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Minutes

 

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

 

NEBRASKA POWER REVIEW BOARD

Minutes of the 787th Meeting

September 22, 2017

 

The 787th meeting of the Nebraska Power Review Board (“the Board” or “PRB”) was held in the Liquor Control Commission hearing room, Nebraska State Office Building, 301 Centennial Mall, Lincoln, Nebraska. The roll was called and present were Chairman Reida, Vice Chairman Morehouse, Mr. Grennan, Mr. Hutchison, and Mr. Moen. Executive Director Texel stated that public notice for the meeting had been published in the Lincoln Journal Star newspaper on September 12, 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 at 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 August 25, 2017, meeting. The staff did not have any recommended changes. Vice Chairman Morehouse moved to approve the minutes. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— yes. The motion carried 5– 0.

The next agenda item was acceptance of the expense report for the month of August. The expenses were $32,286.79 in personal services, $4586.98 in operating expenses, and the travel expenses actual $1,248.24. Rebecca Hallgren, the Board’s Business manager, had prepared a document to show the actual cash on hand, not just the percentage of the budget used in each account category. This was done at the request of Vice Chairman Morehouse. The Board members said they would like to have the cash on hand document for each meeting. The executive director said the cash on hand report would become much more important with the new method required by the Governor’s office of collecting less than the Board’s full appropriation amount authorized by the Legislature. Vice Chairman Morehouse moved to accept the expense report. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— yes. The motion carried 5– 0.

The next agenda item was to consider approval of expenses for Chairman Reida (the Board’s designated attorney member) and the executive director and general counsel to attend the Nebraska State Bar Association’s (NSBA) Legal Seminar tilted titled “Who’s Your Client When You Represent the Government?” The seminar is sponsored by the NSBA’s Government and Administrative Law section. Executive Director Texel told the Board he doubted he would attend. He will be attending the American Public Power Association’s (APPA) legal seminar the four days prior to the NSBA seminar, and the Natural Resources Committee invited him to attend a tour of facilities in central Nebraska on the following Monday and Tuesday. He would like to attend due to the topic, but it would be difficult to be out of the office for so many days in a row. Chairman Reida also said he was not sure if he would attend the NSBA seminar, as he was likewise going to the APPA legal seminar. Vice Chairman Morehouse moved to pay for the expenses to attend the legal seminar for the Board’s attorney member and the executive director/general counsel. Mr. Hutchison seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— yes. The motion carried 5– 0.

The next item on the agenda was to review draft language for proposed amendments to two Power Review Board statutes. The executive director explained that he discussed the draft amendments with the Nebraska Power Association’s (NPA) Board of Directors at their meeting just that Wednesday. He has also sent the draft language to several attorneys who represent private developers, as well as the American Wind Association’s (AWEA) lobbyist. The AWEA lobbyist will disseminate the draft amendments to all the AWEA members and ask for comments. The executive director first discussed the proposed language change to Neb. Rev. Stat. section 70-1020. Section 70-1020 controls the Board’s assessments on public power utilities. The draft amendment is necessary due to the changes in how the Governor’s Budget Office wants the Board to collect its assessments. Since the Board was created in 1963 the Board collected the entire appropriation authorized by the Legislature in the State’s biennial budget. The Governor’s Budget Office told the staff that now it will disapprove any assessment that is not based on historical spending levels, regardless of the appropriation amount. The Board submits a budget request, which is acted on by the Legislature. This budgeted amount becomes what the Board terms the appropriation, which is the Board’s entire spending authority for that fiscal year. The statute requires that the Governor approve the Board’s assessment figure prior to collecting its funds. The Governor’s budget office informed the Board that it will not approve the assessment figure unless it is based on collecting what the agency has spent for the past few years, not the entire spending authority or appropriation. This created concerns, because if the Board has a year where it needs to spend more than it has in the recent past, it would run out of funds. The Governor’s Budget Office also wants the Board to reduce its reserve, which it believes is too large. When applied together, that means the agency may need to furlough employees, not hold meetings, or shut down for the rest of a fiscal year if spending is higher than in the recent past. The Governor’s Budget Office wants the Board to use a special assessment in the event of higher than normal spending. The problem is that section 70-1020 only authorizes one assessment. There is no statutory authority to carry out additional special assessments. The statute appears to expect that the Board will collect its entire appropriation each year, and reduce the assessment the next year if the amount collected was too high. This is how the assessments were handled for the past 53 years. The only special assessment authorized is to fund the long-range coordinated power supply plan if the designated representative organization cannot or will not prepare the supply plan. The fact that there is a special assessment authorized for one specific purpose serves to confirm that it is not authorized for the Board’s general operational funds.

The main comment from the NPA Board of Directors was that it does not seem the Board has a choice but to pursue the amendment. The NPA supported the draft amendment. None of the private developers indicated any concerns about the proposed language, which made sense given that the assessments would not affect them. Executive Director Texel stated that he would like to present the draft amendment to Senator Hughes, as Chair of the Natural Resources Committee, and ask if he would be willing to introduce the bill for the PRB. It was the executive director’s hope that the bill would be viewed as essentially a type of “clean-up bill” that is not controversial. Mr. Morehouse moved to authorize Executive Director Texel to continue working with the NPA and private developers to finalize the language in the amendment and to try to find a sponsor to introduce the bill for the Board, starting first with Senator Hughes. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— yes. The motion carried 5– 0.

The Board next discussed a draft amendment to Neb. Rev. Stat. section 70-1014.02. The proposed amendment attempts to address a problem that has arisen with the certification for new Privately Developed Renewable Energy Generation Facilities. The statute was amended last year to allow private entities to avoid the need to follow the PRB’s normal application and evidentiary hearing process. Under the statute the person or entity wanting to construct or install a renewable generator can submit a notice letter in which the person or entity certifies that it will do certain things. The statute requires the person or entity to submit the notice letter at least 30 days prior to commencement of construction of the facility. The Board’s executive director then reviews the certifications and if they are complete notifies the entity that the facility is exempt from the Board’s normal approval process requiring an application and evidentiary hearing.

The problem is that several small entities have constructed renewable facilities and then found out about the certifications requirement. There is no provision in the current statute allowing a waiver of the 30 days, which means technically the Board’s executive director should deny the exemption and require the entities to either submit an application and go through the evidentiary hearing process or obtain approval through the Federal Energy Regulatory Commission under its PURPA regulations. In the instances so far, the executive director has allowed the entities to submit the certifications out of time and essentially waived the 30 day notice requirement. Executive Director Texel believes that all but one of the entities thus far have missed the 30 day requirement by innocent mistake. When he notified them, they immediately submitted the certifications. But the executive director acknowledged he is probably acting without any express authority to grant such waivers. He believes it was the Legislature’s intent to clear the way for private entities to use the certification method in order to avoid the need for a formal application and hearing, and to deny all such entities a waiver would serve to frustrate the Legislature’s intent. The proposed amendment would allow the executive director to impose a fine for entities submitting the certifications less than 30 days prior to construction. The fine in the draft would be $2.00 per kilowatt of rated capacity. There is an appeal process for the private entities. If they believe they have not “commenced construction” yet, or for some other reason should not be fined, they can appeal the executive director’s decision by requesting a hearing before the Board. He added that one thing he believes needs to be added yet is that any notice of appeal to the Board must be filed within 20 days of the mailing of the determination that construction had commenced.

This proposed amendment was also discussed with the NPA Board of Directors and was submitted to the developers’ attorneys and the AWEA. The NPA supported the concept of the waiver and was supportive of the proposed amendment. One suggestion was that perhaps the fines should be based on a sliding scale, based on rated capacity. There was some concern expressed that the $2.00 per kilowatt might be too low to dissuade entities from ignoring the 30 day requirement. It was also expressed that the amount might need to be larger for larger renewable facilities. Only one of the attorneys that represents renewable developers responded so far. He thought that the $2.00 per kilowatt was quite excessive for large facilities. He thought that maybe the executive director should have discretion to allow a party to not pay the fine if they can show good cause. He was particularly concerned about entities that miss the deadline by one or two days being treated the same as others that construct the facility prior to submitting the certifications. Another comment was that perhaps a sliding scale could be used and reduce the fine for facilities larger than 50 megawatts. Finally, he thought that the Board should consider a fine based on a “per day” basis, so missing the deadline by one day was a nominal fine, while missing by 20 or 30 days or more is a substantial fine.

Mr. Grennan thought fines based on a per day violation was a very good idea. That is more consistent with the types of fines used in other regulatory matters, especially environmental issues. The other Board members agreed. The Board also discussed a suggestion that the fine amount be capped after a certain capacity. Larger facilities would have a cap at a certain amount, while smaller facilities would use a sliding scale.

Mr. Hutchison asked where the money from the fines would go. The executive director replied that the fines would go to the schools in the county where the fine was imposed. He read the pertinent provisions of Article VII, section 5 of the Nebraska Constitution, which states that “all fines, penalties and license money arising under the general laws of the state … shall belong and be paid over to the counties respectively where the same may be levied or imposed … all such fines, penalties and license money shall be appropriated exclusively to the use and support of the common schools….” There was discussion about several facilities that Executive Director Texel was working with to get them to submit the required certifications for their renewable facility. Executive Director Texel told the Board all the owners were quick to submit the certifications once he contacted them with one exception. In the instance where certifications were not submitted, he had sent notice to the entity’s agent registered with the Secretary of State’s Office. The Post Office returned the notice as not accepted by the addressed party. The staff had confirmed that the facility did not have approval from the Federal Energy Regulatory Commission. The executive director planned to notify the utility involved that it was purchasing electricity from a facility that is in violation of Nebraska law and request that it cease purchasing from the renewable facility. The Board agreed that was appropriate.

Ms. Dibbern, general counsel for the Municipal Energy Agency of Nebraska (MEAN), addressed the Board and said it is possible there are quite a number of other renewable generation facilities in the State that have not requested certification. Mr. Grennan said that maybe a letter should be sent to all utilities asking them to notify the Board if they are aware of any privately developed renewable generation facilities operating or under construction in their service area. This would not include net metering facilities, as State law already exempts them. This may help the utilities be aware to notify the Board when a private entity requests to interconnect with a utility’s grid system, and help avoid construction prior to submitting the certifications.

Mr. Hutchison moved to authorize Executive Director Texel to find a senator willing to introduce the proposed amendment to section 70-1014.02, starting with Senator Hughes. The executive director will continue working with the NPA and private developers to finalize the language in the amendments, and any senator should be informed some details need to be finalized yet. Vice Chairman Morehouse seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— 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 stated that he attended the recent RARTF (Rate Allocation and Review Task Force) meeting. He talked about the RCAR (Regional Cost Allocation Review) group doing a new study to ensure that all members receive the 1% benefit. A few utilities are still at the .8 level. The next Regional State Committee meeting is at the end of October in Little Rock, Arkansas.

The Board then discussed whether it should consider conducting a new Conditions Certain report. Mr. Hutchison had contacted the executive director about this topic. Recently a couple of groups have been very vocal about promoting retail competition in the electric industry in Nebraska. Last year there was a bill on that topic in the Legislature. Executive Director explained that in 2010 the statute requiring preparation for an annual Conditions Certain report was amended. The amendment removed the annual requirement and allowing the report to be prepared any time deemed beneficial by the Board. The executive director said his recollection was the expectation was that the Board would prepare the report if requested by the Legislature, and in particular the Natural Resources Committee, or the Governor. One difficulty is that when the report was prepared annually the Board had hired a consultant to coordinate preparation of the report, and the Legislature had added funding for the consultant in the Board’s budget. Now the Board has no funds for such a consultant and may have to issue a new request for proposals. When the last report was prepared in 2010, the consultant coordinating preparation of the report was paid $16,272. Executive Director Texel had discussed the possibility of a new Conditions Certain report with the NPA at its meeting. The NPA was not in favor of preparing a new report. One main issue was that the Legislature sent a very clear message last year by indefinitely postponing all bills related to retail electric choice, so why would the Board conduct a new report to study the issue. The employees of the NPA members perform the bulk of the research, spending a great deal of time working on the report for the Board. The NPA did not believe that would be cost effective or necessary, given the Legislature’s actions last session. They also pointed out that neither the Legislature nor the Governor had requested that the report be prepared. Since all but one of the “conditions” had been met, the study would really just be a comparison of wholesale prices in the region. Back when the legislation authorizing the study was passed, that information was not always readily available. Now the U.S. Energy Information Administration, the Southwest Power Pool, and numerous other resources are available that can provide information on prices. Given all these factors, the Board decided to take no action toward preparation of a new Conditions Certain report unless requested to do so by the Legislature or the Governor.

The executive director then informed Board that he had become aware that the Winnebago Tribe was building or had built a solar generation facility on its Tribal Reservation. He is not sure if the PRB has any jurisdiction or responsibility to act on this. He is in the process of contacting the Attorney General’s Office, individuals that may have some involvement with the facility, the utility to which it might be intereconnected, etc. He has avoided contacting the Tribe yet because he wants this to be as informal as possible. The Attorney General’s Office had indicated whether the PRB has any jurisdiction depends greatly on how the facility is configured, where it is located, and to whom the electricity is being sold. The executive director doubted the PRB has jurisdiction, but will continue trying to find out more information to make sure.

The executive director noted that the next meeting dates are on October 27, November 15, and December 15. He asked the Board if it would like to continue scheduling its meetings on the fourth Friday of each month. The Board member all agreed the fourth Friday has been working and should continue through 2018. The executive director reminded them that several months would not be on the fourth Friday due to holidays. He would send out a list of dates following the meeting. The dates will also be made available on the State’s public meeting calendar at https://www.nebraska.gov/calendar/index.cgi.

Vice Chairman Morehouse moved to adjourn the meeting. Mr. Grennan seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse—yes, Mr. Grennan—yes, Mr. Hutchison—yes, and Mr. Moen— yes. The motion carried 5 – 0. The meeting was adjourned at 11:25 a.m.

  

_______________________________

Timothy J. Texel

Executive Director and General Counsel

 

 

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