Substation

File photo of ERPPD substation, located north of the 525 Ave. and Highway 275 intersection.

The City of Neligh has been ordered to pay an additional $82,623.86 to Elkhorn Rural Public Power District, for customers and distribution facilities affected by, or in the area, annexed on the southeast side of Neligh in 2015.

This amount, in addition to $490,445.90, previously agreed upon by the City and ERPPD, is the result of nearly 18 months of litigation after the Nebraska Power Review Board ruled on March 27, 2017, additional compensation beyond the agreed amount was not due and ERPPD appealed.

The case was heard by the Nebraska Supreme Court and on March 30, 2018, the Court issued a decision in which it reversed the PRB’s decision and ordered further proceedings.

In April, PRB Hearing Officer Tim Texel met with both parties’ counsels and collectively, a decision was made to have each side address a series of seven questions.

Following written answers and briefs, the PRB heard oral arguments on Sept. 18.

In the PRB’s final financial determination, released Friday, Nov. 16, it determined the final calculation of the fair market value of the substation, less depreciation, amounted to $317,784.07, and then determined the economic impact of ERPPD’s loss of the substation at $82,623.86, or 26 percent.

History of the dispute

On Nov. 22, 2016, the PRB voted to grant a change in service territory and gave the City of Neligh authority to provide power to newly annexed areas along the Highway 275 corridor.

A separate hearing was held to determine financial compensation due to ERPPD by the City as the new power supplier.

Both parties agreed compensation in the amount of $490,445.90, for revenue lost from Battle Creek Farmers Cooperative, City of Neligh, ERPPD, Elkhorn Valley Storage, Green Line Equipment, TK Drive-In Cinema, Reinke’s Farm & City Service and Nebraska Department of Roads as customers; reintegration cost for the Ed Hemenway property, depreciation of equipment and new equipment, was appropriate.

The financial determination was made by the five-member PRB and signed March 24, 2017.

What was not agreed upon, was payment for the loss of one circuit in a substation, located north of the intersection of Highway 275 and 525 Ave., east of Neligh, owned by ERPPD.

ERPPD filed the case with the Nebraska Court of Appeals on April 24, stating the PRB acted arbitrarily and unreasonably (1) in refusing to include the lost substation circuit within the total economic impact (2) in failing to establish the amount of compensation Neligh should pay to ERPPD for the lost substation circuit and (3) in failing to consider the evidence before it.

David Jarecke of Blankenau, Wilmoth, Jarecke, LLC in Lincoln, counsel for ERPPD, also filed a motion to have the matter transferred to the Nebraska Supreme Court, essentially bypassing the Court of Appeals.

Jarecke stated, “This is a case of significant public interest. Many electric utilities would be similarly impacted.”

He asked the Court to recognize a majority of Nebraska residents are served by public power districts or municipality owned systems. “The determination made will impact future long-term plans and financial decisions of power suppliers.”

The City of Neligh, represented by David Levy of the firm Baird Holm, stated the substation would not be rendered useless by ERPPD, even after the loss of customers in the newly annexed area. Two of three circuits, comprising the substation, would continue to service ERPPD customers. “By compensation of the third circuit, the City would be compensating for lost load, which has already been calculated.”

Levy said the PRB acted under authority and asked the Court to uphold the decision.

In the Supreme Court ruling, the Court stated, “The Board’s actions were arbitrary, capricious, and unreasonable because the Board erred in failing to award compensation for reintegration costs to ERPPD for the lost substation unit.”

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