Neligh, ERPPD Argue Power Case To Supreme Court

Neligh City Attorneys James McNally and Joseph McNally are seen at the Nebraska State Capitol on Friday morning prior to presenting arguments to the Nebraska Supreme Court on the acquisition of power from ERPPD following Neligh's annexation. (Photo by Dylan Widger/ACN)

The fate of the power acquisition between the City of Neligh and Elkhorn Rural Public Power District now rests in the hands of the Nebraska Supreme Court.

On Friday, the justices heard arguments from City of Neligh attorneys from Baird Hold LLP and McNally Law Office and ERPPD's attorneys from Blankenau Wilmoth Jarecke LLP. The opinion from the Supreme Court is expected to come in 60 to 90 days. 
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The case was transferred to the Supreme Court after ERPPD filed a petition to bypass the Court of Appeals and go directly to the Supreme Court, which was granted. ERRPD argued that the Nebraska Power Board acted arbitrarily and unreasonably in 1.) refusing to include the lost substation circuit within the total economic impact on ERPPD resulting from the service territory transfer, 2.) in failing to establish the amount of compensation the City of Neligh should pay to ERPD for the lost substation circuit, and 3.) in failing to consider evidence before it.

Last March, the Nebraska Power Review Board granted the City of Neligh the right to serve its newly annexed area with power. The City was to pay roughly $390,000 less than what Elkhorn Rural Public Power District had requested.

The power board's decision stated the retail service area rights would be transferred from ERPPD to the City of Neligh upon payment of $490,445.90 by the City to ERPPD. ERPPD had requested $881,059.38 in compensation, according to the order. 

The $490,445.90 payment was for the infrastructure that Neligh was required to purchase in the annexed area, such as poles, wiring and transformers.

The $490,445.90 payment broken down was $265,073.33 for loss of net revenue for customers in the south annexation, $149,079.57 for the facilities in the south annexation and $76,293.00 for the costs to integrate the facilities to provide service to the Hemenway customer as a result of the south annexation transfer. 

ERPPD also requested the City of Neligh pay $337,567 in compensation to relocate substation 71-18 and $53,046.48 for lost revenue for customers Bomgaars and Baker. Earlier, ERPPD said it would cost $935,000 to relocate the 19-year-old substation but requested less since it "could be viewed as betterment costs" and lowered the amount to $337,567, according to the order.

"Nothing has been rendered useless, and certainly nothing has made the substation need to be relocated," Neligh representative David Levy told the justices on Friday morning.

The Power Review Board ruled in favor of the City and did not require payment of $337,567 to relocate the substation. The order stated, "Relocating the substation is not necessary in order to reintegrate it into Protestant's distribution grid system."

"They jumped to the conclusion that by moving the substation, that it was the betterment (cost)," said David Jarecke, an attorney representing Elkhorn Rural Public Power District.

Also in dispute was service to the Baker and Bomgaars customers located in the annexed territory that was already being served by the City of Neligh. Because no transfer of service will take place, the Power Review Board also ruled in favor of the City and denied the request of $48,750 for the loss of revenue for Bomgaars and $4,296.48 for the Baker residence. 

"The City is not required to provide any compensation to the Elkhorn Rural Public Power District for the loss of revenue for these two customers as a result of annexation 578, as the customers are not 'existing customers' of Elkhorn Rural Public Power District under Nebraska law and the District has no revenue from sales of electricity to those customers," according to the order.