Note: These minutes are in draft form pending approval by the Board at its next public meeting.
Minutes of the 789th Meeting
December 15, 2017
The 789th 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 December 5, 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 October 27, 2017, meeting. The staff did not have any recommended changes. Mr. Grennan moved to approve the minutes. Mr. Moen seconded the motion. Voting on the motion: Chairman Reida – yes, Vice Chairman Morehouse – abstain, Mr. Grennan – yes, Mr. Hutchison – yes, and Mr. Moen – yes. The motion carried 4– 0 with one abstain.
The next agenda item was acceptance of the expense reports for the months of October and November. In October there was $22,110.56 in personal services, $16,238.01 in operating expenses, and $3,456.35 in travel expenses. The Board paid $747.59 for Mr. Grennan’s travel to attend a meeting of the Southwest Power Pool’s (SPP) Regional Allocation Review Task Force (RARTF) in October. The expenses were actually incurred in September. The Board received reimbursement for the travel expenses from the SPP in October, though. The actual total expenses for October, including Mr. Grennan’s SPP travel expenses, were $41,804.92. The November expenses were $25,167.84 in personal services, $16,339.45 in operating expenses, and $3,283.09 in travel expenses. The travel expenses include $997.33 in travel expenses Mr. Grennan incurred to attend an SPP Regional State Committee (RSC) meeting at the end of October. The Board will receive reimbursement for those expenses from SPP in December. The actual expense total expenses for November were $44,709.38. Vice Chairman Morehouse moved to accept the expense reports for October and November. 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 item on the agenda was to consider PRB-3868. Midwest Electric Cooperative Corporation filed this application on December 11, 2017. The application requests authority to build 1.5 miles of 12.47 kV distribution line in Lincoln County, Nebraska. The line would serve two center irrigation pivots owned by Marvin Knoll. The construction is in McCook Public Power District’s service area. McCook PPD filed a Consent and Waiver Form waiving a hearing and consenting to approval of the application. Midwest ECC already serves a couple pivots in McCook PPD’s service area near the two involved in this application. The line would extend from the one serving the pivots that are already being served by Midwest ECC. The Board consulted with the Nebraska Game and Parks Commission as required by Nebraska Revised Statute section 37-807(3). The Board received a letter from the Commission on December 7, 2017. The Commission determined there are no threatened or endangered species in the project area, nor critical habitat. The Commission did not object to the Board’s approval of this project. Vice Chairman Morehouse moved to approve Midwest Electric Cooperative Corporation’s application PRB-3868. 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 consider SAA 100-17-A. The two utilities involved in the service area agreement amendment were unable to get the necessary signatures on the application prior to the Board meeting. The executive director recommended the Board table the application until the January 2018 meeting. All Board members agreed to table this item until next month. The utilities will be filing the necessary paperwork once each board of directors is able to meet and the appropriate executive can sign the documents for filing.
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 the Board had given him authorization to draft language to amend sections 70-1014.02 and 70-1020. The Board had a draft of the proposed language in their notebooks. Executive Director Texel met with Senator Hughes, Chairman of the Natural Resources Committee, and Senator Hughes agreed to introduce both bills. He wanted to make sure that the changes to 70-1014.02 was not a controversial bill. He would like all the parties involved to agree with the changes. Executive Director Texel met with several representative of private developers on December 8 to discuss the changes to section 70-1014.02, which deals with privately developed renewable energy generation facilities. The discussion had initially included creating a penalty using a “per day” system for the calculation of the penalty, similar to what is often used in environmental law violations. The Board expressed interest in that option during its November meeting. The conclusion the developer representatives and Executive Director Texel arrived at was that the penalty was really secondary to the main method of enforcing compliance available to the Board, which is to notify an entity constructing a renewable facility that it must cease and desist construction activities, or cease operations of an existing facility, due to noncompliance with 70-1014.02. The agreement was that a relatively small fine should be used, with clear injunctive relief to require cessation of construction activities or further operation of the facility until the penalty is paid and the required certifications are filed.
The current language imposes a $500 fine, regardless of the capacity of the facility. Executive Director Texel suggested that perhaps a $250 fine might be more appropriate. That way it imposes a more modest fine on small developers. Large commercial facilities will not care about whether the fine is $250 or $500. Their concern is the Board’s power to require construction or operation to cease. That will create far more costs and problems for a large facility than a fine, unless the amount is increased to many thousands of dollars. Vice Chairman Morehouse spoke about the amount of the penalty and indicated that the amount of the fine would probably not hinder a developer installing a small facility. Even with a small facility, the cost will easily be ten or fifteen thousand dollars or more, so a $500 fine would likely not be a significant deterrent that would risk shutting down a small facility or causing not to be built. The executive director also noted that he and the private developer representatives decided to put the proposed amendments in section 70-1015 instead of 70-1014.02. The private developers did not want to open the door for other amendments to 70-1014.02. Section 70-1015 deals with the Board’s injunctive relief for violations of Chapter 70, article 10, so it seems to be a natural fit to include the amended language there. Neither bill is expected to have a fiscal impact on the Board. The Board discussed several scenarios involving developers arguing that filing the certifications in 70-1014.02 were not required. Mr. Levy, an attorney representing several private developers that worked on the draft language, addressed the Board and expressed support for the proposed amendments to 70-1014.02. He stated that the fine amount really is not what will cause harm to his clients. It is the cease and desist letter that will affect them the most. A letter from a regulatory agency that the facility is not in compliance with state law would create great concern for lenders and could considerably disrupt construction timelines and contracts. A private developer will want to address the issue very quickly. The Board members all agreed to leave the penalty amount at $500, and directed Executive Director Texel to continue working with Senator Hughes to introduce the proposed bills during the 2018 Legislative session. The proposed amendments to 70-1020 have not changed from previous versions.
The next item on the agenda was to discuss proposed addendum to language to State Contract 69810(O4), which is the Board’s contract for a consultant pertaining to the SPP’s RSC and cost allocation working group (CAWG). The PRB previously created a committee comprised of Chairman Reida, Mr. Grennan and the executive director/general counsel to review an informal complaint the PRB received regarding an alleged conflict of interest involving the Board’s SPP contractor. The situation has been addressed with the current contractor. One issue that came out of the investigation is the need to modify the current language in the contract that covers “conflicts of interest.” The committee decided it should address this language in an addendum prior to the next contract renewal on July 1, 2018. Under the “conflicts of interest” section in the contract, paragraph 7 of a list of consulting assignments that are deemed not to constitute conflicts is where almost all the issues have arisen. Executive Director Texel recommended paragraph 7 be removed, along with other amendments. The contractor is still able to take additional assignments, but the contractor would need to give notice of all assignments to the PRB through the executive director prior to accepting the consulting assignment. The executive director would then determine if the assignment constitutes a conflict of interest. If the contractor disagrees with the executive director’s decision and believes the assignment is not a conflict of interest, he could appeal to the Board. The Board’s decision would be final. To challenge the Board’s decision would mean litigation. The proposed addendum would also eliminate the language in the contract that refers to “transmission owning” members of the SPP. After consulting with SPP officials, this was removed because SPP does not distinguish between transmission owning and transmission dependent members. The Board discussed several options available if the contractor will not accept the amendments to the contract. If the contractor chooses to not renew the contract due to the language changes the Board would need to issue a new Request For Proposals (RFP). Executive Director Texel said that is why this process is being done so early. That will allow sufficient time to issue a new RFP and hire a new contractor prior to the new contract period beginning July 1, 2018. Mr. Hutchison moved to approve the proposed amendments to State contract 69810(O4), and to create a committee comprised of Chairman Reida, Mr. Grennan and the Board’s executive director and general counsel that is authorized to take the steps necessary to approve the proposed addendum, including submission to the State Department of Administrative Services, and to make any further necessary changes to the proposed addendum language prior to providing it to the contractor. 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 the Mountain West Transmission Group is still working toward joining the SPP. That is about all he is permitted to say on that issue due to the nondisclosure agreement he signed. He told the Board that the RSC elected him as its new Secretary-Treasurer, the term of which will begin in 2018. The next RSC meeting will be in January.
Next Executive Director Texel briefed the Board on the Governor’s new performance-based pay increase system that will replace the historical practice of giving all rules-covered State employees an annual cost-of-living raise. Mr. Hutchison had asked that the Board be briefed on the new raise system. The executive director explained that the plan is mandatory for all code agencies. The PRB is a non-code or independent agency, so it is not required to participate, but the Governor strongly urged non-code agencies to also implement the plan. The PRB already voluntarily implemented the performance review procedure two or three years ago. The performance review process is the prerequisite to participation in the new performance-based pay plan. The new performance pay raise plan does not apply to employees covered by the bargaining unit. Sara Birkett, the Board’s paralegal, is covered by the bargaining unit, so she could not be part of the new pay plan. Director salaries are controlled by their boards and commissions. That means that for the PRB, the only employee covered by the new plan is the Board’s business manager, Rebecca Hallgren.
Under the new pay plan, an employee who meets the goals established in his or her performance plan would receive a 1.5% increase on January 1, 2019. Those employees who do not meet the goals would not receive any increase. Agency directors can take the funds that are allocated for the employees that failed to meet their goals and give an additional raise with those funds to the employees that did meet their goals. How that would be distributed is within the agency head’s discretion. It could be evenly divided, or the “star performers” could be given higher raises. For the PRB, since the business manager is the only employee that would be covered under the new pay plan, no additional raise would be possible. The plan is revenue-neutral, as the budget already provides funding for a 1.5% raise for all State employees. The remaining details of the pay plan have not been determined. Mr. Moen asked if employees that improve and achieve their goals can receive a raise after their annual performance evaluation. The executive director said the answer is no. The evaluation is done once annually, so employees after that would be improving in order to receive the performance-based pay raise at the next annual evaluation period. Mr. Moen commented that it is more common for performance plans to provide a mechanism for an employee to achieve their goals and receive a raise for the remainder of the pay period. The executive director said if an agency head provided other employees with an extra raise with the funds available from the employees who did not meet their goals, there would be no funds available to give an improved employee a raise. That is probably a detail that will need to be addressed in subsequent years. In a meeting with non-code agency directors, the Governor’s office acknowledged the new system is not perfect and has some issues to be worked out, but it is an attempt to recognize and reward employees whose performance is at least satisfactory.
The executive director noted that the next meeting dates are January 26, February 23, and March 23, 2018. The Board has scheduled the 2018 meetings to be on the fourth Friday of each month, with several exceptions due to holidays.
Mr. Hutchison moved to adjourn the meeting. 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 meeting was adjourned at 11:32 a.m.
Timothy J. Texel
Executive Director and General Counsel