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In Natural Resources Committee we heard testimony on several bills that dealt with Nebraska’s public power industry. Those bills included:
LB 141, introduced by Senator Ken Schilz and made a priority of the Committee, makes changes to the Public Entities Mandated Project Charges Act, which was passed as LB 548 in 2006. The original act authorizes the issuance of bonds by the public entities to finance capital projects mandated by federal or state law or by a regulatory agency, for example, the Environmental Protection Agency. This legislation was designed for use by the Public Power industry in the state. Some of the new regulations being mandated by the EPA will require power plant modifications that could cost millions of dollars. The act also authorizes a public entity to establish a mandated project charge on customer bills to pay bond holders. This special purpose entity is now required by many bond holders.
The special purpose entity in LB 141 would be created by the Public Entities Board, would be a corporation of the state, and would be protected from the general debts of the issuing public entity. This entity would be governed by a three-person board of directors appointed from among the board members of the special entity. Rating agencies consider the special purpose entity to be a bankruptcy remote entity which protects bond holders in the event of a public entity bankruptcy. The proposed changes also provide for the public entity to pledge the proceeds of the mandated project charge to secure the bonds. The ultimate goal of this legislation is to allow the public entities to complete mandated projects at a lower cost. So basically, this bill pledges more of the revenue stream towards the payment of the bonds so there won’t be a default, and so that lowers bond holders risk, which raises the bond rating and therefore saves the customers money. LB 141 has been advanced to the full Legislature.
LB 469, introduced by Sen. Jim Smith and prioritized by Sen. Brett Lindstrom incorporates the provisions of LB 583, which was introduced by Sen. Ken Schilz. LB 469 as amended by the Committee, requires that the Nebraska Department of Environmental Quality (DEQ) provide a copy of a state plan for regulating carbon dioxide emission to the State Energy Office (SEO) prior to submitting such plan to the U.S. Environmental Protection Agency. The SEO is to prepare an assessment of the plan’s effect on: electric generating capacity that could retire or change the fuel used by our coal fired power plants; stranded investments (which would be current plants that may be running below designed capacity); investments needed to offset electric generating capacity changes; risks to electric reliability; electricity prices; employment; the SEO is to finish the report within 30 days after receipt and submit it to the Legislature; the Legislature may vote on a nonbinding legislative resolution on the report’s findings; the DEQ is to submit the final state plan to the Legislature; and clarify that nothing in this act is to prevent DEQ from complying with federal deadlines.
The bill also lists additional duties of the SEO by adding the duties of developing a strategic state energy plan; developing and disseminating transparent and objective energy information and analysis, while using existing resources; maximizing funding to the state for energy planning; monitoring energy transmission planning and energy infrastructure and making policy recommendations to the Governor and Legislature. The information in this report would show us what the potential economic impact would be from EPA regulations that are being proposed by the EPA on the coal generating facilities that we depend on in this state. LB 469 has been advanced to the full Legislature.
An additional bill heard by the Committee, introduced and prioritized by Sen. Ken Haar repeals
several requirements for approving a Certified Renewable Export Facility (CREF) by the Nebraska Power
Review Board. LB 407 would mostly impact the development of wind farms in Nebraska. Since Nebraska is a power surplus state, which means we generate more power than we use, wind generation power needs to be exported. A coal fired power plant needs about 24 hours’ notice to begin ramping up production when the wind ceases to blow. This means that the more wind generation we depend on the more we must depend on natural gas fired generation to bridge the gap when coal fired plants cannot respond quickly enough. The requirements repealed are: a showing by the CREF that it has a power purchase agreement for at least ninety percent of the output to an entity outside the state of Nebraska; allowing public power districts the right of first refusal to purchase ten percent of the CREF’s output; and the ability of the Power Review Board to reject the project on a showing of a substantial risk of creating stranded assets.
The bill also repeals an incumbent public power district the right of first refusal to build transmission projects ordered by a regional transmission organization such as the Southwest Power Pool of which we are a member. Although prioritized, the Natural Resources Committee has not advanced LB 407 to the full Legislature.