Legislative Resolution 455

I.  Background Information

II.  Execution of L.R. 455  
A. L.R. 455-Phase I Work Plan
B. L.R. 455-Phase II Overview

III.  General Aspects of the Studies   
A. Principles
B. Future Legislation
C. Structure of Phase II Study

IV.  Request for Professional Services
A. Structure-L.R. 455-Phase I and II
B. Qualifications

C. Time Requirements

D. Administrative Support
E. Proposal Format/Requirements

F. Costs of Proposing

G. Submission of Proposals

H. Awards of Contracts

I. Lack of Obligation

J. Termination

K. Contact for RFP


 

 

 

 

I. Background Information

During the ninety-fourth Legislature of Nebraska, second session, Legislative Resolution 455 (L.R. 455) was approved as follows:

LEGISLATIVE RESOLUTION 455. Introduced by Beutler.

PURPOSE: To study the electric utility industry in Nebraska. An advisory group of interested parties will be convened to assist the Natural Resources Committee of the Legislature in conducting a study which may include a review of:

(1) The issues related to competition and restructuring in the electric industry, and consideration of the factors that will provide a framework for such review, including, for example, electric system reliability, long-term system efficiency and power generation planning, rates, terms, and conditions of electric service, retail service areas, universal service and obligation to serve, general customer service, effects on different customer classes, comparability of service, fair, reasonable, nondiscriminatory rates, market-based pricing of services, coordination among services, effects of various legal requirements, tax structures, and financing structures on price, service, revenue bonds, and debt ratings, recovery of stranded investments and other transition costs, principles of public power, energy efficiency, fuel diversity, the role of renewable energy development in an environment of market-based pricing of electric service, environmental and social issues, maintaining a highly skilled work force, barriers to competition and open access, technology development, and encouraging the retention and growth of business in Nebraska;

(2) The possible effects in Nebraska of industry restructuring activities in other states and recent federal legislative and regulatory actions such as S. 1526 that is pending in the U.S. Senate and the Federal Energy Regulatory Commission rulemaking and decisions implementing the Energy Policy Act of 1992; and

(3) The regulatory jurisdictional issues addressed by utility boards of directors, and Nebraska Power Review Board, and other state level regulatory entities, federal power marketing administrations, such as the Western Area Power Administration, including legal requirements, contracts, and power allocations under such administrations, regional transmission groups, the federal Nuclear Regulatory Commission, and the Federal Energy Regulatory Commission, including the extent of federal regulatory jurisdiction in Nebraska. NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF THE NINETY-FOURTH LEGISLATURE OF NEBRASKA, SECOND SESSION:

1.That the Natural Resources Committee of the Legislature shall be designated to conduct an interim study to carry out the purposes of this resolution. 2.That the committee shall upon the conclusion of its study make a report of its findings, together with its recommendations, to the Legislative Council or Legislature.

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II. Execution of L.R. 455

The Natural Resources Committee has determined that L.R. 455 should be carried out in two phases as follows:

A. L.R. 455 - Phase I Work Plan

1. Task:

Conduct a study of the current consumer-owned electric utility industry in Nebraska.

2. Purpose:

To provide a comprehensive overview of the organization, structure, governance, regulation, and effectiveness of the consumer-owned electric utility industry in Nebraska.

3. Responsibility:

a. An independent project manager will be retained for the Phase I project and will head up a working task force. The project manager will have overall control and responsibility for performance of the work, keeping the study on schedule, ensuring all issues are covered, assigning work, coordinating with the facilitator, and bringing the study to completion with a written report. The project manager will be accountable to and report to the Natural Resources Committee of the Nebraska Legislature.

b.An independent facilitator will be retained for the Phase I project. The facilitator will serve as the interface between the task force and the advisory group, will lead discussion of issues in the advisory group, and facilitate meetings of the task force and advisory group. Since it is anticipated that the same advisory group will serve in both Phase I and II of the L.R. 455 study, it is critical that the advisory group have a comprehensive understanding of the electric utility industry in Nebraska at the completion of Phase I. This broad base of knowledge will be essential when the advisory group deals with the change issues that will be prominent in Phase II. The facilitator will have the responsibility of ensuring that the advisory group acquires this broad base of knowledge during the Phase I activities. The facilitator will be a member of the task force and will be accountable to and report to the Natural Resources Committee.

c.In addition to the project manager and facilitator, the task force will include up to six representatives as designated by the Nebraska Power Association (NPA). Because of their familiarity with the electric utility industry in Nebraska, the NPA representatives, with the assistance of the NPA subcommittees, will perform the bulk of the data gathering and analyses for the Phase I project. The task force, collectively with the individuals assigned to the task force, will be accountable to and report to the project manager for the performance of their respective work assignments.

d.The task force will have the responsibility to develop a work plan, schedule and RFP for project manager and facilitator for the Phase II work to be approved by the Natural Resources Committee. The Phase II activities are expected to commence about July 1, 1997. An overview of the Phase II work is attached.

e.An advisory group comprised of approximately 30 interested parties, including representatives of electric consumer groups in Nebraska, will be utilized to provide input on specific issues throughout the study process as requested by the task force or the Natural Resources Committee. All recommendations from the advisory group will be considered but will be non-binding on the task force. The Natural Resources Committee will have final authority on which recommendations will be pursued.

4. Deliverables/Schedule:

a.The Phase I project will commence about August 26, 1996.

b.The project manager will submit written progress reports to the Natural Resources Committee and the President of the NPA with the first report submitted October 1, 1996, and subsequent reports every two months thereafter.

c.The project manager will submit a preliminary final draft report to the Natural Resources Committee and the President of the NPA by July 1, 1997.

d.The entire task force will be expected to participate in public hearings as requested by the Natural Resources Committee.

e.The project manager will submit a final report, complete with supporting data, to the Natural Resources Committee and the President of NPA by December 31, 1997.

f.The project manager shall submit the work plan, schedule and RFP for the Phase II project as developed by the task force to the Natural Resources Committee by June 1, 1997.

5. Budget/Billing:

a.The Phase I activities will be funded by the NPA.

b.All billings for project manager and facilitator services and expenses, as well as incidental expenses of the task force and advisory group will be submitted by the project manager on a monthly basis to Mr. Nate Donovan, c/o Natural Resources Committee, for review and comparison to work completed to date. Upon completion of his review, Mr. Donovan will submit the billings to the Treasurer of NPA, who will review the appropriateness of the charges and conformance to budget, and arrange for payment within 20 days of NPA's receipt of the billings.

c.Billing disputes will be resolved by the project manager, Mr. Donovan, and the President of NPA.

6. Listing of issues anticipated to be considered in Phase I of the L.R. 455 Study*:

1.Public policy
2.History of public power
3.Principles of public power
4.Statutory regimes governing consumer-owned utilities
5.Electric utility organizations
6.Electric utility structures
7.Governance
8.Regulatory and jurisdictional roles

9.Retail service areas
10.Obligation to serve and universal service
11.Fair, reasonable and non-discriminatory rates
12.Rates, terms and conditions of service
13.Electric facilities
14.Fuel diversity
15.Integrated resources planning
16.Conservation and renewables
17.Energy efficiency
18.State industry performance
19.System reliability
20.System efficiency
21.Technology development
22.Revenue transfer policies

23.Indebtedness
24.Bond resolutions
25.Credit ratings
26.Sources of capital
27.Work force
28.Federal legislative and regulatory actions
29.FERC rulemaking and decisions
30.Industry restructuring in other states
31.Potential stranded assets
32.Transition from a regulated environment

* This listing is not meant to be all inclusive.

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B. L.R. 455 - Phase II Overview

1. Task:

Conduct a study of the emerging issues of competition and restructuring in the electric industry and analyze the possible effects of these issues on the consumer-owned electric utility industry in Nebraska.

2. Purpose:

To provide a comprehensive overview of the completed and anticipated developments in wholesale and retail electric competition, including FERC activity, utility mergers, PUC and legislative activities in other states, federal regulatory and congressional initiatives; and an evaluation of the potential effects of these developments on the consumer-owned electric utility industry in Nebraska.

3. Responsibility:

A task force designated by the Natural Resources Committee and the Nebraska Power Association.

4. Resources:

An advisory group comprised of approximately 30 interested parties, including representatives of electric consumer groups in Nebraska, will be utilized to provide input on specific issues throughout the study process as requested by the task force or the Natural Resources Committee. All recommendations from the advisory group will be considered but will be non-binding on the task force. The Natural Resources Committee will have final authority on which recommendations will be pursued.

5. Output/Timetable:

a. Anticipated start date - July 1, 1997.

b. Preliminary draft report for public comment - July 1, 1999.

c. Final report to Legislature - December 31, 1999.

6. Issues for Consideration: *

*This listing is not meant to be all inclusive.

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III. General Aspects of the Studies

The Natural Resources Committee has determined that L.R. 455 should be carried out in two phases as follows:

A. Principles

The following set of principles shall initially guide the discussion of issues included in the L.R. 455 - Phase I and II studies.

1. The State of Nebraska should ensure that customers' electric service needs are met at a price that is fair, just and reasonable.

2. Public policy goals of availability, affordability, reliability, efficiency, quality, safety, economic development, and environmental protection must be maintained or enhanced.

3. The principal benefits and elements of public power, including low costs and local control, should be preserved.

4. The benefits of integrated resources planning, including demand-side management, conservation and renewable resources should be preserved.

5. Public power's environmental, financial and contractual commitments represent electric consumer-owned assets and should be honored.

6. All electric suppliers should have the flexibility to offer products, services, prices, terms and conditions that meet unique and diverse customer needs.

7. The results of any restructuring should ensure that facilities are not duplicated, all customers have access to electricity at fair and reasonable prices, and that consumer protection is maintained.

8. All suppliers of electricity to Nebraska consumers should be subject to fair and consistent laws, rules and regulations, including public access to pertinent information.

9. If retail competition is allowed in Nebraska, all electric suppliers should have the authority to conduct retail electric operations and provide products and services outside of Nebraska.

10. Any changes to the electric utility structure must provide for a transition period which will allow changes to occur in a responsible and rational manner.

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B. Future Legislation

There is no intent expressed by the Natural Resources Committee nor should there be any expectations by the participants in the studies that introduction of legislation relating to electric utilities will be precluded during the pendancy of the L.R. 455 Phase I and II studies. In fact, legislative debate can be an important part of shaping public policy changes which may occur as a result of these studies. Notwithstanding the above caveat, it is expected that the primary legislative responses to industry restructuring and the changing electric utility environment will await the results of these studies.

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C. Structure of Phase II Study

The Natural Resources Committee and the study participants understand that the structure of the Phase II study may change from that outlined in this document depending upon experience gained prior to commencement of the Phase II study.

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IV. Request for Professional Services

The Natural Resources Committee is requesting proposals for the Phase I independent project manager and independent facilitator positions. A schematic of the structure to be utilized for the L.R. 455 study follows:

A. Structure - L.R. 455 - Phase I and II

OversightNatural Resources
Committee MembersTask ForcesPhase I
Project ManagerFacilitatorNebraska Power Assn. Phase II
Project Manager FacilitatorNebraska Power Assn.IPP's/NUG's, etc. Legislative Research DivisionLegal Counsel Bond CounselEngineeringFinanceEconomist

------------------------------------------------------------------------

ConsultantAdvisory Group
(Advisory Only)Advisory Group
(35)

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B. Qualifications

1. The independent project manager shall be a seasoned individual with experience in managing large projects and divergent views.

2. The independent facilitator shall be:

a. a seasoned individual with strong communication skills;

b. experienced in facilitating discussions of small and large groups of individuals representing diverse interests and opinions;

c. able to close and effectively summarize group discussions, and

d. able to educate a large and diverse advisory group on legal, financial, economic, engineering, public policy and technical issues.

3. The project manager and the facilitator shall not be the same individual.

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C. Time Requirements

1. Project Manager - it is estimated that the Project Manager will have to devote between 800 and 1,000 hours to effectively carry out the Phase I activities.

2. Facilitator - it is estimated that the Facilitator will have to devote approximately 500 hours to effectively carry out the Phase I activities.

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D. Administrative Support

All costs of secretarial and staff support, and all costs of printing and distribution of communications and reports required by the Project Manager and Facilitator for Phase I, shall be included in the cost proposal submitted by project manager respondents.

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E. Proposal Format/Requirements

1. Respondents shall submit a resume of their work experience as it relates to the Phase I work. References shall also be provided.

2. Respondents shall submit a written summation of their understanding of the Phase I work.

3. Respondents shall submit an outline of their approach to carrying out the Phase I activities.

4. Respondents shall submit a fee proposal for the Phase I work in the following form:

a. An hourly rate with a not to exceed amount.

b. A not to exceed out of pocket expense amount.

c. A not to exceed administrative support amount (project manager proposals only).

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F. Costs of Proposing

Costs of Proposing - Respondents will bear all costs of preparing the proposal and participating in oral presentations. No expenses or fees incurred prior to project initiation will be reimbursed or paid.

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G. Submission of Proposals

1. Each respondent shall submit two copies of their proposal to Mr. Nate Donovan, c/o Natural Resources Committee, District 28 State Capitol, Lincoln, Nebraska 68509-4604.

2. Proposals must be received no later than July 26, 1996 for the independent facilitator and August 16, 1996 for the project manager in order to be considered.

3. The successful bidders' proposals and this Request for Proposals will serve as the contract document.

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H. Award of Contracts

Award of Contracts - Contracts were awarded on August 23, 1996.

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I. Lack of Obligation

Lack of Obligation - The Natural Resources Committee reserves the right to reject any and all proposals.

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J. Termination

Termination - The Natural Resources Committee reserves the right to terminate the project manager and/or the facilitator work, without cause at any time. In the event of such termination, the terminated party shall be entitled to receive compensation for services rendered and expenses incurred up to the date of such termination.

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K. Contact for RFP

For questions regarding this RFP, please contact:

Mr. Nate Donovan
c/o Natural Resources Committee
District 28, State Capitol
Lincoln, NE 68509-4604
Phone: (402) 471-2633
Fax: (402) 479-0928

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