Note: These minutes are in draft form pending approval by the Board at its next public meeting.
Minutes of the 772nd Meeting
January 22, 2016
The 772nd 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 Vice Chairman Reida, Mr. Grennan, Mr. Haase, and Mr. Morehouse. Chairman Lichter had informed the Board at the previous meeting he would not be able to attend this meeting. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on January 12, 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 December 18, 2015 meeting. The PRB staff had no changes to recommend to the draft minutes. Mr. Haase moved to approve the minutes. Mr. Grennan 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 next agenda item was acceptance of the expense reports for the month of December. The December expenses were $20,885.92 in personal services, $21,508.61 in operating expenses, and $154.10 in travel expenses. The total expenses were $42,548.63. Mr. Morehouse pointed out that the budget status report includes investment income. He noted the amount of interest seemed high for the amount invested. He asked where the money was invested, and what rate of return it was receiving. The executive director said the Board’s funds are deposited with the State Treasurer’s office and are invested by the State Investment Officer. He did not know how the funds were invested. He will have Ms. Hallgren, the Board’s business manager, check into it and get back to Mr. Morehouse. Mr. Morehouse moved to accept the expense report. 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 next item on the agenda was the executive director’s report. The first item was the update on Southwest Power Pool items. The Board had copies of the JK Energy monthly activities update information. Vice Chairman Grennan stated that he would be attending the quarterly meeting to be held in Oklahoma City January 25 and 26.
The executive director stated that the contract for the SPP consultant had been finalized and became effective on January 1. The contract term will initially be for a six-month period and then have five renewal periods of one year. The six-month contract will align the renewal periods with the state’s fiscal year. This will make accounting and budgeting much easier.
Next the executive director reviewed bills submitted in the 2016 legislative session with the Board.
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. The executive director recommended monitoring the bill and the PRB remain neutral on it. Shirley Higgins, Legislative Analyst with the Nebraska Public Power District (NPPD), explained that the bill expands the definition to include all power suppliers so that anyone of them could buy power from the C-BED.
LB 783 was submitted by Senator Lindstrom. This bill provides for registration of public power districts vehicles. This would exempt the PPD vehicles from the definition of commercial motor vehicle. It would create a permanent license plate and fixed cost for issuance. The bill limits its application to public power districts with annual gross revenue of at least $250 million. The bill was referred to the Transportation and Telecommunications Committee. The bill does not affect the PRB.
LB 802 was submitted by Senator Ken Haar. This bill creates the Health and Climate Resiliency Task Force. This would be a ten-member task force that would create a strategic plan on how to deal with the impacts of the climate change. The ten members will be senators. The Task Force will also have fourteen 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. 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. The bill also repeals the right of first refusal (ROFR) in section 70-1028 and section 70-1014.02 in its entirety. Section 70-1014.02 is the Certified Renewable Export Facility approval process. The bill creates a definition for “private electric supplier”, which is a power producing entity that is not a public power entity. To be exempt from sections 70-1012 to 70-1027, a private entity would need to: 1) provide the PRB with written notice of the intent to build a private renewable generation facility at least 30 days prior to commencing construction, 2) it would need to certify that the facility meets the definition of a “privately developed renewable generation facility”, 3) certify that it will comply with any decommissioning requirements adopted by the applicable local government, and 4) certify that all costs of decommissioning will be borne by the private electric supplier. The PRB’s executive director must then provide written acknowledgement within ten days. The bill also prohibits Nebraska’s public power entities from exercising eminent domain over any property used, operated for, or useful for a private renewable facility. The bill was referred to the Natural Resources Committee.
Executive Director Texel recommended the Board take a neutral position on the bill and authorize him to testify on specific provisions of the bill. The executive director pointed out that the Board previously supported creation of the ROFR provision and therefore opposing that particular provision would be consistent with the Board’s past position. There is also no provision to ensure the existence of a decommissioning plan or protections for landowners if a county would for whatever reason not create decommissioning requirements. The Board has expressed that as an important consideration in the past. In addition, since there would be no PRB approval, the requirement for a Game and Parks Commission review to determine if the project would harm threatened or endangered species or their critical habitat would not be triggered. Lastly, the executive director pointed out that the bill uses the term “biogas” and he was not exactly sure what that term encompasses. It could mean landfill gas, or methane digestors at livestock confinement facilities, or both, in addition to other generation facilities based on methane. It might be helpful to clarify what that term means.
Mr. Grennan stated that based on the discussion there are many questions about the bill, and it seems to be making significant changes very quickly. Mr. Haase also discussed the fact that the bill seems to make sudden changes rather quickly. He expressed that it might be preferable to make such major changes after more study and deliberation. It might be better to make such changes incrementally. He is also not sure at this point if the bill as written would benefit the ratepayers of Nebraska. The Board expressed concerns about the possibility of creating stranded assets, and if there were any unintended consequences. Vice Chairman Reida stated he was concerned that public power utilities have to submit applications to the Board for all generation facilties, including renewables, while under this bill private developers would not have to for renewables. That seems unfair. There was discussion amongst the Board and members of the audience about the production tax credit (PTC) and that public power entities are not eligible to take advantage of the PTC. It was pointed out that the PTC had been renewed for five years, but it decreased by 20 percent each year until it phased out completely. There was also discussion about qualifying renewable facilities that can be constructed if they are less than 80 megawatts capacity by obtaining approval from the Federal Energy Regulatory Commission’s self-certification process under the Public Utility Regulatory Policies Act of 1978 (PURPA). John McClure, Vice President and General Counsel with NPPD spoke to the Board to express NPPD’s concerns about the bill. Mike Degan, a private attorney that represents developers that build renewable generation facilities, spoke to the Board about the benefits of the bill and how at least some of it was based on the findings in the Brattle Group report commissioned by the Legislature last year and carried out under the PRB’s direction.
Mr. Grennan moved to oppose the bill based on how it is written and all the questions the Board expressed during the discussion today, and that executive director Texel should testify accordingly at the Committee hearing. Vice Chairman Reida seconded the motion. Mr. Morehouse expressed concern about getting involved in the politics of the bill. He understands the other members’ concerns, but thought it was not the Board’s normal practice to take a stand on the policy matters in a bill. He asked whether the Board should encourage specific legislation, or only enforce the legislation that is enacted. Executive Director Texel added that the Board is a policy implementing body and not a policy making body. It is necessary and normal for an agency with jurisdiction over the subject matter to bring up concerns and potential problems in a bill, but he was not sure that taking a policy stand is necessary. Traditionally the Board tries to avoid taking a stance on policy matters. Mr. Grennan stated that in his opinion if the Board is neutral is means that we are okay if it passes and to oppose it says that there are some serious issues with the bill. If that is accurate, the Board should express that to the Committee. Mr. Haase stated that he is not opposed to the end result of the bill and its purpose, but rather his concern is the form and process of how the bill achieves that purpose. Vice Chairman Reida stated that he understands there will be benefits for property tax relief to the state, and he supports that purpose. However, he is not aware that time is of the essence to make such significant changes, and the discussion today has raised numerous reservations that should be explored. Voting on the motion: Chairman Lichter – absent, Vice Chairman Reida – yes, Mr. Grennan – yes, Mr. Haase – yes, and Mr. Morehouse – no. The motion carried 3 – 1 with one absent.
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 took 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”. The documents are interpretive documents, as opposed to rules that create obligations or prohibitions for regulated persons or entities. Executive Director Texel said he has been involved in working on this bill with the Legislative Performance Audit Committee since November. He is also on the State Bar Association’s Government and Administrative Practice Section’s legislative review committee, and that section has been active in evaluating the bill. The Performance Audit Committee made numerous changes to the bill before it was introduced based on the recommendations of Executive Director Texel and the other members of the Bar’s Government Practice Section. The new definition for rules and regulations, definition and authorization of guidance documents would be very beneficial to the PRB. The bill also contains provisions for rules and regulations in emergency situations and to allow technical changes. The executive director recommended the Board support the bill and authorize him to testify in support, particularly as it pertains to the new definition for rule and regulation and the guidance document provisions, but take no position on the sections pertaining to Corrections (sections 1, 16 and 17). Vice Chairman Reida moved to support the bill in accordance with the executive director’s recommendation. 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.
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 executive director recommended the Board monitor this bill and remain neutral. The Board agreed.
LB 914 was submitted by Senator Shilz. This is the bill that the Board requested to increase the pay of the Board member that represents Nebraska on the Southwest Power Pool’s Regional State Committee (RSC) from $60 per day to $250 per day. The bill was referred to the Natural Resources Committee. The hearing is scheduled on January 28. The executive director said Chairman Lichter is planning to testify in support of the bill, and the executive director would testify to deal with technical questions or the fiscal note. Vice Chairman Reida moved to authorize the executive director and Chairman Lichter to testify in favor of the bill at the hearing. Mr. Morehouse 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.
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 the road. Anyone moving objects must instead have the local utility move the line or pole. The bill was referred to the Transportation and Telecommunications Committee. Executive Director Texel recommended the Board monitor this bill and remain neutral. The Board took no position.
LB 1068 was submitted by Senator Ken Haar. This bill adopts the Electric Customer Protection Act and provides duties for the Public Service Commission (PSC). The PSC would be authorized to review electric 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. 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 bill had not been assigned to a committee yet, and did not have a hearing date. The executive director recommended the Board remain neutral and monitor this bill. The Board agreed.
LB 1069 was submitted by Senator Ken Haar. The bill directs the State Investment Officer to divest state investments in companies, funds or institutions that profit from the extraction or burning of fossil fuels. It sets out legislative findings that climate change presents serious, diverse and ongoing issues for the economy and health and well-being of Nebraskans. The executive director recommended the Board remain neutral and monitor this bill. The Board took no position on the bill.
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. There is no hearing date or committee assignment yet. The executive director recommended monitoring the bill and remaining neutral. The Board agreed.
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 kwh 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 construction, with a two million dollar maximum. The Board took no position 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 payment 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. There is no committee assignment yet and no hearing date. The Board took no position on the bill.
Executive Director Texel recommended that the Board create legislative committee. The Board has done this in the past and it worked well. A committee of two Board members would be authorized to take positions or alter the Board’s existing positions on bills based on amendments. Without this, the Board cannot react to amendments to bills that come up quickly in the legislative process and do not allow sufficient time for the Board to act in public session. The Board members briefly discussed which two members should be on the committee. The members thought that the chair and vice chair made the most sense. Vice Chairman Reida moved to create a legislative committee as described by the executive director, with the chair and vice chair as the members. Mr. Morehouse 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.
Executive Director Texel informed the Board that the U.S. Court of Appeals for the District of Columbia had just the day before the meeting issued a ruling on the request for a stay submitted by numerous parties in the lawsuit challenging the U.S. Environmental Protection Agency’s Clean Power Plan pending the appeal. The Court did impose an expedited review schedule, though. All briefs were to be submitted by April 15, 2016, and oral arguments were scheduled for June 2, 2016.
The executive director told the Board members that the contract with GIS Workshop for services related to updating the digital service area maps and making the interactive map available on the Board’s website had been renewed at the same amount as last year, which was $8,500.
The Board tabled the election of the Chair and Vice Chair to the February meeting so Chairman Lichter can be present.
The Board’s next meetings are scheduled for February 26, March 25, and April 22, 2016. The 2016 meetings have been scheduled for the fourth Friday of the months, unless there is a State holiday that 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 11:33 a.m.
Timothy J. Texel
Executive Director and General Counsel