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Minutes

Note: These minutes are in draft form pending approval by the Board at its next public meeting.

NEBRASKAPOWER REVIEW BOARD

Minutes of the 783rd Meeting

May 26, 2017

The 783rd 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 Reida, Mr. Grennan, Mr. Hutchison, Mr. Moen, and Mr. Morehouse. Mr. Hutchison and Mr. Moen are the Board’s two newly appointed members. Mr. Moen was confirmed by the Legislature on April 20, and Mr. Hutchison was confirmed by the Legislature on May 23. Both new members took their oath of office prior to the start of the meeting. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on May 16, 2017. All background materials for the agenda items to be acted on had been provided to all Board members prior to the meeting and a copy 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 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 March 24, 2017, meeting. The executive director told the Board that Chris Dibbern, general counsel for the Municipal Energy Agency of Nebraska (MEAN), had previously pointed out that the word “fist” as the first word in the fourth full paragraph on page 5 should be “first”. This was the only noted changed to the minutes. Mr. Morehouse moved to approve the minutes with the corrected word. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next agenda item was acceptance of the expense reports for the month of March and April. The expenses for March were $30,766.44 in personal services, $13,678.89 in operating expenses, and $279.21 in travel expenses. The total March expenses were $44,166.12. The expenses for April were $23,342.13 in personal services, $20,759.39 in operating expenses, and $1,097.41 in travel expenses and $1,204.95 in Capital Outlay for Furniture & Office Equipment. The amount in the Furniture & Office equipment is for a new digital voice recorder for the meeting minutes. When new computers were purchased for the staff, the software that runs the old digital voice recorder is incompatible with the new systems. The total April expenses were $46,403.88. Mr. Morehouse asked if the new voice recorder had voice recognition software where it would transcribe the proceedings. Sara Birkett, the Board’s paralegal, explained that the new recorder is compatible with the voice recognition software but the office did not feel that it was necessary to pay the additional substantial amount for voice recognition software, since it is not necessary and the recorder is only used once each month. Voice recognition software could be useful for the Board’s evidentiary hearings, but the Board uses a court reporter to transcribe its evidentiary hearings. Mr. Morehouse moved to accept the expense reports for March and April. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next item on the agenda was a presentation given by Omaha Public Power District (OPPD) officials describing the District’s new rate class designated as 261-M. Chairman Reida had asked OPPD if it would give a presentation on the new rate class. Tom Richards, OPPD Governmental Relations Manager, introduced Tim O’Brien and Tammy Monroe, who gave the presentation. The presentation described the new rate class and the publicly available information on the new Facebook facility, which was the impetus for the rate. The Board thanked the OPPD members for the very informative presentation on the 261-M rate class.

The next item on the agenda was consideration of the Board’s assessment figure for fiscal year 2017-2018. 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 funds from 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 is sent to each power supplier to certify its gross revenue from electricity and related sales. Once all the certificates are returned, the Board’s business manager calculates the 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 a reserve fund. After removing the reserve amount, the Board credits the remaining balance against what the utilities owe, and then the Board collects the assessment amount from the power suppliers for the Board’s budget in the new fiscal year. The Governor must approve the Board’s proposed assessment figure before the PRB can begin collecting the assessments. The reserve funds are used for emergency expenditures or for the agency’s operations during a new fiscal period when there is a delay in collecting the new fiscal year’s assessment amount. The Board’s biennial budget was approved as part of legislative bill 327e. The State’s fiscal year runs from July 1 to June 30.

Although normally it does not take very long 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 $125,677. In the past, the PRB retained 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 $38,000 per month on which to operate. The Board had always collected the entire appropriation authorized by the Legislature. Last year the Governor’s office asked the Board to determine its assessment figure based on its historical expenses and not collect the entire appropriation that the Legislature approved. During last year’s process to approve the assessment figure, the Governor’s office contacted the Board’s staff to explain that it would not approve the assessment figure. The Governor’s Budget office recommended the Board base its assessment on historical spending levels and not the appropriation approved by the Legislature. The concern with this procedure is if a budget shortfall or an emergency occurs. The Governor’s Budget Office told the PRB staff the Board could use a special assessment to collect the rest of the appropriation if the additional funds are needed.

Based on projections for what funds will be needed to operate in May and June, the three-month reserve scenario would retain $114,000 in reserve, leaving $100,378.14 to credit to utilities to offset the assessment. The assessment figure would be 12.971290 cents per $1,000 gross revenue. Last year’s assessment figure was 11.1656485. The 3-month scenario assessment figure would be slightly higher than last year’s assessment. In FY 2015-16 the assessment figure was 13.318286 and the year previous it was 11.404124. The Governor’s office had expressed concerns when the assessment figure fluctuated greatly year to year, but fortunately that has leveled out.

Executive Director Texel noted to the Board that the language for the authority to conduct a special assessment is not entirely clear. Nebraska Revised Statute 70-1020 states “In order to defray the expenses of the Nebraska Power Review Board, there shall be imposed upon each [public power entity] an assessment each fiscal year in such sum as shall be determined by the Board and approved by the Governor.” Section 70-1024 specifically provides the PRB with “the Power and duty to levy a special assessment” to defray the expenses of a long-range power supply plan if the funds are needed. The executive director’s concern is that there is no specific special assessment provision regarding the PRB’s main budget, only when associated with expenses needed for a long-range power supply plan. One could argue that since there is no specific provision for a special assessment for the main budget, there is no such statutory authority. He would argue that it is an inherent power necessary in order to carry out the PRB’s duties. Executive Director Texel said he would like the Board to ask the Legislature to provide specific authority to conduct a special assessment for its main budget, but that will be dealt with in later meetings.

The memo prepared by the business manager included the assessment figures that would be needed if the Board maintained a reserve of 4-months, 3-months and 2-months. A 4-month reserve would be $152,000 and the assessment figure would be 14.106407. A 3-month would be $114,000 and the assessment figure would be 12.971290. A 2-month reserve would be $76,000 and the assessment figure would be 11.106407. Mr. Morehouse moved to approve the Board keeping three-months expenditures in reserve, which is $114,000, and adopt an assessment figure of 12.971290 cents per $1,000 of gross income. Mr. Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next item on the agenda was to consider reimbursement for the 2017 Wind and Solar Conference expenses for the executive director and any interested Board members. This is the 10th Annual Nebraska Wind and Solar Conference. The event will be held in the Cornhusker Marriott in Lincoln, Nebraska. The only expenses that would be incurred by the executive director would be the registration of $125. Registration increases if paid in October or later. If any of the Board members would want to attend there would be mileage reimbursement and possibly lodging. Mr. Morehouse asked if the Board could change its meeting to coincide with this event. He could not justify attending the conference on Monday and Tuesday, then staying two more days to attend the Board meeting on Friday. The Board agreed to change its November meeting date to Wednesday, November 15. Mr. Grennan said he would be attending the conference, but it would not involve any PRB reimbursement as he was attending in his capacity as a representative of HDR, Inc. Mr. Grennan moved to approve the executive director’s expenses and up to four of the Board members. Mr. Morehouse seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

The next item on the agenda was the executive director’s report. The first item discussed was an update on Southwest Power Pool (SPP) activities. Mr. Grennan discussed the Mountain West Transmission Group joining SPP. The Mountain West group are all located in the western interconnection. Most of the SPP’s current members are in the Eastern interconnection and there are only several areas where there is an AC/DC tie between the Eastern and Western interconnect. The SPP formed a committee to review the Mountain West members becoming SPP members and the costs that may result.

The next item was the Legislative update. The executive director reported on several bills that the Board’s staff is tracking. The Board members also had a document in their notebook showing the bills being tracked and the status of each bill.

First was LB 327e, which is the State’s main budget bill for the next biennium. Executive Director Texel explained that the Governor proposed to reduce the Board’s appropriation by $50,000 in each year of the biennial budget periods. Almost all agency budgets were reduced in the Governor’s proposed budget, so the Board was not being singled out. The Appropriations Committee’s preliminary decision was to not reduce the PRB’s budget and appropriate the entire requested budget of $656,000. A letter was submitted to the Appropriations Committee instead of testifying at the budget hearing. The Board’s budget request was for a reduction of approximately 1% before taking into account increases for health insurance and cost of living raises, which are outside an agency’s control and are added in after agencies submit their budget requests. After the health insurance and raises were added in, the Board’s budget saw an increase of less than one percent (.9%).

LB 127 was introduced by Senator Groene. The bill would change the notice requirements for public meetings in the Open Meetings Act. It would repeal language allowing public bodies to decide on the method of how to issue public notice of its meetings and instead require that all public bodies publish notice in a newspaper with general circulation in each county within the public body’s jurisdiction. That would mean state agencies would have to publish notice in newspapers that can be shown to have general circulation in all 93 counties. Executive Director Texel told the Board that an amendment had been added exempting state agencies from the new requirements, so the bill would only apply to political subdivisions. The Government, Military and Veteran’s Affairs Committee had added the amendment when the bill was forwarded to general file. The bill will carry over to the next session.

LB 494 was introduced by Senator Briese. This bill allow withholding public records related to energy infrastructure and allowing utilities to withhold the names of employees responsible for critical infrastructure. It was the executive director’s understanding the press was opposed to protecting the identities of the employees, but did not oppose protection of the critical infrastructure plans. This bill is on general file and will carry over to the next session.

There are several Interim Studies of interest to the PRB. LR 125 (introduced by Senator Hughes) will examine the public power industry in Nebraska. LR 159 (introduced by Senator Wayne) would examine issues under the jurisdiction of the Natural Resources Committee. LR 211 (introduced by Senator Wayne) would examine allowing customers to choose their electric supplier and allowing greater information in bills. LR 239 (introduced by Senator Kolowski) will examine issues related to solar development in Nebraska. Executive Director Texel stated that he would like to provide committee testimony concerning the difficulty of dealing with Community Solar Facilities under current Nebraska law at any hearings held on LR 239. LR 245 (introduced by Senator Brewer) will examine issues raised by placing a moratorium on wind generation projects in the Sandhills.

The Board scheduled its 2017 meeting dates for the fourth Friday of each month. The next meetings will be on June 23, July 28 and August 25. The June meeting will be held in Grand Island in the City Council Chambers. The Board will take a tour of the NPPD Control Center in Doniphan, Nebraska following the meeting.

The Board then elected a new vice-chair for 2017. This was necessitated when Governor Ricketts did not reappoint Chuck Haase to the Board, and instead appointed Mr. Moen. Mr. Grennan made a motion to appoint Mr. Morehouse as the vice-chair for 2017. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0.

Mr. Morehouse moved to adjourn the meeting. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Mr. Grennan—yes, Mr. Hutchison—yes, Mr. Moen—yes, and Mr. Morehouse – yes. The motion carried 5 – 0. The meeting was adjourned at 11:38 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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