Power Supply, is chair of the NPA’s Joint Planning Subcommittee and gave the presentation to the Board. The report covers statewide utility load forecasts, resources and projections over a twenty-year period. There was discussion during the presentation about the estimated load growth being down from last year by 1.3%, and continued operation of the state’s coal and natural gas facilities. The NPA Board of Directors already approved the report and authorized presenting it to the PRB. The Board thanked Mr. Fortik for giving the presentation. Mr. Morehouse moved to accept the 2014 Load and Capability Report. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was application PRB-3771. This is an application submitted by the Loup River Public Power District requesting authority to construct 3.4 miles of 34.5 kV distribution line in Platte County. The application was filed on July 22, 2014. The proposed construction is in the service area of Cornhusker PPD. A signed Consent and Waiver form was filed by Cornhusker PPD consenting to the construction and waiving a hearing. The total cost of the project is estimated to be $532,122. The Board did not receive any protest or objections. The project would rebuild an existing line with upgraded conductor and add a shield wire for lightning protection. The line connects Loup River PPD’s existing substations at Leigh and Creston. As required by Neb. Rev. Stat. section 37-807(3), the Board consulted with the Nebraska Game and Parks Commission to ensure that the project would not harm any threatened or endangered species or critical habitat. In a letter dated August 6, 2014, the Game and Parks Commission determined the project would have “no effect” on any threatened or endangered species or their habitat and it does not object to approval of the project. Mr. Haase moved to approve PRB-3771. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was a joint application submitted by the Nebraska Public Power District, Dawson Public Power District and the City of Kearney. The application was filed on July 17, 2014. The application was designated as SAA 310-14-B and SAA 57-14-B (consolidated). Both service area agreement numbers are between NPPD and Dawson PPD. SAA 57 was between Dawson PPD and Platte Valley PPD, but Platte Valley PPD merged with NPPD in the early 1970’s. It was evidently determined that it would be easier to leave both service area agreements intact and not merge them. NPPD serves Kearney at retail and holds the service area rights to the City. Kearney is not an actual party to the amendment, but it is the PRB’s practice to allow a city in this position to participate in the joint application to amend a service area that directly affects the city. This amendment is not based on an annexation, but in anticipation of future annexations. Exhibit A shows the area to be transferred, which is on the northwest edge of the City. Exhibit B is a metes and bounds description of the territory to be transferred. Mr. Morehouse moved to approve applications SAA 310-14-B and SAA 57-14-B (consolidated). Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was to consider renewal of contract 47077 04 with JK Energy Consulting. This is the PRB’s Southwest Power Pool’s consultant position to represent Nebraska on the SPP’s Cost Allocation Working Group and assist the PRB’s Regional State Committee member. This is a renewal of the current contract period that ends at the end of 2014. The original contract allowed for five renewals. This will be the last renewal allowed. Next year the Board will need to issue a new request for proposals for this contract. The contract is actually handled through the State Administrative Services’ Purchasing Bureau. The Board has to consider whether it wants to renew the contract for another year or issue a new RFP for the consultant. Once DAS receives the Board’s approval for renewal they will contact JK Energy Consulting and renew the contract. Mr. Krajewski was in attendance at the meeting and offered to answer any questions. He also submitted letters to the Board expressing his desire to renew the contract. During the meeting the Board talked about the extra duties the consultant has been asked to work on, and the best process for the Board to approve of the extra work and the needed compensation. An addendum was added to the original contract last year to allow the Board to pay JK Energy Consulting for additional duties, as approved by the Board. Executive Director Texel thought the Board should clarify how it will give approval when it asks JK Energy Consulting to engage in additional duties beyond the original scope of work. The SPP sometimes sets up meetings on a time frame that does not allow the PRB to meet and vote on the additional expenses before the meeting is held. The executive director explained that Chairman Lichter and he had discussed the issue and recommended that the Board delegate approval authority to the Board Chairman and executive director in instances where time does not allow for the entire Board to act at its monthly public meetings. This would allow Mr. Krajewski to receive confirmation that he would be compensated before attending an SPP meeting on behalf of the PRB. Chairman Lichter told the Board about the additional task forces the SPP was forming to examine issues such as the Environmental Protection Agency’s proposed rule 111(d) on emissions, and the meetings for the Rate Allocation Review Task Force (RARTF) coming up next week in Dallas, Texas. The Board decided to consider the issue of delegating approval authority for additional work at the next meeting and asked the executive director to put the matter on the agenda for its September meeting. Chairman Lichter and Executive Director Texel also told the Board that at its July quarterly meeting, the RSC decided to begin holding monthly meetings via conference calls in the months in between the in-person quarterly meetings. These meetings were not anticipated or addressed in the original RFP scope of work for the SPP consultant contract. In the letters he submitted, Mr. Krajewski asked for an additional $6,000 annually to cover the additional eight RSC conference call meetings and the preparation time involved. The letters provided an explanation of how Mr. Krajewski calculated the estimated time involved for the monthly conference call meetings. Vice Chairman Reida moved to renew the SPP consultant contract with JK Energy Consulting, at a compensation level of $168,000 for the one-year term, due to the RSC’s additional monthly conference call meetings, and authorize the executive director and Chairman to take whatever actions are necessary to enter into the renewed the contract. Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item to consider was the renewal of contract PRB-2012-B-SAA with GIS Workshop. This contract is for GIS Workshop to maintain the Board’s digital version of the service area agreements, including updating the digital maps following each service area agreement amendment. This covers the digital maps on the Board’s computers. This system contains all the scanned maps that are viewed on the paralegal’s and executive director’s computer. The compensation for this contract is $3,500 annually. The contract provides that the PRB pays $3,000 up front and then $500 at the completion of the contract period (one year). The contract term begins on November 1 and ends on October 31. The Board also has a contract with GIS Workshop to host the Board’s online interactive service area map viewer. The compensation for this contract is $5,000 after the first year. The Board’s contract with GIS Workshop to create the web-based map included one year of hosting, which expires December 31, 2014. Marcus Tooze, President of GIS Workshop, asked if the two contracts could be consolidated. The new consolidated contract that the Board is considering for renewal is for a fourteen-month period beginning on November 1, 2014, and would cover both the map updating services and the online map hosting service, for a combined compensation amount of $8,500. The payment for the new combined contract would be $5,000 upon signing the agreement and $3,500 at the end of the contract period, which is December 31, 2015. The contract could then be renewed for additional one-year periods coinciding with the calendar year. Mr. Morehouse moved to approve renewing the annual contract PRB-2012-B-SAA with GIS Workshop for maintenance and updating services for the Board’s digital service area map system, and also renew the contract for hosting the Board’s online service area maps, and merging the two contracts into one new contract for 14 months at a combined compensation level of $8,500, and to authorize the executive director and chairman to take whatever actions are necessary to enter into the new contract. Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was to consider approval of the costs for the Board’s executive director to attend the 2014 Wind and Solar Power Conference. This will be held at the Conference Center in La Vista, Nebraska, on October 29 and 30. The cost should be limited to the registration expense of $100 and mileage. The executive director stated that he has been to all but one of the six previous conferences. He also suggested that if any of the Board members wanted to attend it could be included in the motion for approval. Mr. Morehouse moved to approve the travel and registration cost for the executive director and any Board members to attend the 2014 Wind and Solar Power Conference. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Grennan – absent, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent.

The next item on the agenda was the executive director’s report. The Board members had a copy of the July update from JK Energy Consulting regarding its SPP activities. Chairman Lichter stated that the Environmental Protection Agency’s proposed air emissions rule is a big topic and comments to the EPA are due in October.

Executive Director Texel then updated the Board on the Request for Proposals (“RFP”) for the study required by Legislative Bill 1115 (2014). The RFP was issued on May 29. The maximum compensation amount for the bidders was set at $185,000. The bill appropriated $200,000 for the RFP, but $15,000 was held back to pay PRB expenses that would be incurred during the hiring process such as publishing notices, paying the Board’s per diems and travel expenses, and paying the cost for multi-party conference calls. The bid opening date was July 1. There was four bids submitted and the firms that received the top three scores were interviewed. The RFP had stated that interviews would be worth fifty points, and scores for the three firms that were interviewed were all within fifty points of each other. Following the interviews The Brattle Group, headquartered in Cambridge, Massachusetts received the highest score from the evaluation committee and a letter of intent to enter into a contract was issued. The start date was anticipated to be August 6. The Brattle Group had proposed about a dozen changes to the language in the Terms and Conditions section of the RFP, and the firm’s legal counsel and the PRB’s executive director and general counsel are engaged in negotiating the final version of the language.

The executive director then informed the Board about a recent Iowa Supreme Court case. The case is SA Enterprises v. Iowa Utilities Board, issued July 11, 2014. The docket number is 13-0642. A solar energy company wanted to install solar panels on a third-party company’s commercial property. The solar company would own and operate the solar equipment. The solar company would then sell the electricity generated by the solar equipment to the company on whose property the equipment was located. The electricity would be metered and the sales based on actual production. The Iowa Utilities Board determined that the sale of electricity under such a system made the solar company a public utility subject to the IUB’s jurisdiction, and was prohibited due to the service area protections in Iowa. The Court reversed, finding that the sales were not significant enough to make the solar company a public utility, and thus the company is not prohibited from serving customers inside an existing utility’s service area, and is likewise not subject to IUB jurisdiction. The executive director and general counsel told the Board that the PRB had determined similar sales in Nebraska do subject the entity producing the electricity for sale to PRB jurisdiction and violate service area protection. The language in the Iowa and Nebraska statutes are different, though. Executive Director Texel said he believes the language in Nebraska’s statute is more narrowly tailored and less subject to interpretation than the language in the Iowa statute. He wanted the Board to be aware of the case, as it seems if a company in Nebraska would want to engage in the same type of activity as the solar company in Iowa, the PRB’s interpretation may be challenged. He had already received a call from a large national corporation asking whether Nebraska allows sales structured exactly like the one in the Iowa Supreme Court case. Although the Iowa case was not mentioned, it would be quite a coincidence that the inquiry came less than one month after the Iowa Supreme Court’s decision was issued.

Mr. Grennan had asked the executive director to see if the Board would want to have a presentation on EPA’s proposed rule under section 111(d) of the Clean Air Act. Mr. Grennan thought it would be a good idea to see if the Nebraska Power Association would be willing to give the Board a briefing on this issue next month. Mr. Morehouse noted that he will not be present at the September meeting, and would like to hear the presentation. He asked if it might be possible to do the briefing at the October meeting. The Board asked the executive director to contact the NPA to see if a briefing could be set up in conjunction with the Board’s October 10 meeting.

The Board scheduled its 2014 meeting dates for the second Friday of each month. The meetings will be held in the Liquor Control Commission Hearing room, 5th floor, State Office Building, 301 Centennial Mall, Lincoln, Nebraska. The next meetings will be on September 12, October 10, and November 14, 2014.

Mr. Morehouse moved to adjourn the meeting. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Grennan – absent, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4 – 0 with one absent. The meeting was adjourned at 11:52 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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