MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, August 16, 2019, at the offices of Lincoln Electric System, 1040 O Street, Lincoln, Nebraska. Board Members Present: Layne Sup, DaNay Kalkowski, Andy Hunzeker, Sarah Peetz, Lucas Sabalka, Rebecca Lai, Eliot Bostar, David Spinar, Karen Griffin Board Members Absent: None LES Staff Present: Kevin Wailes, Shelley Sahling-Zart, Laura Kapustka, Jason Fortik, Dan Pudenz, Paul Crist, Lisa Hale, Trish Owen, Jim Rigg, Marc Shkolnick, Scott Benson, JD Linscott, Eric Ruskamp, Chasity Blair, Kyle Dump, Jennifer Bangert, Troy Hopkins, Dave Auman, Dustan Daniel, Bryan Willnerd, Tom Rathe, Kelley Porter, Richard Grabow Others Present: Alyssa Martin, Alyssa Baker, Ken Winston News Media Present: None Chair Layne Sup called the meeting to order at approximately 9:30 a.m. A safety briefing was provided. He noted that LES conducts its meetings in compliance with the Nebraska Open Meetings Act, and noted that copies of the Act are located near the entrance to the Board room. Former Board member and Vice Chair Tammy Ward was elected to the City Council and subsequently resigned from the LES Administrative Board, leaving a vacancy in the office of Vice Chair. Election of officers was deferred for a couple of months pending confirmation of new Board members. The nominating committee had previously recommended the following slate of officers: Chair – Layne Sup Vice Chair – DaNay Kalkowski Secretary – Andy Hunzeker It was also recommended that Shelley Sahling-Zart be temporarily appointed as Assistant Secretary due to Lacy Stockdale having accepted a position elsewhere in LES. Sarah Peetz moved that the recommended slate of officers and appointment of Sahling-Zart be approved. Lucas Sabalka seconded the motion. The vote to elect the officers was: Call to Order Election of 2019 Officers
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MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, August 16, 2019, at the offices of Lincoln
Electric System, 1040 O Street, Lincoln, Nebraska. Board Members Present: Layne Sup, DaNay Kalkowski, Andy Hunzeker, Sarah Peetz,
Lucas Sabalka, Rebecca Lai, Eliot Bostar, David Spinar, Karen Griffin
Board Members Absent: None LES Staff Present: Kevin Wailes, Shelley Sahling-Zart, Laura Kapustka, Jason Fortik,
Dan Pudenz, Paul Crist, Lisa Hale, Trish Owen, Jim Rigg, Marc Shkolnick, Scott Benson, JD Linscott, Eric Ruskamp, Chasity Blair, Kyle Dump, Jennifer Bangert, Troy Hopkins, Dave Auman, Dustan Daniel, Bryan Willnerd, Tom Rathe, Kelley Porter, Richard Grabow
Others Present: Alyssa Martin, Alyssa Baker, Ken Winston News Media Present: None Chair Layne Sup called the meeting to order at approximately 9:30
a.m. A safety briefing was provided. He noted that LES conducts its meetings in compliance with the Nebraska Open Meetings Act, and noted that copies of the Act are located near the entrance to the Board room.
Former Board member and Vice Chair Tammy Ward was elected to
the City Council and subsequently resigned from the LES Administrative Board, leaving a vacancy in the office of Vice Chair. Election of officers was deferred for a couple of months pending confirmation of new Board members. The nominating committee had previously recommended the following slate of officers:
It was also recommended that Shelley Sahling-Zart be temporarily appointed as Assistant Secretary due to Lacy Stockdale having accepted a position elsewhere in LES. Sarah Peetz moved that the recommended slate of officers and appointment of Sahling-Zart be approved. Lucas Sabalka seconded the motion. The vote to elect the officers was:
Nay: None Abstain: None Absent: None Chair Sup asked for approval of the minutes of the meeting of
July 19, 2019. Sarah Peetz moved their approval. Andy Hunzeker seconded the motion. The vote for approval of the minutes was:
Aye: Sup, Hunzeker, Kalkowski, Peetz, Sabalka,
Lai, Bostar, Griffin, Spinar Nay: None Abstain: None Absent: None Ken Winston submitted a letter from Nebraska Interfaith Power &
Light and nine other individuals and organizations outlining suggestions for additional uses of the Sustainable Energy Program Funds. (Exhibit I)
Alyssa Baker, on behalf of herself and the Nebraska Sierra Club, requested that LES livestream its Board meetings and archive the videos of its meetings online. She noted that many cannot attend the LES Board meetings, but they are interested in the policies the LES Board is considering.
Lucas Sabalka, Chair of the Operations & Power Supply
Committee, reported on Committee discussion which included the following: 1) a review of proposed 2020 power costs which are projected to be lower than 2019; 2) a review of drivers and barriers for customer electric vehicle adoption; 3) current trends in utility generation portfolio targets; and 4) a review of 2019 second quarter generation revenue and costs. (Exhibit II)
Sarah Peetz, Chair of the Finance & Audit Committee, reported on
Committee discussion which included the following: 1) overview of LES’ efforts to identify and prevent or mitigate threats to LES employees and physical assets; 2) overview of the LES Enterprise Risk Management program and how
Approval of Minutes Comments from Customers Operations & Power Supply Committee Finance & Audit Committee
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LES’ Risk Appetite Statement is used to manage risks; and 3) an overview of LES’ Employee Retirement 401(k) Plan and 457 Deferred Compensation Plan. (Exhibit III)
Sarah Peetz, LES’ representative on the District Energy
Corporation (DEC) Board, provided a quarterly update on activities of the DEC. She noted that Tammy Ward and Alyssa Martin are new DEC Board members, both representing the City of Lincoln. The DEC currently operates six DEC plants at various locations. Current capital projects include a central thermal facility at the Nebraska State Penitentiary and extending distribution piping to the new Olsson’s building in the West Haymarket. Peetz also noted that DEC is celebrating its 30th anniversary this year. An anniversary recognition is scheduled for October. (Exhibit IV)
Eric Ruskamp, Manager, Regulatory Compliance, provided an
overview of the North American Electric Reliability Corporation (NERC) and LES’ efforts to comply with NERC reliability standards. (Exhibit V) He summarized some large outages in the northeast that spurred the creation of the Electric Reliability Organization and mandatory electric reliability standards. Penalties for violating the standards can run as much as $1 million per violation, per day. NERC has 97 enforceable standards, 68 of which are applicable to LES, and more than 500 requirements, more than 300 of which are applicable to LES. There are numerous additional sub-requirements within the standards.
LES’ regional reliability enforcement entity is the Midwest
Reliability Organization which is accountable to NERC and the Federal Energy Regulatory Commission (FERC). The MRO employs a variety of monitoring processes including compliance audits, self-certification, spot checking, compliance violation investigations, and self-reporting, among others.
Ruskamp noted that LES conducts an annual internal review of its compliance involving 38 subject matter experts throughout the company. In addition, various LES staff are also actively engaged with MRO and NERC in the process of developing and revising reliability standards, although FERC has the final approval of standards. Ruskamp also summarized the NERC 2019 State of Reliability Report.
Quarterly District Energy Corporation (DEC) Update North American Electric Reliability Corporation (NERC) Overview
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Scott Benson, Manager, Resource & Transmission Planning, gave an overview on Renewable Energy Certificates/Credits (REC). (Exhibit VI) He provided the same overview at the July meeting, but due to the fact that some Board members wanted more time to consider the policy and new Board members have been recently confirmed, Benson repeated the overview. A renewable energy certificate is a tradeable, market-based instrument that represents the legal property rights to the “renewable-ness” – or all non-power attributes – of renewable electricity generation. A REC is issued for every megawatt-hour (MWh) of electricity generated and delivered to the electric grid from an applicable renewable energy resource. Benson went over historical LES REC sales, the existing LES REC Purchase Program and proposed a new LES REC Purchase Program.
Benson noted that staff is seeking input from the Board
whether they are comfortable with LES continuing to sell LES’ generated RECs to third parties rather than claiming them for LES. Following considerable discussion, the consensus of the Board was to continue selling RECs with first priority given to LES customers and initiating a REC marketing program.
Due to time constraints, the construction update on the LES
Operations Center was deferred to the September Board meeting.
reported on LES’ Sustainable Living Festival (SLF) held July 27 on Canopy Street in the West Haymarket. (Exhibit VII) The SLF is LES’ signature outreach event and this was the ninth year for the event. Approximately 46 employee volunteers assisted with the event and this year we had 33 community partnerships. The partnerships include a variety of vendors or organizations with a focus on some aspect of sustainable living ranging from home solar panels and electric vehicles to recycling and composting. An estimated 2,000 people attended the festival.
Andy Hunzeker moved that the Board go into closed Executive
Session to discuss a) labor negotiations and b) a pending tort claim. DaNay Kalkowski seconded the motion. The vote to go into closed Executive Session was:
Aye: Sup, Hunzeker, Kalkowski, Peetz, Sabalka,
Lai, Bostar, Griffin, Spinar
Renewable Energy Credit (REC) Sales Overview & Guidance LES Operations Center (LOC) Update Sustainable Living Festival Report Executive Session
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Nay: None Abstain: None Absent: None
Chair Sup declared the Board in closed session at 11:57 a.m. He declared the Board out of closed session at 12:24 p.m.
The Monthly Financial and Power Supply Reports were distributed
to the Board and staff was available to answer questions. (Exhibit VIII)
Board members were invited to attend the Nebraska Lineworkers
Rodeo at the Nebraska State Fair on August 24. There will also be a Public Power Booth at the State Fair for the duration of the fair.
The next regular meeting of the LES Administrative Board is
scheduled for Friday, September 20, 2019, at 9:30 a.m. There being no further business before the Board, Layne Sup
declared the meeting adjourned at approximately 12:27 p.m.
Monthly Financial and Power Supply Reports Miscellaneous Next Meeting Adjournment
Dear Chairperson Sup and Members of the LES Board:
The undersigned individuals and organizations request that the Lincoln Electric Systemmaintain the funding for the Sustainable Energy Program at the 2019 level of $1.5million for the 2020 Fiscal Year. Applications to date indicate the entire amount allocatedfor 2019 will be used by LES customers to make investments to become more energyefficient and this program should continue to be funded to meet the needs of the programin2020.
V/e further request that the approximately $1.8 million that was rolled ovsr from the 2018SEP budget into the Rate StabilizationFund to be'oavailable for customer energyeffrciency and conservation use in a future fiscal year" continue to be earmarked forsustainability purposes. There are many worthwhile projects in the community whichcould benefit from allocation of such funds to reduce energy use and cost for yourcustomer owners. LES should engage in conversations with customer owners on ways tobest use these funds.
We encourage LES to take a big picture and long-tenn approach for use of these funds.Funding for customer solar and geothermal projects would achieve the same goals as theenergy efficiency and conservation purposes named in the resolution and would benefitboth your customer owners and the community as a whole. Following are some suggesteduses for these funds:
Solar and geothermal demonstration projects for environmental educationpurposes.
Incentives for solar facilities for churches and non-profits that are unable to makeuse of tax incentives.
Solar facilities for public buildings, such as the City of Lincoln, Lincoln PublicSchools, SCC or I-INL.
Projects such as these would help reduce the energy burden on LES, free up funds forthese organizations to carry out their respective missions and create jobs that wouldbenefit the local economy. They would also help with the overriding mission of reducinggreenhouse gas emissions, which is an absolute imperative for our community and ourplanet.
We would like to set up a meeting of interested persons to meet with board members and
staff to discuss the ideas set forth in this letter.
Sincerely,Kenneth C. WinstonDirector of Policy and OutreachNebraska Interfaith Power & [email protected] 402-212-37 37
John Hansen, PresidentNebraska Farmers Union
Moni UsaszLincoln Citizens Climate Lobby
Sherlyn MillerLeague of Women Voters ofNebraska
Dr. Donald A. V/ilhiteProfessor Emeritus, Climate ScienceUniversity of Nebraska Lincoln
Kristal StonerExecutive DirectorAudubonNebraska
Chris CallihanIBEW LocaI265
Jane KleebFounder and Executive DirectorBold Nebraska
Senator Ken Haar, retiredLincoln City Council 1989 -1997State Senat or 2009 -2017
David E. CorbinChair, Nebraska Sierra Club
Exhibit II
Operations and Power Supply Committee Meeting Summary
August 5, 2019
2020 Power Cost Review: The proposed 2020 Power Cost net expenditure is $98.9M, which is $3.5M lower than the 2019 Power Cost Budget. Customer loads in the SPP footprint, continued low projected natural gas prices, and increasing wind generation in the footprint continue to have a significant influence on Power Costs. Staff now has four full calendar years of representative historical market data that is being used to help refine the proposed Power Cost budget. The Operations and Power Supply Committee is scheduled to review the overall Budget and any proposed changes to the Power Cost expenditure at the September Committee meeting.
Drivers and Barriers for Customer Electric Vehicle (EV) Adoption: LES, in collaboration with seven other major utilities around the country, coordinated with the Electric Power Research Institute to survey over 3,200 individuals to determine which factors have the largest impact on electric vehicle purchasing decisions. Direct monetary incentives such as vehicle purchase price discounts, home charging station incentives, and reduced overnight electricity price discounts were surveyed. Indirect incentives such as the availability of workplace charging stations, free EV parking, and increases in the availability of public charging stations were also surveyed. Vehicle purchase price discounts were shown to create the largest increase in projected EV sales while indirect incentives had much smaller impacts on customers’ purchasing decisions. This survey data will be used in conjunction with the data from LES’ ongoing electric vehicle pilot study to shape any future LES EV programs.
Current Trends in Generation Portfolio Targets: Staff shared an overview of generation portfolio targets that a sample of electric utilities across the country have adopted. The sample utilities have portfolio targets that cover a broad range of renewable generation and traditional generation technologies. The operational realities of utilities currently claiming to be 100% renewable were discussed. And further, the infrastructure and technology advancements that will be necessary for utilities setting zero carbon or net-zero carbon goals were also reviewed. Staff will continue to monitor technologies and trends in the industry to find opportunities to further advance decarbonization of the resource portfolio while meeting the requirements for a reliable, economical, and environmentally responsible power supply resource portfolio. This topic will be further addressed by future Committee and Board discussions.
2019 Second Quarter Generation Revenue and Cost Report: Staff presented its analysis of the financial performance of LES’ generating resources in the SPP Integrated Marketplace for the second quarter of 2019. Natural gas prices trended at or below Budget in the second quarter due to lower demand by the electric generation sector and lower liquified natural gas demand. Market electricity prices for the second quarter trended higher than Budget due to ongoing generating unit outages in the SPP footprint and lower wind production. LES’ generating fleet posted positive net revenue results for the second quarter, though the results were lower than the first quarter.
Exhibit III
Finance & Audit Committee – meeting minutes August 16, 2019
1. Physical Security Update (Jim) • Jim Rigg, Manager, Safety & Physical Security gave an update that outlined the
inception of the Physical Security department and provided an explanation for the measures we take regarding security. Jim also provided a description of Critical Infrastructure and how LES falls into that category.
• Jim provided an outline for the types of facilities we are protecting, as well as the 500 LES employees. Jim described the types of threats utilities are seeing, such as terrorism, homegrown violent extremists and internal/external threats. He defined the steps LES has taken to strengthen the security of LES installations and provided a look at what’s on the table for future efforts.
2. Enterprise Risk Management at LES (Bryan)
• Bryan Willnerd provided an overview of LES’ Enterprise Risk Management (ERM) program, which included a description of ERM, the developing ERM culture at LES, how LES’ Risk Appetite Statement is used to manage risks, and what role Finance & Audit has within the program.
3. An overview of LES’ Retirement Plans (Laura) • An overview of LES’ retirement plans was provided which included a description
of the underlying LES policies which provide the authority for actions related to the Plans.
• A description of the responsibilities of each of the parties that supports the Plans was also provided.
• At the end of 2019, there was $164 million invested in both Plans. • The Finance & Audit Committee will continue to receive periodic updates on the
Plans.
Exhibit IV
DEC Board Meeting Summary
July 31, 2019
The District Energy Corporation held its most recent Board meeting on July 31, 2019. Highlights from the
meeting include the following:
1. New Board Members: The Board President recognized new Board members Tammy Ward and Alyssa
Martin. They fill the two recently vacated Board positions for City of Lincoln representatives.
2. Multi-Year Contract Considerations: The DEC Board adopted “Non Appropriation Clause” language that
will be included in multi-year contracts that notifies the contractors the contract may be terminated if
sufficient funds are not appropriated for the contract in future years. The Board also adopted language
that will be included in each year’s Budget Resolution that lists the total estimated cost of multi-year capital
projects and authorizes the DEC Administrator to enter into multi-year contracts to complete those
projects. These two actions resolve the outstanding items in the recently adopted Management
Agreement that needed further clarification.
3. DEC Management Report
a. Operations Update: Staff provided an overview of the six DEC plants, the types of service they
provide, and their locations. Staff also reviewed the natural gas purchasing program and noted that
we are in the process of issuing an RFP for a new natural gas supplier, with a goal of awarding the
contract by November 1st.
b. Capital Projects Update
1. Nebraska State Penitentiary (NSP) DEC Central Thermal Facility
a. The building and steel erection work is substantially complete. The steam system and backup
electrical generator system are scheduled to be in service by September 27, 2019. The chilled
water system is scheduled to be in service by October 25, 2019. Although final completion is
not expected until early November, we have been able to meet the customer’s interim
heating and cooling needs through the use of a temporary boiler and operation of the
customer’s existing chilling equipment. The project has a $22M budget and it appears the
final project cost will be right at $22M.
2. A distribution piping extension was installed to the new Olsson’s building in the West Haymarket.
c. The Board passed a Resolution and an associated Policy to clarify that the DEC does not provide
electrical generation defined as “Legally Required Standby Systems,” also known as “Life Safety
Systems.” The DEC will continue to provide “Optional Standby” electrical generation to customers
where life safety does not depend on the performance of the system.
4. DEC Financial Report
a. Energy sales for Q2 2019 were up 16% from budget, due largely to weather and operational
challenges at the County Adult Detention Facility. Revenues were 1% above budget overall, although
revenue from the LES Operations Center was below Budget due to the delayed timing of the plant
reaching Substantial Completion. Expenses were 19% below budget, also largely due to the timing of
the LES Operations Center plant. Debt Service Coverage is 1.44 compared to a budget of 1.21 due to
the lower than expected expenses.
b. Staff provided the Semi-Annual Investment Report, a verbal update on the DEC Enterprise Risk
Management Program, and received approval from the Board to enter a contract with BKD, LLP for
audit services. Staff also received approval to obtain pollution liability insurance and to obtain
cybersecurity coverage.
5. Other Business: The DEC is celebrating its thirty-year anniversary in 2019. The October Board meeting will
include a tour of the new LES Operations Center thermal plant along with an anniversary event. The Board
also heard an update from the attendees of the June International District Energy Association annual
conference. District energy systems continue to gain popularity due to the energy efficiency they provide
compared to conventional heating and cooling systems. These increased efficiencies are being recognized
by the United Nations in its District Energy in Cities Initiative as another tool to reduce fossil fuel
consumption in the building space conditioning sector.
transmission loading relief outage coordination real-time assessments model development system operator training system protection underfrequency load shedding generator capability coordination operations planning transmission planning voltage control
Transmission Operator Transmission Planner Transmission Service Provider Resource Planner Reserve Sharing Group
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Functional Entity Registration
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NERC | Reliability Standards
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NERC | Reliability Standards
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NERC | Reliability Standards
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NERC | Reliability Standards
FAC-008-3 - Facility Ratings• Purpose - To ensure that Facility Ratings used in the planning and operation of
the Bulk Electric System are determined based on technically sound principles• Applies to Transmission and Generation • 8 Requirements, 27 sub Requirements
o Development a methodology, and implement
• 1,722 Transmission Elements• 95 Generation Elements
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NERC | Reliability Standards
NERC Reliability Standards97 enforceable
• 68 applicable to LES500+ Requirements
• 300+ applicable to LES
An additional 1,100 sub Requirements within the standards (not counting bullet points and attachments)
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NERC | Regulatory Hierarchy
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FERC
NERC
SERC RF MRO TREWECCNPCC
Provides oversight & direction
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NERC | Regulatory Hierarchy
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FERC
NERC
SERC RF MRO TREWECCNPCC
Develops & Enforces Reliability Standards
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NERC | Regulatory Hierarchy
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FERC
NERC
SERC RF MRO TREWECCNPCC
Audits the NERC Reliability Standards
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NERC | Regulatory Hierarchy
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NERC Regional Entities
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NERC | Regulatory Hierarchy
MRO – LES’ Regional Entity• Compliance & Enforcement• Registration & Certification• Seasonal and Long-term Assessments• Data Submittals
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NERC | Enforcement
The MRO monitors, assesses, and enforces compliance with Reliability Standards using eight monitoring processes:
Self ReportingExpectation to self identify and Self Report matters of potential noncompliance
1. Issues reported to Regulatory Compliance Dept.2. Regulatory Compliance Dept. investigates3. Formal report and presentation provided to LES Compliance Committee4. LES Board and MRO notified
Peak Reliability Dissolution • Ended Reliability Coordinator services on July 1st
• SPP and Cal ISO took over Reliability Coordinator services
Cal ISO
SPPSPP
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Compliance Update
Large Financial Penalty• A large utility received a $10 Million penalty, issued on Jan 25, 2019 • Addressed violations and Self Reports from 2015-2018• 127 violations ranging from minimal to serious risk. NERC determined
that the collective violations posed a serious risk to the security and reliability of the Bulk Power System.
• Contributing causes for the violations:o Lack of management engagement, support, and accountabilityo Disassociation of compliance and securityo Lack of communication between management levelso Organizational silos that resulted in confusion regarding ownership of tasks
• Drafting teams comprised of industry volunteers• Develop and provide comments and voting recommendations
o 66.66% Approval needed• Implement new standards before enforcement date
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Compliance Update
Standards Under Development• 12 Projects
o 22 standards being revisedo Standards Efficiency Review
Implementation of Standards• 9 Implementation Plans
o Transient Cyber Assetso Generator testingo Communications testingo Training on protections systems
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Compliance Update
NERC 2019 Summer Assessment• Texas continues to have a generation shortfall due to recent generation
retirements. The projected reserve margin is 11%, 3% below their recommended level.
• California faces generation ramping capability concerns. These shortage conditions occur during late afternoon as solar generation output decreases while system demand is still high.
• SPP footprint does not have any emerging reliability issues that are considered unique.
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Compliance Update
NERC 2019 State of Reliability ReportReport looks back over the previous year with a view toward solving future problems
• There were no non-weather related Category 3, 4, or 5 events.
• There was only one Energy Emergency Alert–Level 3 that led to firm load shedding (675 MW, due to extreme weather) in Nova Scotia, lasting just over seven hours. Firm load was served 99.92% of time.
• Despite continually evolving threats, no cyber or physical security incidents leading to unauthorized control actions or loss of load occurred in 2018.
• There were frequency response improvements in all Interconnections. Frequency response arrests and stabilizes frequency during system disturbances.
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Compliance Update
NERC and MRO Dues
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• MRO dues to increase 9.8% in 2020• NERC dues to increase 9.0% in 2020
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NERC Overview andCompliance Update
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Eric RuskampManager, Regulatory Compliance
Exhibit VI
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Renewable Energy Certificates
1
Scott BensonManager, Resource & Transmission Planning
August 16, 2019
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Renewable Energy Certificates/Credits 101
“A renewable energy certificate (REC) is a tradeable, market-based instrument that represents the legal property rights to the ‘renewable-ness’—or all non-power attributes—of renewable electricity generation.”
“A REC can be sold separately from the actual electricity (kilowatt-hour, or kWh).”
“The REC owner has exclusive rights to make claims about ‘using’ or ‘being powered with’ the renewable electricity associated with that REC.”
“A REC is issued for every megawatt-hour (MWh) of electricity generated and delivered to the electric grid from a renewable energy resource.”
“If you own the RECs associated with your renewable energy project’s electricity output, you can sell these RECs to another party. In doing so, you forfeit the ability to make any claims about ‘using’ renewable energy, but generate a new revenue stream. The revenue is a function of the system’s kWh output and the market price of RECs.”
Taxes & Other Charges/ CreditsCity DividendSales Tax
Total Taxes & Other Charges/ Credits
Previous Balance
Payments
RECs would be sold via the LES bill, passing through the cost of a REC (plus related charges) for every kWh consumed each month (after net metering or virtual net metering).
Voluntary program would allow customers to claim 100% renewable energy; RECs would be retired on customer’s behalf.
REC price would be set annually, based on LES’ forecast for the next year.
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Related Policy Discussion
Selling RECs via the LES bill is a significant customer-focused improvement, but truthfully, it’s a rather minor enhancement to the overall program.
The bigger question is actually one of policy:Does the LES Board wish to continue to sell LES’ generated RECs?
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LES Financials
Renewable Financials
LES Marketing
Customer Position
Customer Service
Continue Selling RECs.
$0.6M - $0.7M revenue.
Offset 5% - 6% of total net
cost of related resources.
Include LES REC sales disclaimer whenever
applicable.
Customersofficially 0% renewable.
Customers can partner with LES to claim 100% renewable.
Stop Selling RECs;
retire for LES.
Lost revenue would have benefited all customers.
Net cost of renewable
resources is higher.
Directly claim LES to be 45%
renewable.
Customersofficially 0% renewable.
Customers partner with 3rd party to claim 100% renewable.
Stop Selling RECs;
retire for customers.
Lost revenue would have benefited all customers.
Net cost of renewable
resources is higher.
Include LES REC sales disclaimer whenever
applicable.
Customers can claim
45% renewable.
Customers partner with 3rd party to claim 100% renewable.
Could represent significant administrative overhead for LES.
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July Board Meeting Follow-up
Question:The following question was raised during the previous REC presentation at the July Board meeting:Which REC sales option would best support decarbonization efforts?
Answer:The current practice of selling RECs allows LES to leverage some of our existing sustainability initiatives (i.e., renewable resources) to improve our overall financial position.The better our overall financial position, the more room we then have to pursue new sustainability initiatives in the future…because most of these initiatives place upward pressure on rates.
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Landfill Gas
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Recent Sustainability Initiatives
SustainableEnergy Program
Community SolarRenewable Generation Rate
Net Metering RatePaperless Billing
EV Study
Peak RewardsAll Made Possible in Large Part by LES’ Strong Financial Position
Exhibit VII
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Sustainable Living Festival Overview
August 16, 2019
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Campaign
• Social media / partner posts• Digital ads• Website banner• Radio• Family sites• Partner location promo
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Snapshot
• 9th year of signature event• 2,000 estimated festivalgoers• 33 community partnerships• 46 volunteers
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Community PartnersBig Red WormsBikeLNKCity of Lincoln Parks, Planning & HealthCity of Lincoln Solid Waste ManagementCommon Ground Nebraska Conservation NebraskaElectric VehiclesGC ReVoltGreat Plains Bicycling ClubGreat Plains RenewablesGNRE SolarGroundwater FoundationHigh Level HappinessHVCcycle Inc./Zero MotorcyclesJim King – MusicJ-Tech Solar
Lancaster County Ext. Master GardenersLincoln & Lancaster Co. Health Dept.Lincoln City LibrariesLincoln Public Schools – SustainabilityLower Platte South NRDNebraska811Nebraska Building ProductsNebraska Solar SchoolsPioneers Park Nature CenterSpeedy Pete’s E-Bikes / QP Ace HardwareSustain UNLSWT Energy Inc.UNL State Museum of Natural HistoryUNL Bee LabUNL Office of SustainabilityWheelie Good Bike Shop (promo partner)
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New this year…
• More space • Entrance• Media partners• Experiences!
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New this year…
EdITH – Educational Interactive Tiny House
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Campaign results
Primary digital campaign:• 3.3 million delivered impression• 4,875 clicks (.15% click through rate)
Macaroni Kid campaign:• 35.5% open rate – newsletter (4,658 subscribers)
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Exhibit VIII
Revenue & Expense Statement (Condensed)JULY 2019
2019 2019 PercentageYEAR TO DATE Actual Budget Difference Difference
1) Total Revenue $183,175 $187,756 ($4,581) -2%
YTD residential revenue is 6% above budget, primarily due to weather related higher use per customer, all other retail classes are below budget. Wholesale revenue is under budget due to extended outages at LRS and Rokeby which kept these units from being offered into the market.
2) Power Costs 75,912 83,701 (7,789) -9%
Produced power is 22% under budget due primarily to lower energy, operations and maintenance expenses at LRS related to a planned outage which lasted longer than anticipated, lower energy expense at WS4, Rokeby, and TBGS, partially offset by higher maintenance expenses at Rokeby related to unit 2 and 3 outages. Purchased power is 3% above budget with higher than budgeted SPP purchased power expenses offset by lower than budget renewable wind energy expenses.
3) Other Operating Expenses 41,202 44,838 (3,636) -8%
Other Operating expenses (operation & maintenance, administrative & general) are under budget (-8%) due to the timing of project spending in categories including transmission, corporate communications, consulting services, and software purchases.
8) Change in Net Position (Net Revenue) $11,972 $4,738 $7,234 153%
Year End Projection Year End Budget9) Debt Service Coverage 2.27 2.10
Month End Actual Month End Budget10) Days Cash on Hand (Days) 178 153
July’s above average temperatures did not result in above budget sales to LES’ retail customers. We are still projecting strong year-end debt service coverage of 2.27 times, which is better than the budgeted debt service
coverage of 2.10 times primarily due to lower than budgeted power, operations & maintenance and administrative & general costs.(Dollar amounts in 000)
Comments
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LINCOLN ELECTRIC SYSTEM
FINANCIAL AND OPERATING STATEMENT
July 2019
INDEX
REVENUE & EXPENSE STATEMENT - CURRENT MONTH ------------------------------------------------------------- 1
STATEMENT OF CASH FLOWS -------------------------------------------------------------------------------------------------- 8
DEBT SERVICE COVERAGE ------------------------------------------------------------------------------------------------------ 9
NOTE: Federal Energy Regulatory Commission accounting guidance for the Southwest Power Pool Integrated Market (SPP IM) transactions (purchases, sales and other charges) requires netting together these transactions based on the time increments. If, during the time increment, sales to SPP are greater than purchases from SPP, the net amount is recorded as wholesale revenue. If, during the time increment, purchases from SPP are greater than sales to SPP, the net amount is recorded as purchased power cost. Because of this netting process, the energy (MWH’s) amounts no longer directly correlate to wholesale revenue.
REVENUE & EXPENSE STATEMENTCURRENT MONTH JULY 2019
CURRENT CURRENT LAST YEARDESCRIPTION MONTH MONTH MONTH
ASSETS & DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND NET POSITION END OF VARIANCE END OF VARIANCE
DESCRIPTION MONTH SINCE DESCRIPTION MONTH SINCEBALANCE JANUARY 1 BALANCE JANUARY 1
CURRENT ASSETS: CURRENT LIABILITIES: 1. Revenue Fund (including CDFUO) $98,832,468 ($24,667,445) OTHER LIABILITIES 2. Payments in Lieu of Taxes Fund $5,799,547 ($6,416,150) 1. Accounts Payable $16,810,343 ($9,232,682) 3. Rate Stabilization Fund 36,247,931 575,527 2. Accrued Payments in Lieu of Taxes 7,149,489 (5,946,757) 4. Bond Principal & Interest Funds 33,192,154 15,840,243 3. City Dividend for Utility Ownership Payable 3,176,685 635,337 5. Other Restricted/Designated Funds 3,626,387 794,352 4. Commercial Paper Notes 65,500,000 0
6. Restricted/Designated Funds Total 73,066,472 17,210,122 5. Accrued Liabilities 18,908,888 1,325,186 7. Total Current Asset Funds 177,698,487 (13,873,473) 6. MBPP-BNSF-STB Settlement 0 0 8. Receivables Less Uncollectible Allowance 22,011,547 1,573,142 7. Total Other Liabilities 111,545,405 (13,218,916) 9. Unbilled Revenue 20,496,230 5,575,015 CURRENT LIABILITIES - RESTRICTED ASSETS10. Accrued Interest Receivable 969,786 (206,427) 8. Current Portion of Long-Term Debt 22,750,000 011. Materials, Supplies & Fuel Inventory 15,746,972 1,934,654 9. Accrued Interest 12,409,007 2,508,601 12. Plant Operation Assets 13,402,176 1,608,612 10. Other Current Liabilities 1,339,402 (140,067) 13. Other Current Assets 2,998,952 158,417 11. Total Current Liabilities - Restricted Assets 36,498,409 2,368,534 14. Total Current Assets 253,324,150 (3,230,060) 12. Total Current Liabilities 148,043,814 (10,850,382)
21. Total Noncurrent Assets 27,074,636 360,246 19. Total Revenue Bonds 662,795,000 0 20. Less Current Maturities 22,750,000 0
CAPITAL ASSETS: 21. Less Unamortized Discounts/Premiums (63,254,649) 4,007,699 22. Utility Plant in Service 1,601,960,201 31,486,177 22. Note Purchase Agreement 1,500,000 0 23. Accumulated Depreciation & Amortization (804,399,970) (27,527,881) 23. Revolving Credit Agreement 0 0
24. Construction Work in Progress 142,035,224 (2,709,770) 24. Net Long Term Debt 704,799,649 (4,007,699)25. Total Capital Assets 939,595,455 1,248,526 25. Liabilities Payable from Segregated Funds 896,137 250,000
26. Other Noncurrent Liabilities 587,962 0 DEFERRED OUTFLOWS OF RESOURCES: 27. Total Liabilities 854,327,562 (14,608,081)26. Deferred Loss on Refunded Debt 12,325,585 (1,014,092)
NET POSITION:28. Net Investment in Capital Assets 179,339,199 4,160,77829. Restricted for Debt Service 20,908,005 13,371,39530. Restricted for Employee Health Insurance Claims 578,122 126,28531. Unrestricted 177,166,938 (5,685,757) 32. Total Net Position 377,992,264 11,972,701
27. TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $1,232,319,826 ($2,635,380) 33. TOTAL LIABILITIES & NET POSITION $1,232,319,826 ($2,635,380)
Page 7
STATEMENT OF CASH FLOWSJULY 2019
CURRENT MONTH YEAR-TO-DATECASH FLOW FROM OPERATING ACTIVITIES: 1. Received from Sales to Customers and Users $32,287,144 $186,028,724 2. Paid to Suppliers for Goods & Services (17,963,718) (117,310,308) 3. Paid to Employees for Services (2,873,853) (19,960,923) 4. Cash Flow from Operating Activities (a) 11,449,573 48,757,493
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 5. Payments in Lieu of Taxes (75,937) (13,251,224) 6. City Dividend for Utility Ownership Payments 0 (3,812,022) 7. Other 0 0 8. Cash Flow from (used for) Non-capital Financing Activities (75,937) (17,063,246)
CASH FLOWS FROM INVESTING ACTIVITIES: 9. Net (Purchases) Sales of Investments (1,583,589) 26,144,52310. Interest Income 701,113 2,487,923 11. Cash Flow from (used for) Investing Activities (882,476) 28,632,446
CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:12. Acquisition and Construction of Capital Assets (4,961,512) (32,101,710)13. Salvage on Retirement of Plant 5,336 56,71014. Cost of Removal of Property Retired (15,379) (1,207,624)15. Debt Issuance Cost Paid 0 (157,191)16. Debt Premiums Collected 0 017. Net Capital Contributions 77,980 674,97818. Net Proceeds form Issuance of Long-Term Debt 0 019. Principal Payments on Long-Term Debt 0 020. Interest Payments on Long-Term Debt (3,669) (15,167,106)21. Cash Flow from (used for) Capital Financing Activities (4,897,244) (47,901,943)
22. Net Increase (Decrease) in Cash and Cash Equivalents 5,593,916 12,424,75023. Cash and Cash Equivalent Beginning of Period 34,742,250 27,911,416 24. Cash and Cash Equivalent End of Period (b) $40,336,166 $40,336,166
STATEMENT OF CASH FLOW FOOTNOTES(a) Reconciliation of operating income to cash flows from operating activities 1. Net Operating Revenue $12,078,820 $35,437,731 2. Noncash items included in operating income 4,526,333 31,312,665 3. Changes in Assets & Liabilities Increase/(Decrease) (5,155,580) (17,992,903) 4. Net cash flows from operating activities $11,449,573 $48,757,493
(b) Cash and cash equivalents are defined as cash and investments with original maturities of three months or less.
Page 8
DEBT SERVICE COVERAGEJULY 2019
DESCRIPTION ACTUAL BUDGET ACTUAL ACTUAL BUDGET ACTUALTHIS YEAR THIS YEAR LAST YEAR THIS YEAR THIS YEAR LAST YEAR
1. Total Operating Revenues $33,621,471 $37,295,000 $36,165,776 $183,175,223 $187,755,872 $192,525,241
2. Total Operating Expenses 21,542,651 24,270,414 22,272,288 147,737,492 159,352,913 149,249,084 3. Less Depreciation (4,421,499) (4,444,364) (4,281,209) (30,624,199) (30,814,241) (29,926,424) 4. Operating Expense Net of Depreciation 17,121,152 19,826,050 17,991,079 117,113,293 128,538,672 119,322,660
5. Net Operating Revenue for Debt Service 16,500,319 17,468,950 18,174,697 66,061,930 59,217,200 73,202,581 6. Interest Income (a) 367,028 305,295 295,922 1,825,028 2,174,150 1,219,850 7. Other Income 0 0 0 0 0 0 8. Rate Stabilization Fund 0 0 0 0 0 0
9. AVAILABLE FOR DEBT SERVICE 16,867,347 17,774,245 18,470,619 67,886,958 61,391,350 74,422,431
10. DEBT SERVICE (b) 4,324,651 4,324,650 4,133,317 30,272,554 30,272,550 26,045,571
11. DEBT SERVICE COVERAGE 3.90 4.11 4.47 2.24 2.03 2.86
(a) Excludes interest from Rate Stabilization Fund.(b) Includes Bond Principal & Interest only. Page 9
-------- CURRENT MONTH ---------- ---------- YEAR-TO-DATE ----------
LES.com
Power Supply Division2019 July Monthly Report
Jason FortikAugust 16, 2019
LES.com
Monthly Actual vs. Budget
2
$8.66
-$0.26
-$5.94
$6.67
-$1.75
$4.91
$5.04
$9.52
-$0.28
-$5.62
$4.46
-$1.78
$7.36
$5.39
-$8 -$6 -$4 -$2 $0 $2 $4 $6 $8 $10 $12
Net
SPP Other***
SPP IM Market Revenue
SPP IM Load Purchases
Contract Sales**
Owned Asset Power
Non-Owned Asset Power*
Millions ($)
Budget Actual
Revenues Expenses
*Non-Owned Asset Power does not include SPP IM Purchased**Contract Sales does not include SPP IM Revenue***SPP Other includes Over-Collected Losses and ARR’s/TCR