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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 773rd Meeting

February 26, 2016

The 773rd 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 February 16, 2016. 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 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 January 22, 2016 meeting. The PRB staff had no changes to recommend to the draft minutes. Mr. Morehouse 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 January. The expenses were $21,209.91 in personal services, $20,463.45 in operating expenses, and $510.86 in travel expenses. The total expenses were $42,184.22. Mr. Haase moved to accept the expense report. 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 a presentation on the Environmental Protection Agency’s Clean Power Plan (CPP). Executive Director Texel stated that the U.S. Circuit Court of Appeals had denied a stay requested by the 26 states challenging the CPP, including Nebraska. The U.S. Supreme Court overruled the circuit court and issued a stay. The stay is in force pending a decision by the circuit court and during any appeal to the U.S. Supreme Court. The PRB asked the Nebraska Power Association if it would have someone give a briefing on how the Nebraska utilities were preparing for the CPP and how the stay affects their preparations. The presentation was given by Scott Benson of the Lincoln Electric System (LES). Mr. Benson gave a presentation touching on how LES believes the CPP would affect the state’s generation capacity and how LES is analyzing its options. Each utility is conducting its own analysis. Mr. Benson explained that there are two methods of compliance available for states to deal with the CPP’s requirements. One way is “rate based” and the other is “mass based.” He described in detail the difference between the two methods and how they are each calculated. He said that the CPP uses 2012 emissions as the benchmark for compliance purposes. Many states do not like it that the EPA decided not to give utilities credit for facilities with zero carbon emissions such as wind farms, solar facilities, and nuclear facilities if they were built prior to 2012. There was quite a bit of discussion regarding how Nebraska will become compliant with the CPP requirements. Mr. Benson showed the PRB how LES’s model allows different scenarios to be inserted into the mix to see how it would affect the overall emissions and compliance under both the rate and mass based alternatives. The stay creates more uncertainty as to the time frame of the CPP, though. Mr. Benson’s slideshow demonstrated different ways that the state could change its generation portfolio, or change how it operates the portfolio, in order to bring itself into compliance with the new rules. At the end of the presentation the Board members thanked Mr. Benson for his presentation.

The next item on the agenda was the executive director’s report. The first item was the update on Southwest Power Pool (SPP) items. The Board had copies of JK Energy Consulting’s monthly activities update information.

The executive director then reviewed bills submitted in the 2016 legislative session.

LB 736 was submitted by Senator Friesen. This would amend the Community Based Energy Development (C-BED) Act. The bill would change the definition of a power supplier. This has been referred to the Natural Resources Committee. This bill was placed on General File on February 18. The PRB is neutral on this bill.

LB 783 was submitted by Senator Lindstrom. This bill provides for special license plates for public power district vehicles. The vehicle plates would be permanent and have a fixed issuance cost. The bill also exempts public power district vehicles from the current definition of “commercial motor vehicle.” The bill limits its application to public power districts with annual gross revenue of at least $250 million, which at this time would be Nebraska Public Power District and Omaha Public Power District. The bill was referred to the Transportation and Telecommunications Committee. The bill does not directly affect the PRB, and the PRB is neutral on it.

LB 802 was submitted by Senator Ken Haar. This bill creates the Health and Climate Resiliency Task Force. The task force would consist of ten voting members who are senators, and fourteen members who are non-voting members, one of which is the Director of the State Energy Office. The task force will also have an advisory committee, which will include a public power district representative. The task force would create a strategic plan on how to deal with the impacts of climate change. This bill was referred to the Health and Human Services Committee. The Board took no position on the bill.

LB 824 was submitted by Senator McCollister. The bill currently has nine additional co-sponsors, four of which are on the Natural Resources Committee. The bill exempts privately developed renewable generation facilities from the regulatory oversight set out in 70-1012 to 70-1027 and rescinds the Certified Renewable Export Facility (CREF) approval process set out primarily in 70-1014.02. Executive Director Texel said a good deal of work had been done on this bill by the senators on the Natural Resources Committee, the private developers, Nebraska’s public power utilities, and the PRB. Many changes had been made to the original version of the bill. The repeal of the right of first refusal (ROFR) in section 70-1028 had been removed. The bill still repeals the CREF process in its entirety, but a new 70-1014.02 will replace it. The bill still prohibits the use of eminent domain by public power districts to take a private renewable generation facility. The amended bill retains a new definition for “private electric supplier,” which is essentially any electric supplier that is not a public power entity. The new definition of the term “privately developed renewable generation facility” is one that 1) generates or stores electricity using solar, wind, geothermal, biomass, landfill gass, or biogas, including all interconnected equipment and any transformer stepping up voltage to 60,000 volts or more, as well as any buildings and roads, 2) is developed, constructed and wholly owned by private electric suppliers, and 3) is not owned by a public power entity. The amended definition clarifies that nothing in the applicable part of the bill limits the authority of public electric suppliers to enter into an agreement with private developers to own renewable generation facilities. The bill would exempt private renewable generation facilities from the approval requirements set out in sections 70-1012 to 70-1027, if a private entity does the following: 1) provides the PRB with written notice of the intent to build a private renewable generation facility at least 30 days prior to commencing construction, 2) certifies to the PRB that the facility meets the definition of a “privately developed renewable generation facility”, 3) certifies to the PRB that it will comply with any decommissioning requirements adopted by the applicable local government, and if the local government does not enact any decommissioning requirements, the owner will submit a decommissioning plan to the PRB by the tenth year following the commercial operation date, 4) certifies to the PRB that the owner has or will enter into a joint transmission development agreement with the local utility owning transmission assets of 60,000 volts or more, and 5) certifies to the PRB that it has or will consult with the Nebraska Game and Parks Commission prior to commencement of construction. The bill specifies that the PRB can bring an action in the name of the State of Nebraska if the owner fails to comply with the decommissioning requirements. After receiving the properly completed above certifications, the PRB’s executive director must provide written acknowledgement within ten days. The bill was referred to the Natural Resources Committee and the hearing was already held. The executive director believed that all parties had come to an agreement on the amended version of the bill and he expected it might be forwarded on to General File in the next few days. The Board had originally opposed the bill, but Senator McCollister (the bill’s introducer) agreed to remove the ROFR repeal, and the PRB switched to neutral.

LB 863 was submitted by Senator Shilz. This bill adopts the Wind Energy Expansion Act. The bill establishes a process and criteria for designating counties as “wind energy friendly”. It also creates a database available through the State Energy Office for counties wanting to evaluate and develop wind energy resources. The bill was referred to the Natural Resources Committee. The Board has no position on the bill.

LB 867 was submitted by the Legislative Performance Audit Committee. The bill amends the Nebraska Administrative Procedure Act and requires the Department of Corrections to promulgate certain rules and regs. The executive director explained that this bill would be very helpful to the Board by changing the current definition of “rule or regulation” and authorizing the creation of “guidance documents”. Many of the Board’s policies would qualify as a “guidance document”. Guidance documents are interpretive documents, as opposed to rules that create obligations or prohibitions for regulated persons or entities. The bill also contains provisions for rules and regulations in emergency situations and to allow technical changes to be adopted without going through the normal time-consuming approval process. The State Bar Association had testified in support of the bill, but expressed concerns about problems with vagueness in two sections. In the emergency procedure section the Bar recommended limiting the emergencies to imminent peril to public health, safety and welfare, and unforeseen loss of federal funding for an agency’s program. This would also make the bill similar to the national model rules. In the technical changes, the Bar recommended clarifying that technical changes could not alter the rights or obligations of the public. Executive Director Texel told the Board he had testified in support of the bill at the hearing before the Government, Military and Veterans Affairs Committee. He clarified at the hearing that the PRB took no position on the sections pertaining to the Department of Corrections (sections 1, 16 and 17). The bill has been placed on General File with a committee amendment that adopted the State Bar Association’s recommendations.

LB 897 was submitted by Senator Lindstrom. This bill allows certain public power agencies to engage in hedging transactions. The bill would allow generating power agencies operating in a regional transmission organization (RTO) to engage in certain commodity futures financial hedging transactions for fuel, power or energy. The bill was referred to the Natural Resources Committee. The bill had been placed on General File with a Committee amendment. The PRB is neutral on this bill.

LB 914 was submitted by Senator Shilz. This is the bill introduced at the PRB’s request to increase the pay of the Board member that represents Nebraska on the Southwest Power Pool’s Regional State Committee (RSC). The bill would increase the compensation from $60 per day to $250 per day. The bill was referred to the Natural Resources Committee. The bill was placed on General File on February 19. Committee staff told the executive director the bill is expected to be on the consent calendar, which is limited to bills that do not have opposition and do not have a general fund appropriation associated with them. The PRB is cash funded, so the bill qualifies.

LB 973 was submitted by Senator Smith. This bill makes it a Class II misdemeanor to interfere with electrical lines when moving objects higher than 15.5 feet tall or wider than a roadway. Anyone moving objects must instead have the local utility move the line or pole. Although people or entities moving large objects on roadways are required to coordinate with the local utility, this is often being ignored and there is only a minor fine for ignoring it. This presents a significant safety issue and the utilities are concerned about potential damage to distribution lines. The bill was referred to the Transportation and Telecommunications Committee. The bill was placed on General File on February 25. The PRB is neutral on the bill.

LB 1068 was submitted by Senator Ken Haar. This bill would adopt the Electric Customer Protection Act. The Act would authorize the Public Service Commission (PSC) to conduct a review of electric utility retail rate increases of more than two percent in any one-year period. If two percent of an electric utility’s customers sign a petition, the PSC is required to hold a hearing and render a decision. The executive director reviewed the process to initiate a review and the standard for review the PSC would use when evaluating the rate increase. The bill also creates the Office of the Customer Advocate as a separate division within the PSC to represent electric ratepayers. The executive director described the requirements for the Customer Advocate and some of the position’s duties and rights, such as the right to appeal a decision of the PSC. The executive director noted that several senators had indicated serious concerns about the policy of the bill and the way it was structured. Executive Director Texel told the PRB the hearing before the Transportation and Telecommunications Committee was contentious and lasted over four hours. Most of the bill’s supporters were upset at the Omaha Public Power District for its decision to increase the fixed cost portion of the district’s electric bill. At the hearing Senator Haar requested the bill not be advanced to General File, but rather that a legislative interim study be conducted to investigate the issues raised in the bill. Shirley Higgins told the Board that the Committee had decided to indefinitely postpone the bill, although that has not yet been posted on the Legislature’s website. The PRB is neutral on LB 1068.

LB 1071 was introduced by Senator Ken Haar. The bill would adopt the Solar Energy Economic Development Act. The act would appropriate four million dollars in fiscal year 2016-2017 to the State Energy Office for grants to support solar energy development in Nebraska. The bill is still held in the Natural Resources Committee. The PRB is neutral on the bill.

LB 1085 was introduced by Senator Davis. The bill would change a renewable energy tax credit. It allows a producer of electricity generated by a renewable source to earn a tax credit for the first ten years of the facility’s operation. The credit would be calculated either based on kilowatt-hours of electricity produced, at one cent per kilowatt-hour for the first two years, and then decreases over a ten year period, or a one-time credit of up to thirty percent of the total cost of the construction of the facility, with a two million dollar maximum. The hearing before the Natural Resources Committee was just held yesterday (February 25) and the Committee has not taken any action on it yet. The Board is neutral on the bill.

LB 1099 was introduced by Senator Krist. The bill would change the reimbursement method for state officers and employees from a system based on “actual and necessary expenses” to a per diem basis following the reimbursement amounts established by the federal General Services Administration. This would eliminate the need for the Board members and the executive director to submit receipts for all expenses that are reimbursed. The bill is still held by the Government, Military and Veterans Affairs Committee. Although one or two Board members expressed a preference for the simplicity of the per diem method of reimbursement, the Board is officially neutral on the bill.

The next item on the agenda was election of chair and vice-chair for 2016. The Board tabled this item last month so Chairman Lichter could participate. The board members and the executive director discussed that after the PRB joined the SPP Regional State Committee (RSC), the Board Chairman has been the member designated to represent the PRB on the RSC. Prior to that the PRB had normally rotated all members through the vice-chair and chair position annually, based on seniority. The board members expressed that the Board does not function like it did fifteen years ago due to the advent of the SPP. Mr. Morehouse said that just because one is a good board member does not mean they will necessarily make a good chairman, especially taking into account the many changes required with the SPP and RSC. Vice Chairman Reida made a motion to retain the current chair and vice-chair for 2016. 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 Board’s next meetings are scheduled for March 25, April 22, and May 27, 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.

Mr. Morehouse moved to adjourn the meeting. Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter – absent, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 4– 0 with one absent. The meeting was adjourned at 11:59 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
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