Modernizing MEAN's Total Requirements Power Agreement

The Municipal Energy Agency of Nebraska (MEAN) was formed during the era of leg warmers, parachute pants, and Jell-O Pudding Pops.

The year was 1981. Just like those popular 1980s trends, long-term power supply contracts can also show their age. Now, more than four decades later, the MEAN Board of Directors is working to modernize its Total Requirements Power Agreement up to current industry standards.

Through the Total Power Requirements Power Purchase Agreement, known as the Service Schedule M (SSM), MEAN matches participant electric load with long-term, low-cost and reliable power supply. In simple terms, the SSM agreement is a contractual commitment that obligates MEAN to provide long-term wholesale power supply to participant communities and in-turn obligates those participating communities to take the power supply, with the exception of each participant’s federal hydro allocations and certain qualifying local power projects. The SSM agreement includes a list of MEAN Board-approved power projects on Exhibit D of the agreement.

The long-term SSM agreement provides several key benefits  for MEAN participants, including:

  • Providing MEAN the opportunity to share in future power facilities, including the rights and obligations in those facilities for the life of the projects;
  • Allowing participants to maintain local control for rate-setting and power costs;
  • Providing long-term certainty regarding resource planning. Long-term resource acquisitions generally result in lower pricing and a larger pool of counterparties;
  • Several value-added services provided to participants.

Modernizing the Service Schedule M agreement is a big task. The MEAN Governance Review Committee has done much of the heavy lifting, working since 2020 to guide the initiative and share its progress with the MEAN Board of Directors. Other joint action agencies similar to MEAN have also successfully undertaken similar modernization initiatives the past few years.

Modernizing the SSM agreement will accomplish two primary objectives:

1) It will bring the agreement in line with current rules and regulations in today’s electric industry, which have evolved significantly over the past 40 years. That evolution includes open access transmission tariffs, network transmission service and ancillary services, market operations, regional transmission organization roles and requirements and many other regulatory requirements. MEAN operates in a significantly different environment than when it was formed and the agreement finalized.

2) It will provide participants the option to terminate the contract with proper notice, while honoring pre-existing agency resource obligations.  

There are several other modernization updates in many other areas, but these are the primary objectives behind the initiative.

MEAN participants that sign the new SSM agreement
The new SSM agreement would replace the old SSM agreement for participant communities that sign the new agreement. The description of services will be modernized to reflect the projects and services offered in today’s industry. The new SSM agreement also includes a termination option with proper notice, while honoring pre-existing agency resource obligations. This ensures other MEAN participant communities are not harmed by a terminating participant community. Most of the other material terms remain the same as the old SSM.

MEAN participants that DO NOT convert to the new SSM agreement
Participant communities that opt not to convert to the new SSM agreement would remain under the old SSM agreement and would need to consider updates to the Exhibit D list of power projects as MEAN adds power supply resources to its portfolio.

A participant remaining on the old SSM agreement and opting out of a new MEAN Board-approved power project would convert the participant to a Contract Purchaser and would need to secure another power supplier to fulfill any need over the Contract Demand as well as any associated transmission and certain related services required. Arrangements would also need to be made by the community with the applicable regional market operator and transmission provider to facilitate such a change. The community would be required to assume responsibility for several tasks related to power supply and transmission.

Timeline moving forward
The MEAN Governance Review Committee and Board reviewed a draft of the new SSM agreement and plan to review it again at their August meetings. This summer/fall staff from MEAN will be seeking input from city/village/town-appointed attorneys, and regional virtual meetings will likely be scheduled. All city/village/town-appointed attorneys are encouraged to participate and provide feedback on the draft agreement.

The MEAN Board of Directors’ goal is to prepare a final version for Board approval in November 2023, which would then be distributed to current SSM participants for consideration and approval before the April 1, 2024 effective date.