Natural Resources

Exemptions for private renewable energy companies proposed

A bill heard by the Natural Resources Committee Jan. 27 would make changes to state power regulations to encourage private renewable energy development.

LB824, introduced by Sen. John McCollister of Omaha, would exempt private renewable energy generation facilities from certain laws that regulate the construction or acquisition of electric generation facilities.

The bill would eliminate the requirement that a developer have a power purchase agreement, in which a customer agrees to buy most of a proposed facility’s electricity, before the facility is built. The bill also would exempt a private developer from a requirement that it prove that a new facility would not create stranded assets. Finally, the bill would prohibit other power suppliers from acquiring the private facility’s property through eminent domain.

To qualify for the exemption, a private company would be required to notify the Power Review Board, which oversees most of the state’s electric generating facilities, at least 30 days before it begins construction. The company also must certify that it will pay for any decommissioning costs if the facility fails.

McCollister said the bill would eliminate regulatory hurdles that deter private companies—especially wind energy developers—from building renewable energy generation facilities in the state. He said more private development would lead to billions of dollars in capital investment, high-paying jobs and new property tax revenue in rural Nebraska.

“Our state’s current regulatory structure is decades old,” McCollister said, “but the industry and the market have changed dramatically over the last six years and major simplification of existing structures is required to remove barriers that place our state at a significant disadvantage with regards to renewable energy.”

Thomas Budler, president of BHE Wind, said the company announced plans last year to build a 400-megawatt wind farm in northeast Nebraska that will create approximately 350 temporary construction jobs, 12 to 15 permanent jobs, $4 million per year in lease payments to landowners and $2.6 million per year in property taxes. However, that facility is the only investment the company has made in Nebraska because of the regulations that LB824 would remove, he said.

“BHE Renewables is very interested in making additional major investments in the state of Nebraska,” he said, “but the current regulatory environment makes it a much more difficult proposition than doing so in neighboring states.”

Bruce Bostelman, a member of the Center for Rural Affairs advisory board, opposed the bill. It would restrict the Power Review Board’s oversight of private energy developers, he said, and the state’s electrical grid does not have the capacity to handle the amount of wind energy that developers could generate. Private developers hope to sell electricity to the Southwest Power Pool (SPP), a group of utilities, power generation and transmission companies that oversees electricity infrastructure in 14 states including Nebraska, but Bostelman said the market is already saturated.

“There is no market need within the SPP,” he said. “There is nowhere to go with the power.”

Tom Kent, vice president and chief operating officer for the Nebraska Public Power District, testified in a neutral capacity. He said the state would benefit from new privately developed energy facilities. However, as those facilities put more electricity onto the market, prices will go down, reducing the margin that public power utilities earn on the energy they generate. That could result in higher rates for customers, he said.

The committee took no immediate action on the bill.

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