MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD

Transcription

1 MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, February 19, 2016 at the offices of Lincoln Electric System, 1040 O Street, Lincoln, Nebraska. Board Members Present: Board Members Absent: LES Staff Present: Others Present: News Media Present: Jerry Hudgins, Ann Bleed, Dan Harshman, Marilyn McNabb, Vicki Huff, Libby Raetz, W. Don Nelson Layne Sup, Sarah Peetz Kevin Wailes, Shelley Sahling-Zart, Laura Kapustka, Jason Fortik, Lisa Hale, Dan Pudenz, Trish Owen, Paul Crist, Lacy Stockdale, Melissa Palmer, Jim Rigg, Dan Kucera, Emily Koenig, Shari Tretheway, David Auman, Inna Goldman, Taletha Kryzsko, Marc Shkolnick, Debbie Vandegrift, Ben McGuire, Erin Hergott, Kelley Porter John Atkeison None Chair Jerry Hudgins called the meeting to order at approximately 9:30 a.m. 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. Chair Hudgins asked for approval of the minutes of the meeting of January 15, Ann Bleed moved their approval. Vicki Huff seconded the motion. The vote for approval of the minutes was: Call to Order Approval of Minutes Aye: Nay: Absent: Hudgins, Bleed, Harshman, McNabb, Huff, Raetz, Nelson None Sup, Peetz John Atkeison, EnergyLinc, reiterated the urgency to get serious about climate change and requested the Board continue discussions regarding compliance with the Clean Power Plan regardless of the recently issued Stay. Comments from Customers

2 Debbie Vandegrift, Manager, Internal Operations, Power Supply, was recognized by the Board for 30 years of service to LES. Introduction and Recognition of Staff Dan Kucera, Supervisor, Meter Shop, Customer Services, was recognized by the Board for 40 years of service to LES. LES Policy No. 1 provides that the Chair of the Board shall appoint standing Committees at the February Board meeting. The Board Committee assignments for 2016 were given to the Board members. (Exhibit I) Dan Harshman, Chair of the Budget & Rates Committee, reported on Committee discussion which included: 1) a review of rating agency sensitivity cases; 2) 2015 fourth quarter generation revenue and cost report; 3) 2015 budget carryovers; and 4) an update regarding District Energy Corporation (DEC) and Nebraska Utility Corporation (NUCorp). Marilyn McNabb, member of the Communications & Customer Services Committee, reported on Committee discussion which included updates on the following: 1) LES Mobile Meter Reading (MMR) project; 2) multiple Customer Services projects, including electronic bill payment and presentment and the lockbox project; 3) community outreach activities, including the Sustainable Living Festival which is scheduled for Aug. 13; and 4) LES 50 th anniversary. Libby Raetz, Chair of the Finance & Audit Committee, reported on Committee discussion which included updates on the following: 1) cyber security; 2) accounts payable audit; 3) an RFP which was issued seeking Investment Consulting Services for LES retirement plans; 4) an RFP seeking underwriting services in anticipation of issuing refunding bonds in 2016; and 5) District Energy Corporation (DEC) and Nebraska Utility Corporation (NUCorp). Ann Bleed, Chair of the Operations & Power Supply Committee, reported on Committee discussion which included updates on the following: 1) generating unit revenue and cost report; 2) LES Operations Center; and 3) District Energy Corporation (DEC) and Nebraska Utility Corporation (NUCorp). Appointment of 2016 LES Administrative Board Committees Budget & Rates Committee Communications & Customer Services Committee Finance & Audit Committee Operations & Power Supply Committee Report 2 -

3 Vicki Huff, Chair of the Personnel & Organization Committee, reported on Committee discussion which included: 1) a 2015 workers compensation overview 21 claims resulted in a cost of $68,000 to LES, which was a decrease from 2014; 2) a 2015 overview of employee participation in LES wellness program; and 3) a 2015 year-end review from Human Resources. W. Don Nelson, Chair of the Legislation & Governmental Affairs Committee, stated the Committee had met to discuss legislation that is being monitored by LES. Nelson noted that Shelley Sahling-Zart will go into more detail during her Legislation and Regulatory update later in the Board meeting. Shelley Sahling-Zart, Vice President & General Counsel, reported that the legislative session is at the half-way point, and it will be difficult for legislative bills to be considered further unless they have a priority designation. Friday marked the deadline for senators and committees to designate priority bills. She noted that all of the bills on LES tracking table were reviewed in detail with the board Legislation & Governmental Affairs Committee. (Exhibit II) Sahling-Zart highlighted some of the more significant bills of impact to LES, including: Personnel & Organization Committee Legislation & Governmental Affairs Committee Legislation and Regulatory Update LB a bill to provide for privately developed renewable generation, particularly wind. The bill is intended to eliminate what the private wind developers have identified as barriers to their ability to develop large wind farms in the state. Sahling-Zart noted that she participated in meetings over the past couple of weeks between the senators, wind developers and public power representatives to try and reach a compromise. The public power industry agreed to be neutral on the bill provided the authorization for private renewable generation is very narrow and mitigates impacts to public power. Sahling-Zart noted that a compromise was recently reached. LES has committed to a neutral position on the bill with the compromise replacing the original language, but will be closely monitoring any amendments to the bill. 3 -

4 LB 1068, a bill that would require Public Service Commission (PSC) review of certain rate increases. The bill provides that the PSC would review a public electric utility s rate increase if a) 2% or more of the utility s customers petition for a review, or b) the rate is increasing by 2% or more in a 12-month period, or any component of the rate is increasing by more than 20% over the same period. LES is opposed to this bill as it undermines the most fundamental attribute of public power, which is local control. It erodes the authority of the LES Administrative Board, the Mayor, and the City Council who spend a great deal of time reviewing the LES budget and any requested rate changes. LB 1068 establishes an unnecessary layer of review at added taxpayer cost. LES will be testifying in opposition to LB 1068 at the public hearing on Feb. 23. The American Public Power Association s (APPA) National Conference is scheduled for June 10-15, 2016, in Phoenix, Arizona. LES policies require a preauthorization for more than three Board Members to attend the conference. W. Don Nelson moved that any Board members wishing to attend the conference be authorized to do so and that any Board member attending be reimbursed for allowable business expenses incurred. Ann Bleed seconded the motion. The vote was: Authorization of Board Attendance at the 2016 APPA National Conference and Pre-Conference Seminars Aye: Nay: Absent: Hudgins, Bleed, Harshman, McNabb, Huff, Raetz, Nelson None Sup, Peetz Inna Goldman, Manager, Financial Accounting, provided the Board an overview of the results from Omaha Public Power District s (OPPD) and American Public Power Association s (APPA) annual benchmarking surveys of public power utilities. Overall, LES ranked favorably compared to the other participating utilities. (Exhibit III) Ben McGuire, Engineer, Protection and Controls in Energy Delivery, reviewed the 2015 system interruption and outage statistics. (Exhibit IV) On a normal day, LES customers were without electricity an average of 27.5 minutes. On the three major event days occurring in 2015 (April 19, July 25, September 24), the average total time LES Corporate Key Indicators Benchmarking 2015 Interruption/Outage Report 4 -

5 customers were without electricity was 57.3 minutes. Trees were the leading cause of outages in 2015, with a total number of 132 interruptions. LES uses the analysis to identify possible problems that can be remediated, such as replacing aging cable. The Monthly Financial and Power Supply Reports were distributed to the Board and staff was available to answer questions. (Exhibit V) Jason Fortik, Vice President of Power Supply, informed the Board of the Spring Missouri Basin Power Project Engineering & Operations Committee meeting being held at Laramie River Station on April 28, It is an all-day event and Board members are welcome to attend. The next regular meeting of the LES Administrative Board is scheduled for Friday, March 18, 2016 at 9:30 a.m. There being no further business before the Board, Jerry Hudgins declared the meeting adjourned at approximately 11:23 a.m. Monthly Financial and Power Supply Reports Miscellaneous Next Meeting Adjournment Dan Harshman, Secretary BY: S/Lacy Stockdale Lacy Stockdale Assistant Secretary 5 -

6 Exhibit I

7 2016 LES ADMINISTRATIVE BOARD COMMITTEES The Board Chair is an Ex Officio Member of Each Committee Personnel & Organization Vicki Huff, Chair Libby Raetz Marilyn McNabb* Finance & Audit Libby Raetz, Chair Vicki Huff Layne Sup Operations & Power Supply Ann Bleed, Chair Sarah Peetz Vicki Huff Budget & Rates Dan Harshman, Chair Layne Sup W. Don Nelson Legislation & Governmental Affairs Communications & Customer Service W. Don Nelson, Chair Sarah Peetz, Chair Sarah Peetz Dan Harshman Ann Bleed Marilyn McNabb* Labor Negotiations Executive W. Don Nelson Jerry Hudgins Vicki Huff Ann Bleed Dan Harshman *Marilyn McNabb or New Member

8 Exhibit II

9 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 60 LB 84 STATUS OF LEGISLATION Judiciary Committee Government, Military & Veterans Affairs Committee LB 104 Approved by Governor on 5/26/15 LB 115 LB 117 Banking, Commerce & Insurance Committee Natural Resources Committee LB 141 Approved by Governor on 5/13/15 SUMMARY OF LEGISLATION CARRYOVER LEGISLATION FROM 2015 (Kintner, et al.) Prohibits employers from establishing policies that prohibit a person s transportation or storage of a firearm as long as certain conditions are met, such as the firearm is in a privately owned vehicle, it is not in open view, and the firearm is in a locked trunk or glove box, among others. This bill conflicts with the no weapons provisions in the LES Code of Conduct. (Davis) Permits certain public bodies to use telephone conferencing or videoconferencing for public meetings. Applies to small counties of 3,000 residents or less. The bill does not apply to LES, but all bills relating to public meetings are monitored for amendments. (Krist) Changes provisions relating to notice to customers of discontinuance of utility service. The statute currently requires notice to be given by first class mail or in person. LB 104 provides that notice may also be provided by electronic mail if the customer has elected to receive billings or notifications by electronic delivery. LES does not currently provide for electronic billing, but LES would support this legislation for future use. Update: The committee amendment provides that customers who sign up for electronic billing must separately sign up to receive notifications electronically. (Scheer) Prohibits entities from requiring an individual to provide a social security number unless required by federal, state, or local law or when the SSN is used for a criminal history background check by an employer or volunteer service organization. SSN s are a valuable tool for LES in managing debt collections. LES opposes this bill as introduced. (K. Haar) Current law provides for energy financing contracts between an energy service company and a governmental unit for the implementation of energy conservation measures in existing facilities. LB 117 would expand this authority to also apply to construction of new facilities. (Schilz) LB 141 amends the Public Entities Mandated Project Charges Act to authorize a public entity to create a special purpose entity to act as a mandated project bond issuer and sets forth the authority and obligations of such special purpose entity. The special purpose entity would be governed by a three person board of directors from among the public entity s governing board. The bill was introduced on behalf of OPPD. LES POSITION Oppose Monitor Support Oppose Monitor Monitor

10 LEGISLATION IMPACTING LES LEGISLATIVE BILL STATUS OF LEGISLATION LB 177 Approved by Governor on 3/12/15 LB 181 Approved by Governor on 3/12/15 LB 205 LB 209 LB 282 LB 288 LB 295 Indefinitely Postponed Indefinitely Postponed Indefinitely Postponed Business & Labor Committee Final Reading SUMMARY OF LEGISLATION (K. Haar) LB 177 prohibits an employee of any public power district from serving on the board of directors of any public power district. This bill does not directly apply to LES, but will be monitored as it relates to the public power industry. (Smith) LB 181 was introduced on behalf of the Nebraska Rural Electric Association. The bill permits flashing or rotating blue and amber lights to be displayed on vehicles operated by a public utility for construction, maintenance and repair of infrastructure on or near any highway. This authority would extend to LES. (Schilz) Provides that towers over 50 ft. in height and less than 6 ft. in diameter be marked and painted in bands of aviation orange and white. The bill explicitly exempts wind turbines and towers or poles that support electric utility transmission or distribution lines, but we will closely monitor any amendments to this bill. (Hilkemann) Creates the Political Subdivisions Mandatory Mediation Act requiring all political subdivisions of the state to submit to mandatory mediation before engaging in litigation. This bill raises numerous questions and concerns and would significantly alter LES legal remedies. LES conferred with the City lobbyist, but neither the City nor LES testified on the bill. (Baker) Amends the Open Meetings Act to explicitly provide that a public body may go into closed session for the discussion of applicants, other than finalists, who have applied for employment by the public body. Discussion of finalists would still be required to be held in open session. It also allows for closed session discussion of the performance of non elected officials. (Ebke) Prohibits any collective bargaining agreement involving a public employer from requiring the deduction of union dues, assessments or other amounts from a public employee s wages. LES does not engage in such practice, but the bill will be monitored as LES has two collective bargaining agreements. (Scheer) Requires a city to receive approval of the county board before regulating within its extraterritorial zoning jurisdiction, including the erection of new structures. The bill was amended to only apply to first and second class cities. LES POSITION Monitor Support Monitor Oppose Monitor Monitor Neutral with Amendment February 22,

11 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 337 LB 340 LB 407 STATUS OF LEGISLATION Natural Resources Committee Judiciary Committee Natural Resources Committee SUMMARY OF LEGISLATION (B. Harr) This bill renames the Low Income Home Energy Conservation Act to the Energy Conservation and Demand Reduction Act. The bill was introduced on behalf of OPPD. The Act applies to a customer receiving energy service at a building that receives no greater than a one thousand kilowatt demand. Such customer can apply for funds to implement energy conservation and demand reduction measures. A utility can set up a subaccount and designate that up to $300,000 of its remitted sales tax be transferred to its subaccount. The state will match these transferred amounts up to a total of $500,000 per year on a first come, first served basis. The Act sunsets on July 1, (Brasch) Amends the Concealed Handgun Permit Act to require the Nebraska State Patrol to design a standardized sign for use in the premises of those entities and employers who are permitted to prohibit concealed handguns in and on their premises. LES currently has signage, but we would be required to switch to the standardized signage if passed. (K. Haar, et al.) Amends provisions of the Certified Renewable Export Facility (CREF) Act with the intent of minimizing barriers for wind developers. The bill eliminates the requirement that at least 10% of a project be offered to public power entities as well as the requirement for a power purchase agreement (PPA) with a minimum 10 year term. It also eliminates language that included substantial risk of stranded assets as a consideration for approval of a facility. The bill also outright repeals the right of first refusal provisions passed in 2013 to clarify that Nebraska public power entities have a first right to construct new transmission facilities constructed in the state. LES is opposed to repealing the right of first refusal provisions that were just passed by the Legislature in 2013 and opposed to removing the language regarding stranded assets. LES is neutral on the remaining provisions. Update: The public power industry and the wind developers reached a conceptual agreement in February, but have been unable to agree on amendment language that effectuates the compromise. Sen. Haar and the wind developers have moved forward with an amendment, AM1183, in an effort to advance LB 407 from committee. LES has taken a neutral position on AM1183. LES POSITION Support Support Neutral based on AM1183 February 22,

12 LEGISLATION IMPACTING LES LEGISLATIVE BILL STATUS OF LEGISLATION LB 412 Approved by Governor on 5/26/15 LB 423 Select File LB 424 Approved by Governor on 5/26/15 SUMMARY OF LEGISLATION (Mello, et al.) Amends provisions of the Community Based Energy Development (C BED) Act to clarify that a county that adopts a resolution of support for a C BED project must also have adopted zoning regulations that require planning commission, county board, or county commission approval for the C BED project. Notice of incentives for participation in a C BED project must also be provided to each property owner on whose property a turbine will be located and to each governing body of a municipality or political subdivision where a turbine will be located. (Nordquist, et al.) Provides a tax credit for a renewable electric generation facility that qualifies as a C BED project. The producer may select a credit of either a) 1.5 cents per kilowatt hour for electricity generated during the first 20 years of commercial operation; or b) a one time credit equal to 30% of the total cost of construction of the C BED facility not to exceed $2 million. The credit may be used to reduce the producer s income tax liability, franchise tax liability, or premium or related retaliatory tax liability. The credit may be transferred or sold. We are seeking clarification regarding a provision that a renewable electric generation facility may use fuels other than those enumerated. LES is generally supportive of a production tax credit or investment tax credit to incent greater development of renewable energy in Nebraska. LES is neutral as to the level at which such credit should be set. Update: LB 423 was advanced from committee with an amendment that reduces the credit to a credit of 1.0 cent per kilowatt hour for the first 2 years and scaling down to 0.6 cents for the last two years. The amendment also limits the transferability of the credits to those earned by facilities of 20 MW or less. (Davis, et al.) LB 424 extends the personal property tax exemption for property used in the generation of electricity using wind to other renewable energy generation using solar, biomass, or landfill gas as the fuel source. It also extends the nameplate capacity tax on owners of wind generation facilities, to all renewable energy generation facilities. The tax is in the amount of the total nameplate capacity multiplied by a tax rate of $3,518 per megawatt. Facilities owned by a public power entity are exempt from the nameplate capacity tax. LES POSITION Monitor Support state incentives to promote greater renewable energy development Support February 22,

13 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 462 STATUS OF LEGISLATION Government, Military & Veterans Affairs Committee LB 469 Approved by Governor on 5/27/15 LB 473 LB 475 Judiciary Committee Natural Resources Committee SUMMARY OF LEGISLATION (Seiler) Changes restrictions on campaigning by public officials and public employees. The bill was prompted by a case involving candidates for the Northeast Public Power District Board. The legislation clarifies the definition of campaigning to include a broadcast, printed or disseminated communication that references a ballot question or a candidate by name, nickname, photograph, or drawing, or in any way makes the identity of the candidate apparent through an unambiguous reference. LES will monitor the bill as it relates to public entities. (Smith) LB 469 requires certain actions before the Nebraska Department of Environmental Quality (NDEQ) may submit to EPA a State Implementation Plan (SIP) pursuant to the EPA 111(d) rules regulating carbon emissions from power plants. LB 469 requires NDEQ to prepare an impact assessment evaluating a number of factors and submit such assessment to the Legislature prior to submitting its SIP. NDEQ must also provide an opportunity for public review and comment on the assessment report. Update: The committee amendment merges the provisions of LB 583 into the bill as well. The amendment also assigns the responsibility for the LB 469 assessment report to the Nebraska Energy Office rather than NDEQ. It also streamlines the scope for the state energy plan and eliminates the December 2015 deadline. (Chambers) LB 473 eliminates the power of eminent domain for certain pipelines. The bill as introduced does not impact LES, but it will be monitored for any amendments that may impact LES power of eminent domain. (Davis) This bill appears to provide additional approval authority for the Nebraska Power Review Board (NPRB) over any construction activity or improvement of a generating facility that either increases generating capacity or has a total cost of $150 million or more. This may apply, for example, to environmental retrofits. This seems to put the NPRB in a different role of making an operating decision. In addition, the NPRB approval criteria would be difficult to apply to retrofit projects. We will work with Sen. Davis to better understand the bill s intent, but LES is opposed to the bill as introduced. LES POSITION Monitor Monitor Monitor Oppose February 22,

14 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 517 LB 536 LB 583 STATUS OF LEGISLATION Transportation & Telecommunications Committee Natural Resources Committee Provisions/portions amended into LB 469 by AM 833 LB 627 Approved by Governor on 4/13/15 SUMMARY OF LEGISLATION (Riepe) Prohibits the use of an interactive wireless communication device while operating a motor vehicle unless used to communicate in an emergency situation with an emergency response operator, physician, emergency medical service personnel, a fire department, or law enforcement agency. Such emergency responders are also exempt from the prohibition. There are already statutory provisions governing the use of handheld wireless communication devices so the need for this legislation is unclear. If the bill advances, LES will seek an exemption for utility radios used for communication while performing utility work. (K. Haar) LB 536 provides that every public power supplier must file an annual report with the NPRB including a number of specific criteria such as average electric rates, number of customers, other charges, sources of generation, fuel costs, employee salaries, emission of specified pollutants, board information and benefits, net metering data, financial statements, amount spent on advertising, among other things. Some of the identified information may be subject to contractual confidentiality provisions. Considering the differences between public power entities and how they are structured, much of this data would be difficult to utilize as it would not be comparative across all entities. LES and other public power entities will try to work with Sen. Haar to identify the purpose and use for such a report and database, and work to develop a report that would provide useful and comparative data. (Schilz, et al.) Legislation to require the Nebraska Energy Office to develop a state energy plan by Dec. 31, The scope of the study is quite broad with a significant focus on developing wind energy for export. The scope of the plan seems primarily directed at the electric utility sector rather than at all energy sectors including natural gas and transportation fuels. LES is not opposed to developing a state energy plan, but LES and the other public power utilities will work with Sen. Schilz to try and amend the plan scope to include all energy sectors and to clarify some of the provisions in the scope. (Mello, et al.) Amends the Nebraska Fair Employment Practice Act to prohibit employment discrimination against an individual who is pregnant. It also specifies reasonable accommodation provisions with respect to pregnancy. LES POSITION Monitor Oppose as introduced/work to Amend and tie to State Energy Plan Support Concept of Energy Plan/Seek clarification of provisions Monitor February 22,

15 LEGISLATION IMPACTING LES LEGISLATIVE BILL February 22, 2016 STATUS OF LEGISLATION LB 649 Bracket until June 5, 2015 LB 653 LB 669 LB 681 LB 693 LB 720 LB 725 Revenue Committee Transportation & Telecommunications Committee Hearing February 9, 2016 Judiciary Committee Hearing March 3, 2016 Judiciary Committee Hearing January 28, 2016 Judiciary Committee Hearing February 25, 2016 General File 7 SUMMARY OF LEGISLATION (Kintner, et al.) Amends public records statutes to specify that all votes taken by public officials in the course of their public duties shall be considered a public record. All votes of the LES Administrative Board are recorded in the meeting minutes which are a public record. (Johnson, et al.) LB 653 would provide a one weekend sales tax holiday for the purchase of Energy Star qualified products for noncommercial home or personal use. The exemption would apply to sales over the first weekend in October of each year. LEGISLATION INTRODUCED IN 2016 (Krist) Amends statutory provisions regarding vehicle occupant protection systems to provide that violations of the protection systems could be charged as a primary offense. State law currently only allows a citation as an offense secondary to a primary offense, such as speeding. (Schnoor) Amends the Concealed Handgun Permit Act related to entities under the act that may prohibit concealed handguns on the entity s premises. It clarifies that an individual does not violate the provisions unless the entity establishes that it requested the permit holder to remove the concealed handgun from the premises and the permit holder defied the request. Since LES prohibits weapons on its property, we will monitor this legislation and confer with the City. (Morfeld) Changes the statute of limitations for actions filed pursuant to the Political Subdivisions Tort Claims Act from one year to two years. LES will confer with the City. (Kuehn) Creates a presumption of liability for invasion of privacy for operating an unmanned aircraft (e.g., drone) within 200 ft. or less of the airspace over private property without the express permission of the property owner. It provides an exemption for lawful activities of law enforcement or government agencies. LES will monitor the bill to see how it may impact LES use of drones to inspect its infrastructure, such as overhead distribution and transmission lines. (Schumacher) Amends provisions related to statements regarding conveyances of real estate to provide that such statements are not required to include utility easements. The bill was introduced on behalf of NPPD. The bill is unlikely to alter LES practices in this regard, but we will monitor the bill. LES POSITION Monitor Support Monitor Monitor/Confer with City Oppose/Confer with City Monitor/Confer with City Monitor

16 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 736 LB 783 LB 802 LB 821 STATUS OF LEGISLATION General File Transportation & Telecommunications Committee Hearing February 22, 2016 Health & Human Services Committee Hearing February 3, 2016 Business & Labor Committee Hearing February 8, 2016 SUMMARY OF LEGISLATION (Friesen) The bill expands provisions of the Community Based Energy Development (C BED) Act to provide that such C BED projects could enter into power purchase agreements with any electric supplier in the state. The Act was previously restricted to the four largest utilities in the State. LES has no objection to LB 736. (Lindstrom) LB 783 was introduced on behalf of OPPD to reduce costs and provide greater efficiency in the licensing of its fleet vehicles. The provisions of the bill only extend to public power districts with annual gross revenues of at least $250 million, so essentially OPPD and NPPD. LES is not eligible as it is not a public power district. The bill provides that each district vehicle be issued a permanent, distinctive public power district license plate with a fee of $3 per plate and an annual renewal fee of $2 for any plate listed in the district s registration. (Haar, Mello) LB 802 creates the Health and Climate Resiliency Task Force to develop a strategic plan to enable the state to meet the challenges of climate change and take advantage of adaptation and mitigation strategies, including opportunities for attracting new business to the state. The task force would consist of 10 voting members comprised of legislators and 14 non voting members representing various departments of state government and the University of Nebraska. The voting members may appoint an advisory committee representing various stakeholder groups, including public power. (Larson) Adopts the Workplace Privacy Act to prohibit employers from requiring that employees or applicants provide account information that would allow the employer to access the employee s social networking profiles or information. LES POSITION Monitor Monitor Monitor Monitor February 22,

17 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 824 LB 825 LB 850 LB 863 LB 881 STATUS OF LEGISLATION Natural Resources Committee Hearing January 27, 2016 Revenue Committee Hearing February 18, 2016 Business & Labor Committee Hearing February 1, 2016 Natural Resources Committee Hearing February 4, 2016 Natural Resources Committee Hearing January 28, 2016 SUMMARY OF LEGISLATION (McCollister, et al.) LB 824 essentially provides for privately developed renewable energy generation with nominal state oversight. The legislation repeals the Certified Wind for Export Facilities Act that was passed a few years ago to provide a framework for constructing and exporting renewable energy facilities. By eliminating the act, private entities would be able to operate merchant renewable generation, meaning they could inject the energy into the market without having a power purchase agreement with a designated customer. The Power Review Board would have essentially not authority over such projects. In addition, the bill outright repeals the right of first refusal provisions that give public power entities in the state the first right to construct new transmission facilities directed to be built by the Southwest Power Pool. LES continues to evaluate this bill. While the impacts to LES are less than those to NPPD and OPPD, LES is concerned that there be an adequate framework to address customer concerns for such development projects. LES testified at the hearing in a neutral position. (Davis) LB 825 requires that owners of tax exempt property file a statement with the county assessor every 2 years indicating whether any of the property was leased to another party during the preceding 2 years. The bill exempts property owned by the state or a governmental subdivision, but LES will closely monitor the bill. (Crawford, et al.) Adopts the Paid Family Medical Leave Insurance Act to be effective April 1, Employers would be required to pay qualifying employees on an income based sliding scale for up to 12 weeks of family medical leave. Paid leave would be taken concurrently with unpaid family medical leave allowed by the federal FMLA. LB 850 would be a significant cost to LES as we would be paying the paid leave, but also in some cases hiring temporary staff to cover the employee s absence. (Schilz) Adopts the Wind Energy Expansion Act which provides a process for counties to be designated as a wind friendly county for purposes of promoting wind energy development. The bill will be monitored, but has no impact on LES operations. (Schilz) Amends provisions for energy financing contracts entered into by government entities to include capital and other equipment that reduces water or energy consumption or reduces operating costs. LES POSITION Monitor Monitor/Confer with City Oppose/Confer with City Monitor Monitor February 22,

18 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 897 LB 913 LB 914 LB 928 LB 973 STATUS OF LEGISLATION General File Revenue Committee Hearing February 24, 2016 Natural Resources Committee Hearing January 28, 2016 Business & Labor Committee Hearing February 1, 2016 Transportation & Telecommunications Committee Hearing February 8, 2016 SUMMARY OF LEGISLATION (Lindstrom) LB 897 allows public power entities operating in a regional transmission organization to engage in a limited amount of financial hedging transactions in order to mitigate risk from market fluctuations. The bill was introduced on behalf of NPPD. The authority under the bill would extend to LES, but at the present time LES has no need for such transactions. (Smith) Adopts the Facilitating Business Rapid Response to Declared Disasters Act to exempt from state income taxes any out of state employees who come into Nebraska to aid in emergency response to a disaster. LES has received storm assistance from out of state utilities in the past. We are not aware that there has ever been an issue with being subject to state income taxes, but we are supportive of LB 913 and any efforts that help facilitate bringing in needed assistance. (Schilz) LB 914 provides compensation for the member of the Nebraska Power Review Board (PRB), or proxy, designated to represent Nebraska on the Southwest Power Pool s Regional States Committee (RSC). Such member would be compensated $250 for each day engaged in RSC duties, not to exceed $20,000 in any one year. The PRB is a cash funded agency of the State and it does not receive general fund appropriations. Rather the agency is funded by assessments that are levied on all of the State s public power entities, including LES. While LB 914 would slightly increase LES assessment, LES believes that it is imperative that Nebraska is represented on the RSC and LES is supportive of this compensation proposal. (Mello, et al.) Clarifies statutory provisions prohibiting employers from discriminatory wage practices based on sex to provide that an unlawful employment practice occurs when a discriminatory compensation decision or practice is adopted or an employee becomes subject to such, including each time that wages, benefits, or other compensation is paid resulting from such decision. (Smith) Current state law prohibits companies engaged in activities that require the temporary moving of overhead high voltage conductors, such as house movers, from moving such conductors and requires them to notify the appropriate electric utility. There have been a number of instances of entities not complying with these provisions. LB 973 was introduced on behalf of the Nebraska Rural Electric Association to make violations of these provisions a Class II misdemeanor. LES POSITION Monitor Support/Confer with City Support Monitor/Confer with City Monitor February 22,

19 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 992 LB 1012 LB 1044 STATUS OF LEGISLATION Government, Military & Veterans Affairs Committee Hearing February 17, 2016 Urban Affairs Committee Hearing February 9, 2016 Business & Labor Committee Hearing February 22, 2016 SUMMARY OF LEGISLATION (Ebke) Prohibits political subdivisions from entering into certificates of participation or installment contracts exceeding $25 million. LES does not have any installment contracts, but the bill would threaten the City s use of certificates of participation for funding projects. (Mello, et al.) Adopts the Property Assessed Clean Energy Act to promote greater homeowner engagement in energy efficiency by provided a mechanism to help amortize the up front investment required. A municipality is authorized to establish clean energy assessment districts. The municipality would arrange financing for the energy projects in such a district and property owners in such districts would enter into contracts for energy efficiency improvements to their property. The costs of these projects would be repaid through assessments on the qualifying properties benefiting from the energy projects. There is no direct impact on LES. (Ebke) LB 1044 would terminate the Commission of Industrial Relations, the state commission that was created to resolve labor disputes involving public employees. The bill provides that termination of the CIR would not eliminate or restrict the right of employees to strike. LES POSITION Monitor/Confer with City Monitor Monitor/Confer with City February 22,

20 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 1068 STATUS OF LEGISLATION Transportation & Telecommunications Committee Hearing February 23, 2016 SUMMARY OF LEGISLATION (Haar) Adopts the Electric Customer Protection Act requiring that certain proposed electric rate increases be reviewed by the Public Service Commission (PSC) and creating the office of customer advocate within the PSC. The PSC would review a proposed electric rate increase: 1) upon receipt of a petition filed by 2% or more of the affected customers; or 2) when an electric utility proposed to increase its rates by more than 2% in any consecutive 12 month period, or any component of its rates by more than 20% in any consecutive 12 month period. Much of the language seems to be borrowed from states that have PSC s that regulate the rates of investor owned utilities because it includes language that allows for a fair and reasonable rate of return. Public power utilities do not earn a rate of return. LES POSITION Oppose/Confer with City LB 1069 Indefinitely Postponed LES has numerous concerns with the bill, primarily the fact that it erodes one of the hallmarks of public power which is local control. This bill would erode the jurisdiction of both the LES Administrative Board and the Lincoln City Council with regarding to setting retail electric rates for LES. It would add another layer of review with an added cost to taxpayers to fund the additional PSC staff that would be required to implement the bill. (Haar) LB 1069 requires the state investment officer to review all major investments of the State of Nebraska to determine the extent to which state funds are invested in companies that derive a substantial portion of their revenues from the extraction or combustion of fossil fuels. It also directs that a plan be developed to divest the state of such investments. The bill as written does not impact LES, but it will be monitored due to its energy focus. Monitor February 22,

21 LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 1071 LB 1085 STATUS OF LEGISLATION Natural Resources Committee Hearing February 11, 2016 Revenue Committee Hearing February 25, 2016 LR 422 Adopted February 1, 2016 SUMMARY OF LEGISLATION (Haar) Adopts the Solar Energy Economic Development Act, calling for the appropriation of $4 million in FY for the purpose of providing grants for solar energy development. The Nebraska Energy Office would be charged with establishing rules and regulations to administer such grants. The grants would be available to utilities that provide solar energy incentive programs for their customers, such as net metering and certain community solar programs. Grants are also available to local governments, individuals, and businesses. For individual grants, preference is given to applicants whose electric utility does not offer a solar energy incentive program. This is somewhat confusing as utilities are required by law to provide net metering to customer generators who request it. Grants may not exceed 15% of the total project cost or $150,000. LES already provides incentives to customers who install solar generation. (Davis) Provides for a production tax credit for renewable electric generation facilities. However, the definition of renewable electric generation facility is very narrow and includes only facilities that are located in a county with a population of less than 7,000 inhabitants and has been approved as a community based energy development (C BED) project. LES has been generally supportive of incentives to promote greater development of renewable energy resources in Nebraska. (Campbell) Legislative Resolution recognizing LES 50 th anniversary and congratulating the LES staff and Board on 50 years of providing the Lincoln area with reliable, safe and efficient electric service at retail rates that have consistently ranked among the lowest in the country. LES POSITION Monitor Support tax incentives for renewable energy Support February 22,

22 Exhibit III

23 Corporate Key Indicators Public Power Utilities Ratios Benchmarking Provided By: Omaha Public Power District (OPPD) & American Public Power Association (APPA) Inna Goldman, Manager Financial Accounting February 19,

24 OPPD Benchmarking Participants Responses by 2014 Electric Energy Sales (MWh) < 3,000,000 3,000,000-8,000,000 2 > 8,000,000 4 City Utilities of Springfield * Colorado Springs Utilities * Gainesville Regional Utilities * KC Board of Public Utilities Lincoln Electric System * Muscatine Power & Water Nebraska Public Power District * Omaha Public Power District * Orlando Utilities Commission * Santee Cooper * Seattle City Light Tacoma Public Utilities Total Participants 12 * Also included in LES Peer Group 6 LES Source: OPPD Corporate Key Indicators Report, June

25 APPA Benchmarking Participants Public Power Utilities whose Retail Sales are 50% or more of Total Sales Retail Sales or Sales for Resale of 100,000 MWh or more Responses by Customer Size Class 2,000 5, > 100,000 50, ,000 Please refer to slides for a complete list of participants 5,000-10, ,000-20, ,000-50, Total Participants 168 Source: APPA Selected Financial and Operating Ratios of Public Power Systems, Nov

26 Summary of LES Rankings Percentages based on results for 71 Ratios for approximately 29 utilities (APPA & OPPD) 3rd Quartile 21% 4th Quartile 18% - Debt to Total Assets - Energy Loss % 1st Quartile 28% - A&G per Retail Customer - Total Power Supply Exp. per kwh Sold - System Average Interruption Duration Index (SAIDI) - Debt Service Coverage 2nd Quartile 33% - Customer Average Interruption Duration Index (CAIDI) - OSHA Incident Rate - Total O&M per Retail Customer - Days Cash on Hand - Residential Revenues per kwh Sold 4

27 LES 2015 Year-End Performance Indicators LES 2015 year-end performance indicators based on preliminary results 5

28 7% Energy Loss Percentage (APPA Selected Financial & Operating Ratios of Public Power Systems, Nov 2015) Ideally - BELOW the median! 6% 5% 4% 3.81% 3% 2% 1% LES 2015 Year End Performance Indicator Target = 3.85% Actual = 3.81% 0% LES 6.00% 5.36% 3.03% 3.75% 4.02% 3.74% 3.69% 3.66% 4.03% 3.81% Overall Average 4.19% 4.01% 3.86% 3.96% 3.97% 3.11% 3.53% 4.71% 3.47% Cust. Size Class Avg. 4.45% 4.18% 3.91% 4.06% 4.07% 3.02% 3.51% 5.22% 3.98% Comments: LES ranked in the 2 nd Quartile of utilities with a customer size class > 100,000 (total of 16 utilities). The ratio of total energy losses to total sources of energy. 6

29 Customer Average Interruption Duration Index (CAIDI) (OPPD Corporate Key Indicators Report, June 2015) Ideally - BELOW the median! LES 2015 Year End Performance Indicator Target = 80 Actual = 69 Minutes LES Average Median Comments: LES ranked 5 th out of the 11 participants that submitted data. CAIDI = Total Duration of Sustained Interruptions in a Year / Total Number of Customers Interrupted 7

30 60 System Average Interruption Duration Index (SAIDI) (OPPD Corporate Key Indicators Report, June 2015) Ideally - BELOW the median! Minutes LES 2015 Year End Performance Indicator Target = 60 Actual = LES Average Median Comments: LES ranked 3 nd out of the 11 participants that submitted data. SAIDI = Total Duration of Customer Sustained Interruptions in a Year / Total Number of Customers Served. 8

31 OSHA Incidence Rate (per 100 Employees) (OPPD Corporate Key Indicators Report, June 2015) Ideally - BELOW the median! 14 Incidences Total Injury Cases LES 2015 Year End Performance Indicator Target = 0 Actual = LES Average Median Comments: LES ranked 5 th out of the 9 participants that submitted data. LES is not subject to OSHA as a governmental entity but uses OSHA as a standard for comparison purposes with other utilities. OSHA Incidence Rate (per 100 Employees) = Total Number of Reportable Injuries and Illness Cases * 200,000 / Number of Hours Worked. 9

32 600 Total O&M Expense per Retail Customer (APPA Selected Financial & Operating Ratios of Public Power Systems, Nov 2015) Ideally - BELOW the median! Dollars per Customer LES 2015 Year End Performance Indicator Target = $538 Actual = $504 *LES calculation differs from APPA calculation* LES Overall Average Cust. Size Class Avg Comments: LES ranked in the 2 nd Quartile of utilities with a customer size class > 100,000 (total of 17 utilities). APPA calculation: O&M expense (excluding all costs of power supply) / average number of retail customers; based on FERC accounts LES PI calculation: O&M expense (excluding all costs of power supply) / average number of retail customers; based on LES natural accounts 10

33 A&G per Retail Customer (OPPD Corporate Key Indicators Report, June 2015) Ideally - BELOW the median! $400 $350 $300 $250 LES 2015 Year End Performance Indicator Target = $328 Actual = $308 *LES calculation differs from OPPD calculation* $200 $150 $ $50 $ LES Average Median Comments: LES ranked 1 st out of the 12 participants that submitted data. OPPD calculation: A&G expense / average number of retail customers; A&G expense based on FERC accounts LES PI calculation: A&G expense / average number of retail customers; A&G expense based on LES natural accounts 11

34 Total Power Supply Expense per kwh Sold (APPA Selected Financial & Operating Ratios of Public Power Systems, Nov 2015) 0.06 Ideally - BELOW the median! Dollars per kwh LES 2015 Year End Performance Indicator (kwh) Target = $.031 Actual = $.031 *LES calculation differs from APPA calculation* LES Overall Average Cust. Size Class Avg Comments: LES ranked in the 1 st Quartile of utilities with a customer size class > 100,000 (total of 17 utilities). APPA calculation: Total cost of power supply (generation and purchased power) / sales to all customers; based on FERC accounts LES PI calculation: Total cost of power supply (generation and purchased power) / sales to all customers; includes depreciation and interest exp 12

35 0.90 Debt to Total Assets (APPA Selected Financial & Operating Ratios of Public Power Systems, Nov 2015) Ideally - BELOW the median! Debt ($) / Total Assets ($) LES 2015 Year End Performance Indicator Target <.69 Actual =.69 *LES calculation differs from APPA calculation* LES Overall Average Cust. Size Class Avg Comments: LES ranked in the 4 th Quartile of utilities with a customer size class > 100,000 (total of 17 utilities) APPA calculation: (long-term debt + current and accrued liabilities) / (total assets +other debits); long term debt includes unamortized premium LES calculation: (long-term debt + commercial paper) / (equity + long-term debt + commercial paper); long term debt excludes unamortized premium 13

36 Days Cash on Hand (OPPD Corporate Key Indicators Report, June 2015) Ideally - ABOVE the median! LES 2015 Year End Performance Indicator Target = 74 (minimum) Actual = 193 *LES calculation differs from OPPD calculation* 241 Days LES Average Median Comments: LES ranked 6 th out of the 12 participants that submitted data. APPA calculation: (Unrestricted and Available Cash and Investments) * 365 / (Total Operating Expenses Depreciation and Amortization + PILOT + CDFUO) Available cash consists of Revenue Fund (including CDFUO) and Rate Stabilization Fund LES PI calculation: (Unrestricted and Available Cash and Investments) / Value of One Day of Cash 14

37 2.20 Debt Service Coverage (OPPD Corporate Key Indicators Report, June 2015) Ideally - ABOVE the median! Debt Service Coverage LES 2015 Year End Performance Indicator Target = 2.00 Actual = LES Average Median Comments: LES ranked 6 th out of the 11 participants that submitted data. For some companies the results of this ratio are for the combined operations as opposed to the electric operations only due to the unavailability of the breakdown for the electric operations. Debt Service Coverage = Net Receipts / Debt Service Payments 15

38 Residential Revenues per kwh Sold (OPPD Corporate Key Indicators Report, June 2015) Ideally - BELOW the median! Residential Revenues / kwh Sold LES Average Median Comments: LES ranked 5 th out of the 12 participants that submitted data. Tis ratio is calculated as residential revenues divided by kwh sales to residential customers. 16

39 Staffing Strike Zone APPA Public Power Blog, February 10, 2016 LES within Strike Zone Comments: APPA s analysis suggests that, as cost-of service providers, most public power utilities arrive at similar staffing levels so they can provide excellent customer service at the lower possible cost to consumers. 17

40 APPA Benchmarking Participants ALABAMA Lodi Electric Utility JEA Sioux Center Municipal Utilities Decatur Utilities LA Department of Water & Power Keys Energy Services Waverly Municipal Electric Utility Huntsville Utilities City of Palo Alto Kissimmee Utility Authority KANSAS Riviera Utilities Pasadena Water and Power Department Scottsboro Electric Power Board City of Redding City of Tallahassee KENTUCKY OUC McPherson Board of Public Utilities ALASKA Riverside Public Utilities GEORGIA Owensboro Municipal Utilities Anchorage Municipal Light & Power Roseville Electric City of Calhoun Electric Department LOUISIANA ARIZONA Sacramento Municipal Utility District Crisp County Power Commission Lafayette Utilities System Electrical District No. 2 Pinal County Turlock Irrigation District Marietta Power & Water MARYLAND Navajo Tribal Utility Authority COLORADO IDAHO Easton Utilities Commission Salt River Project Longmont Power & Communications Idaho Falls Power MASSACHUSETTS ARKANSAS Loveland Water & Power ILLINOIS Holyoke Gas & Electric Conway Corporation Platte River Power Authority Springfield City Water, Light & Power Town of South Hadley Hope Water & Light Commission CONNECTICUT City of St. Charles Sterling Municipal Light Dept. Jonesboro City Water & Light Groton Utilities INDIANA MICHIGAN City of North Little Rock Electric Dept. Norwich Public Utilities Crawfordsville Electric Light & Power City of Bay Paragould Light & Water Commission FLORIDA Lawrenceburg Municipal Utilities City of Siloam Springs Beaches Energy Service IOWA CALIFORNIA Fort Pierce Utilities Authority Cedar Falls Utilities Alameda Municipal Power Gainesville Regional Utilities Muscatine Power & Water Coldwater Board of Public Utilities Holland Board of Public Works Lansing Board of Water & Light Zeeland Board of Public Works Source: APPA Selected Financial and Operating Ratios of Public Power Systems, Nov

41 APPA Benchmarking Participants MINNESOTA MISSISSIPPI NORTH CAROLINA Central Lincoln People's Utility District ALP Utilities Greenwood Utilities Commission City of Albemarle Clatskanie People's Utility District Austin Utilities NEBRASKA Fayetteville Public Works Commission Eugene Water & Electric Board East Grand Forks Water, Light, Power Cedar-Knox Public Power Greenville Utilities Commission McMinnville Water & Light Grand Rapids Public Utilities Commission Chimney Rock Public Power District Rocky Mount, City of Northern Wasco County People's Utility District Marshall Municipal Utilities Fremont Department of Utilities Shelby, City of Springfield Utility Board Moorhead Public Service City of Hastings OKLAHOMA Tillamook People's Utility District New Ulm Public Utilities Lincoln Electric System Grand River Dam Authority SOUTH CAROLINA Owatonna Public Utilities Nebraska Public Power District Stillwater Utilities Authority Greer Commission of Public Works Rochester Public Utilities North Central Public Power District Smithfield, Town of South Carolina Public Service Authority Worthington Public Utilities Polk County Rural Public Power District OHIO SOUTH DAKOTA City Utilities of Springfield Southern Public Power District Cuyahoga Falls, City of Brookings, City of MISSOURI NEW MEXICO Clyde Light & Power Watertown Municipal Utilities City of Cameron Farmington, City of City of Hamilton TENNESSEE City of Hannibal Los Alamos County Hudson Public Power Alcoa Electric Department Independence Power & Light NEW YORK Orrville, City of Athens Utility Board Poplar Bluff Municipal Utilities & City Cable Massena Electric Department OREGON Benton County Electric System Rolla Municipal Utilities Plattsburgh Municipal Lighting Department Canby Utility Board Bristol Tennessee Essential Services Source: APPA Selected Financial and Operating Ratios of Public Power Systems, Nov

42 APPA Benchmarking Participants Cleveland Utilities TEXAS Manassas, City of Rice Lake Utilities Columbia Power System Brownsville Public Utilities Board Martinsville Electric Department Shawano Municipal Utilities Cookeville, City of Bryan Texas Utilities WASHINGTON Covington Electric System College Station, City of Benton PUD Dickson Electric System City of Garland Chelan County PUD Dyersburg Electric System Denton Municipal Electric City of Port Angeles Erwin Utilities Kerrville Public Utility Board Mason County PUD Gallatin Department of Electricity Lubbock Power & Light PUD of Cowlitz County Jackson Energy Authority New Braunfels Utilities PUD of Grays Harbor Cnty LaFollette Utilities Weatherford Municipal Utility System PUD of Lewis County McMinnville Electric System UTAH PUD of Snohomish County Memphis Light, Gas, and Water Division City of Springville Seattle City Light Morristown Utility System City of St. George WISCONSIN Nashville Electric Service VERMONT Kaukauna Utilities Pulaski Electric System Burlington Electric Department Manitowoc Public Utilities Sevier County Electric System VIRGINIA Marshfield Utilities Tullahoma Utilities Board BVU Authority Menasha Utilities Wisconsin Rapids W W & L Comm Source: APPA Selected Financial and Operating Ratios of Public Power Systems, Nov

43 Available Ratios from APPA Survey (Quartile Rankings listed in parentheses) Revenue per kwh (All Retail Customers) (1) Total O&M Expense (Excluding Power Supply Expense) per Retail Customer (2) Revenue per kwh (Residential Customers) (1) Total Power Supply Expense per kwh Sold (1) Revenue per kwh (Commercial Customers) (1) Purchased Power Cost per kwh (1) Revenue per kwh (Industrial Customers) (2) Retail Customers per Meter Reader (4) Debt to Total Assets (4) Distribution O&M Expenses per Retail Customer (1) Operating Ratio (1) Distribution O&M Expenses per Circuit Mile (2) Current Ratio (4) Customer Accounting, Customer Service, and Sales Expense per Retail Customer (2) Times Earned Interest (4) Administrative and General Expenses per Retail Customer (2) Debt Service Coverage (3) Labor Expense per Worker-hour (1) Net Income per Revenue Dollar (4) Energy Loss Percentage (4) Uncollectible Accounts per Revenue Dollar (3) System Load Factor (1) Retail Customers per Non-Power Generation Employee (4) Total O&M Expense per kwh Sold (1) Source: APPA Selected Financial and Operating Ratios of Public Power Systems, Nov

44 Available Ratios from OPPD Survey (Quartile rankings listed in parentheses) Total O&M per MWh Sold (3) Transmission O&M (Less Other) as a % of Total Operating Revenues (3) Residential Revenues per Residential MWh Sold (2) O&M (Non-Power Production) per Retail Customer (2) Distribution O&M per Retail MWh Sold (2) Commercial Revenues per Commercial MWh Sold (1) O&M (Less Fuel and Purchased Power) as a % of Total Operating Revenues (2) Distribution O&M per Retail Customer (2) Industrial Revenues per Industrial MWh Sold (3) Total O&M as a % of Total Operating Revenues (2) Distribution O&M as a % of Total Operating Revenues (3) Wholesale Revenues per Wholesale MWh Sold (3) Power Production O&M per MWh Sold (2) System Average Interruption Duration Index (SAIDI) (1) Average Monthly Residential Bill (2) Generation O&M per MWh Generated (2) Electric Energy Sales per Employee (2) Fuel Expense per MWh Generated (2) Customer Average Interruption Duration Index (CAIDI) (2) Retail Customers per Non-Power Generation Employee (1) Generation O&M (Less Fuel) per MWh Generated (4) Customer Accts, Service and Sales per Retail MWh Sold (3) Retail Energy Sales per Retail Employee (1) Purchased Power Expense per MWh Purchased (2) Customer Accts, Service and Sales per Retail Customer (3) Total Liabilities as a % of Total Assets (3) Power Production O&M per MWh Generated/Purchased (3) A&G per MWh Sold (2) Days Cash on Hand (2) Steam Production O&M per Steam MWh Generated (1) A&G per Retail Customer (1) Days Cash on Hand (5-Year Average) (2) EAF Oil & Gas (3) A&G as a % of O&M (Less Fuel and Purchased Power) (1) Debt Service Coverage (3) Transmission O&M per MWh Sold (4) A&G per Employee (1) OSHA Incidence Rate (per 100 Employees) (2) Transmission O&M per Transmission Circuit Mile (3) A&G as a % of Total Operating Revenues (1) Inventory Turnover (1) Transmission O&M as a % of Total Operating Revenues (4) Uncollectible Accounts Expense as a % of Electric Energy Revenues (4) Transmission O&M (Less Other) per MWh Sold (4) Gross Distribution Plant in Service per Retail Customer (2) Transmission O&M (Less Other) per Transmission Circuit Mile (4) Net Distribution Plant in Service per Retail Customer (3) Retail Revenues per Retail MWh Sold (2) Source: OPPD Corporate Key Indicators Report, June

45 Exhibit IV

46 2015 Interruption/Outage Report Ben McGuire February 19, 2016

47 Reliability Statistics Indices ASAI Average Service Availability Index SAIDI System Average Interruption Duration Index CAIDI Customer Average Interruption Duration Index SAIFI System Average Interruption Frequency Index MAIFI Momentary Average Interruption Frequency Index

48 Major Event Days Major Event Days (MEDs)- criteria based on IEEE Std and is calculated using 5 years of outage history. Any day with a SAIDI/day value greater than the MED threshold (Tmed) is classified as a MED. LES began using MED criteria in 2014 to replace old Storm definition, which was based on the customer calls reporting outages during adverse weather. Reliability indices are calculated excluding MEDs (Normal Days) or including MEDs (All Days).

49 2015 Major Event Day Statistics Date # of Outages # of Customer Interruptions SAIDI Minutes Cause April 19th 2 4, July 25th 82 8, September 24th 5 2, Substation Transformer Outage Thunderstorm /Wind Long Feeder Outage Tmed

50 Outage Statistics Year Average No. of Customers 129, , , , , ,779 Total No. of Interruptions Interruptions during Normal Days (excluding Major Event Days) Total No. of Sustained Interruptions (> 5 minutes) Total No. of Instantaneous Interruptions (< 5 minutes)

51 Outage Statistics Year Average Number of Major Event Days ASAI (%) SAIDI (Minutes) (LES Goal <60) CAIDI (Minutes) (LES Goal <80) AD ND AD ND SAIFI (Long Interruptions) MAIFI (Short Interruptions) AD All Days (including Major Event Days) ND Normal Days (excluding Major Event Days)

52 Monthly SAIDI Monthly SAIDI MINUTES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Month

53 Monthly SAIDI 5 Year Averages Monthly SAIDI 5 Year Averages ( ) MINUTES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Month

54 Major Outage Causes on the Distribution System Dist Outage Causes ( ) Year Average % of 5 Yr Avg Total Trees % UG Primary Cable/Splice % Lightning % Squirrels % UG Secondary Cable Fail % Other % UG Primary Cable Cut % OH Secondary Connector Fail % UG Secondary Cable Cut % *OH Problems % ***Miscellaneous % OH Primary Connector/Jumper % OH Secondary Shorted % **UG Problems % OH Arrester Fail % Vehicle Accident % OH Transformer Fail/Overload % Wind % Unknown % Birds % Total %

55 Cause of Outages Trees UG Pri Cable/Splice Lightning Squirrels UG Sec Cable Fail

56 Circuits with the Most Outages RANK SUBSTATION CKT CKT CUST CUST- MIN SYSTEM SAIDI # of OUTAGES 1 91st & Hwy th & A T3 56th & Q T3 84th & Leighton T5 30th & A T5 56th & Everett T7 3rd & Van Dorn T7 91st & A T9 70th & Calvert T9 40th & Gertie T9 30th & A T9 59th & Cornhusker T9 NW 70th & Fairfield T9 30th & A

57 Five circuits with the most outages in 2015

58 Circuits with the Highest SAIDI Impact RANK SUBSTATION CKT CKT CUST CUST-MIN SYSTEM SAIDI # of OUTAGES 1 30th & A th & Pioneers NW 5th & Benton rd & Van Dorn th & Pioneers th & A th & Leighton th & A th & Q rd & Van Dorn

59 Five circuits with the highest SAIDI Impact in 2015

60 Annual SAIDI

61 Annual SAIDI

62 Annual CAIDI

63 Comparative CAIDI Values Averages include All Weather outages

64 System Average Interruption Duration Index (SAIDI) 5-Year Average ( ) (Normal Days) SAIDI [Minutes] A B F (LES) L M I D K G J H Company Comments: In 2014, LES ranked 3rd out of the 11 participants that submitted data. The 5-year average was only calculated for participants that provided five years of data. SAIDI = Total Duration of Customer Sustained Interruptions in a Year / Total Number of Customers Served. Source: OPPD Corporate Key Indicators Report, June

65 Customer Average Interruption Duration Index (CAIDI) 5-Year Average ( ) (Normal Days) CAIDI [Minutes] K I A D B F (LES) J M H G L Company Comments: In 2014, LES ranked 6th out of the 11 participants that submitted data. The 5-year average was only calculated for participants that provided five years of data. CAIDI = Total Duration of Sustained Interruptions in a Year / Total Number of Customers Interrupted. Source: OPPD Corporate Key Indicators Report, June

66 State SAIDI Comparison Nebraska 54 minutes LES SAIDI in 2013 was 20.3 minutes

67 Questions???

68 Exhibit V

69 Financial Performance January 2016

70 Energy Sales January , , , , , , ,725 YTD Status (MWh s) Actual Budget Variance % Retail 281, ,423 23, % Total 420, ,810 7, % Heating Degree Days were 5.3% below normal MWh s 100,000 80,000 89,609 60,000 51,597 49,711 56,790 40,000 34,067 36,558 20,000 0 Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Residential Commercial Industrial Street Light SPP Sales Contract Sales Month 121, , , ,725 34,067 36,558 1,817 1,769 89,609 51,597 49,711 56,790 YTD less current month Total 121, , , ,725 34,067 36,558 1,817 1,769 89,609 51,597 49,711 56,790 Unbilled change allocated to retail revenue classes. Wholesale sales separated into SPP sales and contract sales. 1,817 1,769 1

71 Revenue January 2016 $12,000 $10,000 $9,576 $10,389 YTD Status (Amounts in Thousands) Actual Budget Variance % Retail $20,472 $21,674 $1, % Total $25,381 $28,040 $2, % $8,423 $8,717 $8,000 Amounts in 000 s $6,000 $4,000 $3,606 $2,000 $0 Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Residential Commercial Industrial Street Light SPP Sales Contract Sales Other Revenue CDFUO Month $9,576 $10,389 $8,423 $8,717 $2,301 $2,400 $172 $168 $2,221 $3,606 $1,309 $1,559 $807 $612 $572 $589 YTD less current month $2,301 $2,400 $172 $168 Total $9,576 $10,389 $8,423 $8,717 $2,301 $2,400 $172 $168 $2,221 $3,606 $1,309 $1,559 $807 $612 $572 $589 Unbilled change allocated to retail revenue classes. Wholesale sales revenue separated into SPP sales and contract sales. $2,221 $1,309 $1,559 $807 $612 $572 $589 2

72 Expense January 2016 $9,000 $8,000 $7,000 $6,991 $7,789 $6,354 $6,902 YTD Status (Amounts in Thousands) Actual Budget Variance % Oper Exp $23,416 $24,957 $1, % Total $26,818 $28,710 $1, % $6,000 Amounts in 000 s $5,000 $4,000 $3,000 $2,000 $2,080 $2,250 $3,351 $3,722 $4,052 $4,061 $3,402 $3,753 $1,000 $588 $233 $0 Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget SPP Purchased Power Non Owned Asset Power Produced Power (Owned Asset Power) O&M A&G Depreciation Non Operating Expense (Income) Month $588 $233 $6,991 $7,789 $6,354 $6,902 $2,080 $2,250 $3,351 $3,722 $4,052 $4,061 $3,402 $3,753 YTD less current month $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total $588 $233 $6,991 $7,789 $6,354 $6,902 $2,080 $2,250 $3,351 $3,722 $4,052 $4,061 $3,402 $3,753 Purchased power separated into SPP purchased power and non-owned asset power. 3

73 Change in Net Position (Net Revenue) 2016 $10.0 $ Budgeted Change in Net Position (Net Revenue) = $6.09 Million $6.0 $4.0 (millions) $2.0 $0.0 ($2.0) ($4.0) ($6.0) ($8.0) ($10.0) 2016 Actual $(1.44) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 Budget $(0.67) $(1.64) $(2.60) $(6.37) $(7.76) $(8.32) $(0.43) $5.58 $8.10 $7.89 $5.94 $6.09 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 Actual $ (1.44) 2016 Budget $ (0.67) $ (0.97) $ (0.96) $ (3.78) $ (1.39) $ (0.56) $ 7.88 $ 6.01 $ 2.52 $ (0.21) $ (1.94) $

74 Ratio Debt Service Coverage & Fixed Charge Coverage Prior Month Year-end Projection Year-end Projection As of Jan Year-end Budget Annual Target Debt Service Coverage Fixed Charge Coverage N/A 2.00X 2.00X 2.00X N/A 1.52X 1.52X 1.55X Note: Debt Service Coverage Ratio measures ability of current year funds to cover long-term debt obligations. Fixed Charge Coverage Ratio measures ability of current year funds to cover longterm debt and capacity payments DSC YTD Actual FCC YTD Actual DSC Budget FCC Budget 0.80 J F M A M J J A S O N D 5

75 Significant Capital Projects January 2016 YTD Status (Amounts in Thousands) Actual Budget Variance % Direct Cost $2,738.7 $4, $1, % 6

76 Power Supply Division Jason Fortik February 19, 2016 Ver

77 January 2016 Monthly Actual vs. Budget *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

78 January 2016 Daily Temperature Range

79 January 2016 Loads

80 January 2016 Customer Energy Consumption

81 January 2016 Unit Equivalent Availability

82 January 2016 Daily Load and Resource Energy

83 January 2016 Peak Load Day January 18, 2016

84 Note: Total percentage may not add up to 100% due to rounding January 2016