Note: These minutes are in draft form pending approval by the Board at its next public meeting.
Minutes of the 764th Meeting
May 22, 2015
The 764th 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 May 12, 2015. 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 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 April 17, 2015, meeting. There were no recommended changes. 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 report for the month of April. The April expenses were $27,919.11 in personal services, $18,983.27 in operating expenses, and $1,293.51 in travel expenses. The total expenses were $48,195.89. Mr. Haase 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 – yes, Mr. Haase – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.
The next item on the agenda was to consider an application for a joint service area agreement amendment. The City of Sidney and the Wheat Belt Public Power District submitted the application on May 4, 2015. This is the second service area agreement amendment between these parties in 2015. Due to this, the application was designated as SAA 2015-15-B. Sidney annexed a tract of territory on the southern edge of its service area and wants to incorporate it into its retail service area. A map labeled Exhibit A-2 shows the territory that was annexed. Because part of the boundary is irregular and curved, the PRB staff asked the parties to submit a legal description to be included as an exhibit, which they did. Executive Director Texel recommended approval. Mr. Morehouse moved to approve SAA 105-15-B. 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 – yes. The motion carried 5 – 0.
The next item on the agenda is to consider a Motion to Withdraw PRB-3787-G. This is an application submitted by Holdrege Solar Center, LLC to construct a five megawatt solar generation facility. The Board held an evidentiary hearing on this application on March 27, 2015. The Board has sixty days in which to issue an order. On May 13, 2015, the applicant filed a Motion to Withdraw PRB-3787-G. Per the PRB’s Rules of Practice and Procedure, Chapter 3, section 14, following the filing of any application or pleading, a party shall not be permitted to withdraw an application or pleading without the Board’s approval. Executive Director Texel said although the rules require the Board’s approval, a withdrawal is primarily an administrative action. Obviously, if an applicant wants to withdraw its application, it can do so. Executive Director Texel recommended the Board grant leave to withdraw PRB-3787-G. Mr. Haase moved to grant the Motion to Withdraw PRB-3787-G. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter – yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Grennan – yes, and Mr. Morehouse – yes. The motion carried 5 – 0.
The next item was a Motion to Amend Order in PRB-3777-G. The Board tabled this item. A motion hearing is scheduled later in the morning for arguments in this matter, and the Board will consider the motion after the oral arguments.
The next item on the agenda was consideration of the Board’s assessment figure for fiscal year 2015-2016. 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 reserve funds. After removing that reserve amount, the Board credits the remaining balance against what the utilities owe to pay for the Board’s operations, 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, or while the Board waits for the Governor to approve the Board’s proposed assessment figure. 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 a long time 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 $216,250. 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 $64,256 to be used to offset the assessments. Under that option, the Board would collect $564,080.52 from the power suppliers, and the assessment figure would be 14.199324 cents per $1,000 gross revenue. The three-month reserve scenario would retain $114,000 in reserve and the assessment figure would be 13.242768 cents per $1,000 gross revenue. In the past few years the Governor’s office expressed concern about the fluctuation of the PRB’s assessment figure. The figures show that the Board is slowly leveling 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 put 10% of their funds into the general fund. Some of the agencies, such as the corn and bean boards, 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. In those two instances the cash funded agencies acknowledged the difficult budget situation, but made clear they would object if it became a normal occurrence to take the remaining cash balances and move it to the general fund. Mr. Haase moved to approve the Board keeping four months expenditures in reserve, which is $152,000, and adopt an assessment figure of 14.199324 cents per $1,000 of gross income. Mr. Grennan seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Morehouse – yes, and Mr. Grennan – yes. The motion carried 5–0.
The Board went into recess at 9:36 a.m. During the recess, the Board heard oral arguments on a motion in PRB-3777-G and conducted an evidentiary hearing for PRB-3787-G. The Board reconvened its public meeting at 2:03 p.m. Mr. Grennan, who was previously in attendance, had to leave during the recess due to another commitment and was not in attendance when the Board reconvened its public meeting.
The Board first took up agenda item 6, which is a Motion to Amend Order in PRB-3777-G. This is an application to construct an 89.5 MW wind turbine electric generation facility in Webster County, Nebraska. The hearing on the merits was held September 12, 2014. The Board approved the application, but the approval was conditional. For the approval to become effective, the applicant must have a signed power purchase agreement with the Nebraska Public Power District (NPPD) within 120 days of the issuance of the order. The applicant previously requested an extension to June 1, 2015, which the Board granted. NPPD recently informed the applicant that they are no longer interested in purchasing the proposed facility’s electricity. The applicant submitted a Motion to Amend Order to allow an extension of time in which to enter into a power purchase agreement, and to substitute another Nebraska power supplier in place of NPPD. During the recess of the public meeting, the Board heard oral argument as to why the Motion should be granted. Chairman Lichter moved to approve the Motion to Amend Order and grant an extension to October 1, 2015. Vice Chairman Reida seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Morehouse – yes, and Mr. Grennan – absent. The motion carried 4–0 with one absent. The executive director explained that when the Board is considering a motion such as this one, the Board is actually operating in its quasi-judicial capacity. The Board is not required to vote on such matters during its public meeting. The Board often does so, though, as a convenience to the parties involved, so they receive an answer expeditiously. The Board considers such actions a binding preliminary decision, but the written order is the final action on the matter.
The Board then considered item number 11 on the agenda. This was an application submitted by Prairie Breeze Wind Energy III. The application was designated PRB-3798-G. The application was received on May 1, 2015. The application requests authority to construct a 35.8 megawatt wind farm in Antelope County, Nebraska. The location is southeast of the Village of Elgin and adjacent to the existing Prairie Breeze I and II generation facilities. During the recess, the Board held an evidentiary hearing on this application. Mr. Haase stated that he was recusing himself from participating in this proceeding. He is on the Grand Island City Council, which plans to purchase the electricity produced by the proposed facility. To avoid any appearance of a conflict or bias, he did not participate in the hearing or deliberations, and will not participate in the discussion or vote on the application. Written Notice of Filing and Hearing Date was sent to those utilities and other entities the Board deemed to be interested parties. A public notice was also published in the Elgin Review and Petersburg Press newspapers. The Board did not receive any objections. The Omaha Public Power District (OPPD) and the Nebraska Public Power District (NPPD) both filed a Petition for Intervention, and both were granted. The application was filed pursuant to Neb. Rev. section 70-1014. There are three approval criteria. The first criterion is that the application will serve the public convenience and necessity. The second criterion is that the applicant can most economically and feasibly supply the electric service resulting from the proposed project. The third criterion is that the facility will not unnecessarily duplicate any existing facilities or operations. As required by Neb. Rev. Stat. section 37-807(3), the PRB consulted with Nebraska Game and Parks Commission to ensure that an approval of the application would not jeopardize the continued existence of any threatened or endangered species or their critical habitat. The Board received the Commission’s consultation letter on May 21. The Commission determined that although the project area is within the range of several threatened or endangered species, the Applicant has agreed to implement appropriate mitigation measures, including bird flight diverters on transmission lines and development of a contingency plan for whooping cranes. The applicant also agreed to set turbines back at least 1,000 feet from northern long-eared bat roosting habitat along Cedar Creek and to feather the turbine blades prior to cut-in speed. The Commission determined that the project “May affect but is not likely to adversely affect” any threatened or endangered species, and it did not object to the Board approving the application. During the evidentiary hearing, the Applicant put on evidence that the City of Grand Island will be the purchaser of the power from the proposed facility. The power purchase agreement has not been executed yet, but the applicant does have a resolution from the City to show that it is the City’s intent to purchase all of the power. Executive Director Texel stated that the hearing record was left open to accept a copy of the power point presentation of the witness from the City of Nebraska City as an exhibit. The Applicant will also submit a copy of the City of Grand Island’s resolution approving the power purchase agreement with the Applicant. Once the agreement is executed, the applicant will submit a copy of the actual power purchase agreement, which will be sealed because it will contain confidential proprietary pricing information. Vice Chairman Reida moved to approve application PRB-3798-G contingent on receipt of an executed power purchase agreement between the City of Grand Island and Prairie Breeze Wind Energy III for 100% of the facility’s output. The Applicant will have until June 19, 2015 to submit the executed power purchase agreement. Upon receipt of a copy of a completed and acceptable power purchase agreement, the hearing officer will issue an order acknowledging receipt of the acceptable power purchase agreement, at which point the Board’s approval will become final. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – recused, Mr. Morehouse – yes, and Mr. Grennan – absent. The motion carried 3–0 with one absent and one recused.
The next item the Board took up was the agenda item dealing with the Board’s status as an associate member of the Organization of MISO States (OMS). The executive director stated that there was no specific event that caused this issue to be brought up. He just thought that since Nebraska’s transmission-owning utilities have joined the Southwest Power Pool, and the PRB has not participated in OMS meetings or conference calls for two or three years, he spoke with Chairman Lichter about it and they decided to put it on the agenda to decide if the PRB should retain its associate member status in OMS. The Board became a member of OMS when the regional transmission organizations were being formed. At that time LES joined MISO as an associate or transmission-dependent member. OMS is MISO’s version of the Southwest Power Pool’s Regional State Committee. After Nebraska’s three transmission-owning utilities, OPPD, NPPD and LES, joined SPP instead of MISO, the PRB decided to change its status from a voting member of OMS to associate membership. The executive director said OMS membership does not involve any cost, but the PRB does not participate, and Nebraska has no transmission-owning utilities in MISO. The Board members agreed that there is no purpose being served by the PRB maintaining its associate membership status. At this time the PRB’s associate membership does not benefit either the PRB or OMS. Mr. Morehouse moved that the Board request to withdraw its associate member status in OMS. Mr. Haase seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Morehouse – yes, and Mr. Grennan – absent. The motion carried 4–0 with one absent.
The next item was to consider amending Board Policy 7. This amendment came up due to a discussion the executive director had with the Accountability and Disclosure Commission. He was speaking with the Commission’s executive director, Frank Daley, on another matter, and the situation where Chairman Lichter travels to SPP RSC meetings and is reimbursed directly by the SPP came up. Executive Director Daley said that based on the definition of “gift” in Nebraska law, the Commission considers the direct reimbursement of travel expenses from an entity such as SPP to a government official such as Chairman Lichter or PRB staff to be a “gift”. The gift is not prohibited, as the SPP does not have a lobbyist registered in the State of Nebraska, but PRB members and the executive director need to disclose the travel reimbursements over $100 as a gift on their annual Statement of Financial Interest form filed with the Commission. After discussing the matter further with the Commission’s executive director, it was decided that the PRB would pay for the travel costs for the Board members and executive director, and then the SPP will reimburse the PRB for the travel expenses. Having the reimbursement going to the PRB would eliminate the need to claim the expenses as a gift. The Board members wanted to know if that is viewed as trying to evade the intent of the Statement of Financial Interest form. Executive Director Texel said the answer is no. Executive Director Daley had told him the Commission sees that as a perfectly acceptable financial arrangement using the State accounting and reimbursement system and not as an attempt to evade any reporting requirement. The Board’s Policy 7 gives standing approval for the PRB’s designated RSC member or his or her proxy to travel to SPP and RSC meetings at State expense, either through direct payment or through reimbursement. The current language authorizes the RSC member to attend the RSC and SPP quarterly meetings. The proposed new language adds standing approval for the PRB’s RSC member or his or her proxy to attend other RSC and other related SPP meetings, retreats, workshops, briefings or similar RSC activities and have the State pay for the travel costs. Executive Director Texel recommended two changes to the draft policy. The words “or his or her proxy” should be added after the word “representative” in lines 5 and 7 of the new language. Chairman Lichter made a motion to approve the changes to Board Policy 7, with the amendment recommended by the executive director. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Lichter –yes, Vice Chairman Reida – yes, Mr. Haase – yes, Mr. Morehouse – yes, and Mr. Grennan – absent. The motion carried 4–0 with one absent.
The next item on the agenda was a discussion on the PRB jurisdiction over generation facilities where the fuel used is switched to a new fuel. This issue was put on the agenda because the PRB had received a couple of letters notifying the Board about issues with generation facilities. Executive Director Texel had given his opinion that the PRB did not have jurisdiction over these issues. He wanted to make sure the Board agreed with his opinion to avoid any confusion or uncertainty for utilities and developers. It was also his opinion that when the parent company of a facility that the Board approved is sold to a new parent company, but the subsidiary that was the applicant before the PRB remains the same, that the PRB has no jurisdiction over that transaction. The transaction would not be an “acquisition” under the Board’s statutes that would trigger the PRB’s jurisdiction. Recently NPPD announced it was switching the fuel for Sheldon Station from coal to hydrogen. OPPD also sent a notification to the PRB that it was retiring North Omaha units 1 through 3. An OPPD official had testified in a hearing (application PRB-3740-G) that it would use units 1-3 as back-up for the wind power it would receive from the wind generation facility in PRB-3740-G. OPPD now plans to instead retire the units and eliminate the need for the capacity by using demand management and load efficiency programs. The Board also received notification that BHE Renewables, LLC, a Berkshire Hathaway company, was acquiring ownership of the rights to the Grand Prairie Wind generation facility. BHE Wind will purchase the facility from Geronimo Energy. The executive director’s opinion was that since the applicant that will construct and operate the facility, Grand Prairie Wind, will remain the same, the Board’s approval is unaffected and the purchase does not trigger the need for any PRB review. The transfer of the parent company’s ownership does not constitute construction or acquisition that triggers the need for approval under chapter 70, Article 10 in Nebraska law. All four Board members present indicated they agreed with the executive director’s opinions on these matters.
The next item on the agenda was the executive director’s report. The Board members had a copy of the April activities update from JK Energy Consulting regarding its Southwest Power Pool (SPP) activities. Chairman Lichter stated that the SPP will be holding one of its upcoming quarterly meetings on July 27-28 in Kansas City. The location of the meeting makes it easier for any member who wants to attend to do so. Chairman Lichter stated that SPP is also planning an RSC (Regional State Committee) retreat just prior to its quarterly meeting on July 26. He also recommended that those interested in attending the quarterly meeting register through the SPP’s website, by going to the activities calendar and clicking on the July 27 date, or by going to the RSC tab on the SPP home page. Chairman Lichter also discussed his recent visit to North Dakota. Some North Dakota transmission-owning utilities will be joining the SPP. He discussed the issues with the need for transmission planning in that area. He stated that there was an area where the load was 30 megawatts last year and due to the oil and natural gas development it now has a load of 300 megawatts. Executive Director Texel stated that Sam Loudenschlager with the SPP has set up the educational briefing with PRB members and staff in conjunction with the PRB’s public meeting scheduled for August 28.
The executive director then updated the Board on current legislation. The Legislature is now on the 85th day of its session, so there are only five legislative business days left. The only thing he wanted to mention was that the confirmation for Vice Chairman Reida’s appointment to a second term has not been scheduled yet. The executive director said he called the Natural Resources Committee staff and asked about the appointment. The Committee staff was very apologetic that this was delayed. The appointment will be scheduled after the Committee meets in executive session and presents it to the full legislation for confirmation. The indication is that the Committee has no concerns or problem with Vice-Chairman Reida’s confirmation.
The Board scheduled its 2015 meeting dates for the fourth Friday of each month unless otherwise specified. The meetings will be held in the Liquor Control Commission Hearing room, 5th floor, State Office Building, 301 Centennial Mall South, Lincoln, Nebraska. The next three meetings are scheduled for June 19, July 24 and August 28, 2015. The Board will also have an informational public meeting on June 16 at the Public Service Commission’s offices located in the Atrium in downtown Lincoln, Nebraska. This meeting will consist only of a briefing on cybersecurity to be given by a representative from the National Association of Regulatory Utility Commissioners (NARUC).
Chairman Lichter moved to adjourn the meeting. 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 meeting was adjourned at 3:03 p.m.
Timothy J. Texel
Executive Director and General Counsel