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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 754th Meeting

June 13, 2014

The 754th 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 June 3, 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 a table in the back of the room, as well as extra copies of the agenda.

The Board first considered the draft minutes from its May 9, 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 – 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 report for the month of June. The expenses were $19,316.39 in personal services, $21,339.80 in operating expenses, and $393.96 in travel expenses. The total expenses were $41,050.15. Vice Chairman Reida moved to accept the June expense report. 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 item on the agenda was SAA 148-14-A. This is a joint application to terminate the retail service area agreement between the City of Superior and Nebraska Public Power District. This application was filed on May 15, 2014. Several months ago while researching the service area boundary agreements involving Superior, it was discovered that NPPD has an agreement with the city. The executive director was not sure, but believed this is an example of a service area agreement created due to the former rule that a utility could serve customers within mile of its transmission line located in another utility’s service area. After the Board’s staff contacted NPPD and Superior, the parties agreed they do not have any adjoining service area and submitted the application to terminate SAA 148. The service area agreement number will not be reassigned. The number is designated for Superior and NPPD so if there would ever be a need to reinstate it, the PRB could do so. Mr. Morehouse moved to approve SAA 148-14-A. Mr. Haase 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 joint application submitted by NPPD, Dawson PPD and the City of Kearney. The application was filed on May 15, 2014. The application was designated as SAA 310-14-A and SAA 57-14-A (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 and became part of NPPD. It was 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 tothe 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 affects the city. On November 12, 2013, Kearney annexed a tract of territory on the northern edge of the city. Exhibit C is a copy of Resolution 2013-209, which accomplished the annexation. Exhibit B is a metes and bounds description of the territory. Mr. Grennan moved to approve applications SAA 310-14-A and SAA 57-14-A (consolidated). 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 joint application submitted by Cornhusker Public Power District and Loup River Public Power District. The application was filed on May 29, 2014. The application was designated as SAA 252-14-A. This application is a result of discrepancies discovered after reviewing the Board’s online interactive service area map. Loup River PPD discovered some discrepancies concerning the service area boundary surrounding the municipalities of Cornlea, Genoa and Fullerton. Loup River PPD and Cornhusker PPD discussed the service area boundary issues and submitted the joint application to establish and clarify the boundary. Since some of the lines drawn on the Board’s existing hard-copy map were uncertain as to exact location, each of the exhibits identifies the boundary line using distances from section lines. It could not be determined exactly where some of the lines on the original map were intended to be located. Some lines are boldfaced and very thick, covering geographic features. One line was shown on what appeared to be the mile line, but at least one of the utilities thought it should have been on the 1/8 mile line. There was also an issue because the metes and bounds description in the existing file did not correspond with where the lines on the hard copy map were located. Mr. Haase moved to approve the joint application SAA 252-14-A. 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 a joint application submitted by Norris PPD and the City of Lincoln, doing business as the Lincoln Electric System (“LES”). The parties were unable to get all the necessary documents signed and returned to the PRB, so the executive director recommended tabling the item until next month’s meeting. All Board members agreed to table the item until the July meeting.

The next item on the agenda was to consider a change of work order for JK Energy Consulting, LLC’s contract as the PRB’s Southwest Power Pool (“SPP”) Consultant. JK Energy Consulting submitted a letter outlining the additional hours of work and explaining the situation. A major issue before SPP right now is the application of the Western Area Power Administration (“WAPA”), Basin Electric Power Cooperative and Heartland Consumers Power District to join the SPP. This is referred to as the Integrated System or “IS”. This is a significant issue and somewhat controversial. Mr. Krajewski has attended several meetings representing the PRB and assisting Chairman Lichter. These meetings are not covered in the current contract. Mr. Krajewski has been participating in these meetings at Chairman Lichter’s request due to the importance of the issue. The amount that is being requested is an additional $9,125. In a letter dated May 19, JK Energy Consulting outlined the hours spent and anticipated for the upcoming scheduled meetings on the Integrated System issue. In the previous change of scope of work with JK Energy Consulting, the Board made a motion to authorize the executive director and the PRB Chairman to take the necessary actions to change the scope of work to amend the contract so JK Energy Consulting could be compensated for the additional work. Mr. Krajewski was present and addressed the Board. He provided the Board with additional information regarding his attendance at the additional meetings and what issues are being discussed. Some of the issues deal with the federal service exemptions for WAPA. There was a discussion about the cost allocation, tariffs and the negotiations of these potential new SPP members. Mr. Morehouse made a motion to authorize the scope of work change. Executive Director Texel suggested that a motion similar to the one used in conjunction with the previous scope of work change be used. Mr. Morehouse amended his motion to authorize the Board chairman and the executive director and general counsel to take whatever actions are necessary to accomplish an amendment to the scope of work for the existing consultant contract with the Power Review Board in order to compensate the consultant for attending several recent meetings pertaining to what is referred to as the Integrated System, and to attend future meetings on that topic. 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 item on the agenda was the executive director’s report. The Board members had a copy of the month of May’s update from JK Energy Consulting regarding SPP activities. During the previous item there was discussion on the “IS” and the fact that the SPP Board already approved the new parties joining the SPP. Chairman Lichter mentioned that July 28 and 29 is the next RSC/SPP Board meetings in Omaha at the Embassy Suites. There was also discussion on having an RSC retreat prior to these meetings, but there is no definite schedule yet.

Executive Director Texel then updated the Board on the Request for Proposals (“RFP”) required by Legislative Bill 1115. The RFP was issued on May 29. The maximum compensation amount for the bidder 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 deadline for questions from prospective bidders was June 9. There were several questions submitted, and responses were prepared and will be posted on the State Materiel Division’s website by Monday. The bid opening date is July 1. Mr. Grennan asked about interviews and the timeline for them. He thought the Board should try to block off time on their calendars when interviews were scheduled. Executive Director Texel said he would forward the timeline set out in the RFP to the Board. The projected start date for the contractor is set for August 6.

Executive Director Texel then briefed the Board about a recent decision issued by the U.S. District Court for the District of Columbia. Federal Energy Regulatory Commission (“FERC”) Order 745 pertained to “wholesale demand response”. In the order, FERC determined it had jurisdiction over wholesale demand response and required that companies receive payments for lowering their power use that is competitive with the price a utility would receive for producing that amount of electricity. On May 23, the Court vacated Order 745. The court found that demand response resources do not actually sell into the market, do not constitute a sale, and the resources only “participate” by declining to act. The court found that FERC’s rule encroached on the states’ exclusive jurisdiction to regulate retail electric markets. FERC announced it would see an en banc review, asking the entire court to overrule the 3-judge panel that issued the decision.

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 July 11, August 8, and September 12, 2014.

Mr. Morehouse moved to adjourn the meeting. Mr. Haase 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 10:48 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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