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CITY OF SIDNEY v. MUNICIPAL ENERGY AGENCY OF NEB.

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City of Sidney, Nebraska, appellee, v. Muni

Energy Agency of Nebraska, appe

___ N.W.2d ___

Filed September 28, 2018. No. S-17-471.

1. Nebraska Power Review Board: Arbitration and Award: Appeal and 

Error. On an appeal from the decision of an arbitration board convened 

under Neb. Rev. Stat. § 70-1301 et seq. (Reissue 2009), trial in the 

appellate court is de novo on the record.

2. Nebraska Power Review Board: Arbitration and Award: Evidence: 

Appeal and Error. Despite de novo review, when credible evidence is 

in conflict on material issues of fact, the appellate court will consider 

and may give weight to the fact that the arbitration board observed the 

witnesses and accepted one version of the facts over another.

3. Nebraska Power Review Board: Arbitration and Award: Contracts. 

Where contractual issues are intertwined with a rate dispute, such contractual issues are within the jurisdiction of an arbitration board convened under Neb. Rev. Stat. § 70-1301 et seq. (Reissue 2009).

4. Nebraska Power Review Board: Arbitration and Award: Notice. 

Under Neb. Rev. Stat. § 70-1306 (Reissue 2009), an arbitration board is 

authorized to permit amendments to a notice, substantive or not, at any 

time in the arbitrative proceedings.

5. Public Utilities: Proof. The purchaser of energy has the burden of proving that the transmission rate it is being charged is unfair, unreasonable, 

or discriminatory.

6. Contracts. In interpreting a contract, a court must first determine, as a 

matter of law, whether the contract is ambiguous.

7. ____. A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to 

its terms.

8. Contracts: Substantial Performance. To establish substantial performance under a contract, any deviations from the contract must be relatively minor and unimportant.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

11/09/2018 08:12 AM CST
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9. ____: ____. Substantial performance is shown when the following 

circumstances are established by the evidence: (1) The party made an 

honest endeavor in good faith to perform its part of the contract, (2) the 

results of the endeavor are beneficial to the other party, and (3) such 

benefits are retained by the other party.

10. ____: ____. Substantial performance is a relative term, and whether it 

exists is a question to be determined in each case with reference to the 

existing facts and circumstances.

11. Appeal and Error. An appellate court is not obligated to engage in an 

analysis which is not needed to adjudicate the controversy before it.

Appeal from the Public Power Review Board. Reversed.

John M. Guthery, Derek A. Aldridge, and Richard D. 

Sievers, of Perry, Guthery, Haase & Gessford, P.C., L.L.O., for 

appellant.

Stephen M. Bruckner and Alexander D. Boyd, of Fraser 

Stryker, P.C., L.L.O., for appellee.

Heavican, C.J., Miller-Lerman, Cassel, St

Funke, J

Funke, 

This is an appeal from an arbitration board’s decision under 

Neb. Rev. Stat. § 70-1301 et seq. (Reissue 2009). The City 

of Sidney, Nebraska, initiated this dispute against its wholesale energy provider, Municipal Energy Agency of Nebraska 

(MEAN), regarding its monthly transmission rate charges. The 

board ruled that MEAN breached the parties’ “Service Schedule 

M” (SSM) supplemental agreement, by unnecessarily and unilaterally changing the transmission path for the electric power 

and energy it provided to Sidney and by charging Sidney for 

the increased transmission rates. Because of these breaches, the 

board ruled that the transmission rate MEAN charged Sidney 

was excessive, unfair, and unreasonable.

On our de novo review, we conclude that the increased 

monthly transmission rate charges were not incurred arbitrarily 
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by MEAN but, instead, were required for continued performance of the SSM, after the parties learned they had insufficient contractual rights to complete the transmission path to 

Sidney. We hold that MEAN substantially complied with the 

SSM in transmitting energy to Sidney and that MEAN was 

permitted to charge Sidney the increased transmission rate 

under the SSM. Therefore, we reverse the decision of the arbitration board.

I. BACKGROUND

1. Relevant Enti

Sidney is a political subdivision and the operator of the 

retail electric system within its municipality and Fort Sidney, 

which serves approximately 3,900 customers. Sidney’s peak 

energy need ranges from 12 megawatts (MW) in the winter to 

18.5 MW in the summer.

MEAN is a Nebraska political subdivision and a not-forprofit wholesale energy provider, created under Nebraska’s 

Municipal Cooperative Financing Act.1 It is composed of over 

60 member communities—in Nebraska, Iowa, Colorado, and 

Wyoming—who have signed an Electrical Resources Pooling 

Agreement, which is the master agreement that governs all 

supplemental contracts between the parties. MEAN supplies 

its members’ wholesale energy by contracting for generation 

rights, with other members and third-party energy providers, 

and transmission rights, with third-party transmission service 

providers. MEAN is governed by a board of directors and a 

management committee, both of which consist of appointed 

representatives from each member community.

MEAN has served as Sidney’s primary wholesale energy 

supplier since 1982. At all relevant times, MEAN has served 

Sidney’s energy needs through the Sidney West switchyard 

(Sidney West). Sidney West is composed of several substations 

1 Neb. Rev. Stat. § 18-2401 et seq. (Reissue 2012).
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and facilities owned by different entities: The Western Area 

Power Administration (WAPA) owns a substation containing 

its 115 kilovoltage (kV) bus and attached transmission lines; 

Sidney owns transmission lines and a 115 kV/13.2 kV transformer, which are located within WAPA’s substation and connect to the national power grid only through WAPA’s 115 kV 

bus; and Tri-State Generation and Transmission Association, 

Inc. (Tri-State), owns a substation containing a 230 kV bus, a 

230 kV/115 kV transformer, and transmission lines connecting 

its bus and transformer to WAPA’s 115 kV bus.

WAPA is a federal power marketing administration within 

the U.S. Department of Energy. WAPA allocates federally generated hydroelectric energy to municipalities and other political 

subdivisions. WAPA also operates as a wholesale energy provider and transmission service provider, through its Loveland 

Area Project (LAP) Network Integrated Transmission System 

(NITS). Additionally, WAPA contracts with other transmission 

service providers as a tariff administrator to ensure compliance with Federal Energy Regulatory Commission regulations 

and monitor electronic tag (e-tag) registration in “OASIS,” 

the electronic system for registering transmission paths and 

scheduling energy transmissions across those paths. E-tags 

are electronic transaction records that document the planned 

flow of energy across one or more transmission systems in the 

wholesale market.

The Missouri Basin Power Project (MBPP) owns the 

Laramie River Station (LRS), a power-generating company, 

and transmission lines used to transmit energy from LRS. 

One of the owners of MBPP is Basin Electric Power West 

(BEPW). Through a displacement agreement with BEPW, 

MEAN has rights to 18 MW of energy from LRS and 

MBPP’s transmission lines connecting to Sidney. The displacement agreement makes WAPA the tariff administrator 

for BEPW and MEAN regarding their transmissions on the 

MBPP system.
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2. Contractual Relation

Between Sidney 

In 1995, Sidney accepted bids for its wholesale energy 

needs and resolicited bids in 1996. During the 1996 bid solicitation, MEAN’s bid tied for the lowest, and Sidney chose to 

award MEAN the contract because of the parties’ long history 

and Sidney’s ability to participate in MEAN’s governance, 

as a member community. From 1996 until 2001, Sidney 

and MEAN entered into a series of short-term supplemental 

agreements, under which MEAN provided Sidney its energy 

requirements in excess of WAPA’s approximately 2 MW 

energy allocation to Sidney.

After winning the bid in 1996, MEAN and Tri-State entered 

into the “Sidney Facilities Service Agreement” (Tri-State 

Agreement), which enabled MEAN to transmit 7 MW of energy 

through the portions of Sidney West “own[ed], operate[d], 

and maintain[ed]” by Tri-State for $2,367.40 per month, with 

the option to increase the capacity at the cost of $338.18 for 

each of the MW transmitted per month. With this agreement, 

MEAN was able to transmit LRS-generated energy to Sidney 

through MBPP, which connects to Sidney West at Tri-State’s 

230 kV bus.

In 2005, MEAN’s manager of electric operations was contacted by WAPA concerning the transmission arrangement 

MEAN used to serve Sidney. He informed WAPA that MEAN 

served Sidney using Tri-State’s transformer, under the TriState Agreement, which he believed WAPA found acceptable. 

He later informed Sidney that if Sidney could no longer rely 

solely on the Tri-State Agreement for its energy transmission, 

then Sidney would have to be put on WAPA’s LAP NITS 

for transmission at a nearly $300,000 annual transmission 

rate increase.

In 2007, MEAN’s manager of electric operations encouraged Sidney to enter into the SSM, instead of continuing with 

its then-current supplemental agreement, ending in 2011. He 
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explained several benefits of the SSM to Sidney: long-term 

energy rate stability, saving Sidney over $100,000 in 2008 

alone for its current agreement; savings of more than $1.6 million in 2008, compared to full tariff service with Tri-State; and 

extending Sidney’s long-term relationship with MEAN as a 

participating member in MEAN’s governance. He also stated 

that Sidney’s energy rates were lower than other MEAN members, in part because of the low transmission costs enabled by 

the Tri-State Agreement.

In 2008, the parties entered into the SSM, effective from 

February 1, 2008, until at least 2041. The SSM is a standard 

form agreement used with other members of MEAN and 

includes attachments specific to the member community. It 

requires MEAN to provide Sidney its energy requirements, 

less WAPA allocations, and Sidney to pay MEAN for such 

energy under the provisions of exhibit B, the rate schedule. 

The SSM also states that the energy supplied by MEAN shall 

be delivered to the “Point of Delivery” (POD) specified in 

exhibit A, which may be modified only “by a revised Exhibit 

A signed by an authorized officer of [Sidney] and accepted 

by MEAN.”

Exhibit A includes the following diagram:
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From 1996 until December 1, 2014, under each of the 

parties’ supplemental agreements, MEAN provided Sidney’s 

energy requirements through its generation rights in LRS and 

transmission rights on MBPP’s transmission lines, which connected to Sidney’s facilities in Sidney West through Tri-State’s 

and WAPA’s facilities. The only fee for transmission charged 

to Sidney by MEAN under this transmission path was the 

$2,367.40-per-month base fee in the Tri-State Agreement.

3. Policy Changes Rega

Energy Transmis

(a) MEAN Policy Changes

In 2013, MEAN entered into a settlement with the 

Southwestern Power Pool to compensate it for MEAN’s unreserved use of its facilities, which is the use of a facility to 

transmit energy without any contractual rights to do so. Tariff 

administrators establish the penalties for unreserved use of 

facilities, which generally include compensating the owner of 

the facility for any use at double the rate normally charged. 

MEAN’s board of directors decided to pay the costs of this 

settlement by socializing the amount across all of its members, 

even though Sidney and other members had not directly benefited from the unreserved use.

In response to the incident with the Southwestern Power 

Pool, MEAN’s executive director proposed a directive implementing a culture of compliance for MEAN to the board 

of directors, which it approved. Consequently, there was an 

expectation that MEAN would do whatever was necessary to 

comply with all regulations. By 2013, MEAN had begun extensively reviewing energy contracts to ensure they were complying with applicable regulations.

(b) WAPA Changes to Use of 

E-Tags on MBPP Lines

As Sidney’s energy provider, MEAN scheduled all e-tags 

for the transmission of its generated energy resources to 
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Sidney on OASIS. Historically, e-tags were very general 

in that MEAN was required to specify only the start and 

end points of an entire transmission path and label it as 

grandfathered.

In January 2013, however, WAPA informed MEAN that it 

intended to discontinue the use of grandfathered e-tags effective March 26, 2013. As a result, MEAN was now required to 

schedule each transmission segment along the complete path 

through specific e-tags. These specific e-tags were required to 

specify the start and end points of each transmission segment, 

the transmission service provider that owned the segment, and 

the capacity level of the energy. The capacity level of energy is 

rated on a 1-to-7 scale. Level 7 is the highest priority, the last 

level to be curtailed in the case of overscheduling, classified 

as “firm” capacity.

OASIS rejects a registered e-tag if there is insufficient 

capacity on a particular segment of the transmission line or if 

it does not recognize the registering entity as having a contractual right for its scheduled transmission. Conversely, when an 

entity had used a grandfathered e-tag, OASIS’ system for verifying whether the registering entity had sufficient contractual 

rights to transmit energy across each segment of a complete 

transmission path was bypassed.

Upon announcing the change, Raymond Vojdani, a transmission policy advisor at WAPA, informed MEAN that its transmission capacity on the MBPP line to Sidney West would be 

reduced to 4 MW of firm capacity, from the 18 MW of firm 

capacity available with the grandfathered e-tag. Vojdani also 

suggested that MEAN’s transmission path to Sidney, under 

the displacement agreement, would consist of the following three segments: the LRS generating facility to the MBPP 

transformer converting energy to 230 kV, BEPW LRS>LRS 

230; MBPP’s transformer to the Stegall, Nebraska, switchyard, 

LAPT LRS 230>SGW; and the Stegall switchyard to Sidney 

West, BEPW SGE>SCSW.
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4. MEAN’s Internal 

to WAPA’s Ch

In December 2013, MEAN internally discussed a problem 

with its transmission path for Sidney within Sidney West. 

MEAN found that the three-segment path, provided by Vojdani, 

was insufficient to deliver energy to Sidney, because it resulted 

in a gap within Sidney West, and that it could only create a 

complete transmission path by adding a fourth segment, LAPT 

SCSW>SCSW. “LAPT” referred to the Loveland Area Power 

Transmission, which encompassed WAPA’s 115kV bus located 

within Sidney West.

Rather than scheduling transmissions to Sidney with this 

fourth segment, MEAN used point-to-point transmission capacity (PtP) to create a complete transmission path. PtP is the 

purchase of transmission rights for a single segment of a transmission system, but it must be purchased for the peak MW 

capacity required at any point regardless of whether or not the 

entity needs such capacity at all times. MEAN relied on 10 

MW of its existing organizational PtP and acquired additional 

PtP at a cost of over $30,000 in 2013 and 2014.

MEAN initially attributed the gap in its transmission path 

to Tri-State’s 230 kV/115 kV transformer. They asked Vojdani 

whether a Tri-State-to-Sidney West, TSGT SCSW>SCSW, 

e-tag could be created, under the Tri-State Agreement, to 

resolve the gap, but Vojdani stated that no e-tag across Sidney 

West should be required, because all parties were aware of 

MEAN’s agreement to use Tri-State’s 230 kV/115 kV transformer. During this same period, Billy Cutsor, a MEAN 

employee, provided Vojdani with incorrect information regarding the number of MW MEAN could transmit through TriState’s facilities, under the Tri-State Agreement. Based upon 

the incorrect information, Vojdani recommended that Sidney 

be placed on LAP NITS so that MEAN could transmit a sufficient amount of energy to Sidney to fulfill Sidney’s needs. 

After this recommendation, MEAN targeted placing Sidney on 

LAP NITS on October 1, 2014.
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Still having issues with creating a complete transmission 

path to Sidney, MEAN contacted Tri-State in February 2014. 

Tri-State offered various e-tag alternatives, but each proved 

ineffective. Tri-State suggested using the TSTG SGW>SCSW 

230 e-tag, but it did not work, because it contained the same 

gap within Sidney West. MEAN requested that Tri-State fill 

the gap in its path by creating an e-tag representing its contractual rights under the Tri-State Agreement, suggesting TSTG 

SCSW 230>SCSW 115, but this also did not work.

Tri-State then suggested using the LAPT SCSW>SCSW 

e-tag. However, MEAN expressed concern that this e-tag 

would indicate it was using WAPA’s system, which Vojdani 

confirmed. Subsequently, MEAN, Tri-State, and Vojdani scheduled a conference call to discuss the e-tag issue further. Based 

on the call, MEAN concluded that WAPA’s 115 kV bus was the 

gap in its transmission path to Sidney and that it would need 

to contract with WAPA to create a complete transmission path 

using WAPA’s bus.

In June 2014, MEAN began working on an application to 

WAPA to determine whether there was sufficient capacity on 

LAP NITS to serve Sidney’s energy needs. MEAN submitted 

its application to WAPA on July 21.

5. MEAN Communic

With Sidney and C

to Transmission 

In the spring of 2014, Cutsor mentioned to a Sidney 

employee that some issues had arisen with the transmission 

arrangement MEAN used to serve Sidney, explaining what 

had changed and some options for solving the issue. Then, in 

July 2014, Cutsor sent an email to another Sidney employee 

explaining that the use of e-tags had recently become more 

transparent, that the Federal Energy Regulatory Commission 

now monitored e-tags, and that a complete transmission path to 

Sidney would require additional transmission service. Cutsor 

recommended that Sidney obtain LAP NITS and cancel the 
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Tri-State Agreement effective October 1, 2014, which would 

result in about a $500,000 annual increase in transmission 

fees. During a subsequent conference call in July, MEAN communicated that WAPA would not impose any penalty for the 

unreserved use of its facilities if Sidney obtained LAP NITS 

service by October 1.

In August 2014, MEAN provided Sidney with a price comparison for Tri-State and LAP NITS, the only entities with substations at Sidney West. MEAN determined that the use of LAP 

NITS would cost $576,000 per year and that full tariff service 

with Tri-State would cost about $630,000 per year. Sidney 

responded that it would be examining its options further before 

accepting MEAN’s proposal. Later, MEAN informed Sidney 

that Tri-State’s full tariff service would not include rights to 

WAPA’s 115 kV bus and that WAPA offered only full tariff 

service on LAP NITS, not a limited contract for the 115 kV 

bus only.

Both MEAN and WAPA estimated that keeping the existing transmission path with MBPP and adding PtP to transmit 

energy across WAPA’s bus would be a similar or higher cost 

than obtaining LAP NITS full tariff service. Further, PtP 

would be subject to curtailing when there was insufficient 

capacity on WAPA’s 115 kV bus and would continue to provide Sidney with only 4 MW firm energy. Conversely, WAPA 

informed MEAN that as part of the full tariff service with 

LAP NITS, Sidney could be provided with its full energy 

needs at firm capacity by WAPA’s generating sources. MEAN 

also learned from WAPA that LAP NITS could transmit 

energy to Sidney independent of the rights in the Tri-State 

Agreement and over various lines, which would reduce the 

risk of interruptions.

During a meeting in September 2014, MEAN discussed 

with Sidney the changes in 2013 that led to the identification of the gap in the transmission path, how the Tri-State 

Agreement was insufficient to close the gap, and its final 
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determination that obtaining LAP NITS and canceling the 

Tri-State Agreement, effective October 1, 2014, would be 

the best option to provide Sidney a complete transmission 

path. Sidney, however, refused to accept any rate change until 

60 days after MEAN provided it notice pursuant to the correct SSM procedure. The next week, MEAN advised Sidney 

regarding the use of “non-firm” energy transmission and the 

higher costs of doing so with PtP and explained how LAP 

NITS costs were calculated.

On September 25, 2014, MEAN sent formal notice to 

Sidney of its intent to implement the changes, which would 

affect Sidney’s transmission charges, on December 1. On that 

same day, MEAN sent a notice to Tri-State terminating the TriState Agreement, effective as of December 1.

In October 2014, WAPA informed MEAN that WAPA could 

have charged Sidney for the unreserved use of its 115 kV at 

double the rate going back several years but opted not to do so. 

WAPA also informed MEAN that it would provide an initial 

discount to Sidney for obtaining LAP NITS.

Effective December 1, 2014, Sidney’s energy needs began 

being served by LAP NITS. Due to a billing error, MEAN did 

not start billing Sidney for the LAP NITS charges until March 

2015. Over the next 12 months, WAPA phased in the increased 

costs for Sidney’s service on LAP NITS. Once the full charges 

for LAP NITS were phased in, Sidney’s transmission costs 

had increased from $28,408.80 per year to approximately 

$576,000 per year.

After Sidney was placed on LAP NITS, WAPA took over the 

scheduling of e-tags to transmit energy to Sidney. According to 

an unexecuted contract between MEAN and WAPA and communications with WAPA, MEAN concluded that WAPA schedules Sidney’s energy through the Archer, Nebraska, switchyard, 

which connects directly to WAPA’s 115 kV bus in Sidney West. 

However, LAP NITS connects to Sidney West with four different transmission sources, two of which connect to Tri-State’s 

230 kV bus.
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6. Proceedings Be

Arbitration Bo

In early 2015, Sidney sent MEAN a notice of election to 

dispute charges, under § 70-1304. The parties failed to settle 

the dispute, and arbitration proceedings were initiated, under 

§ 70-1306. Sidney filed an amended notice at the first meeting 

with the arbitration board that alleged MEAN had breached the 

SSM by charging an unfair, unreasonable, and discriminatory 

transmission rate; the SSM by unilaterally changing the POD; 

and the implied covenant of good faith and fair dealing by acting in a manner that injured Sidney. The arbitration proceedings occurred in March 2017.

(a) Transmission Gap in Sidney West

MEAN called several of its employees to testify about the 

gap in the transmission path identified in Sidney West. The 

employees testified that they had concluded WAPA’s 115 kV 

bus was the gap in the transmission path at Sidney West. 

MEAN staff admitted that neither WAPA nor the Federal 

Energy Regulatory Commission had threatened to penalize 

Sidney or MEAN for unreserved use of WAPA’s facilities. 

However, they stated that MEAN had to obtain contractual 

rights to use WAPA’s bus, because using WAPA’s bus without 

a contract violated the regulatory commission’s regulations and 

MEAN’s culture-of-compliance directive. They also testified 

that once Vojdani became aware of the issue, he acknowledged 

that WAPA could have penalized MEAN for its unreserved use 

of WAPA’s facilities but would not do so if Sidney obtained 

sufficient rights.

Sidney called an expert who testified that there was no 

gap in the transmission path MEAN had been using to serve 

Sidney, because “[b]us transfers are not charged for in general 

. . . .” MEAN’s expert agreed that the bus did not create a gap 

in transmission service by stating that the convention in the 

“west” is that there is no charge for energy crossing a substation if it enters and exits at the same voltage, as a professional 
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courtesy. Instead, he stated that an entity has to pay only for 

the use of a transformer to change voltage levels, which generally covers the expense of going across a bus.

MEAN’s expert also acknowledged that there was no path 

for WAPA’s Sidney West facilities posted on OASIS. Pursuant 

to the Federal Energy Regulatory Commission regulations, 

all transmission paths are to be registered on OASIS along 

with the total transfer capability and the available transfer 

capability. However, MEAN’s expert qualified his statement 

by stating that only line segments needed to be registered. 

Additionally, Vojdani testified that LAP NITS would include 

access to transmission facilities like its 115 kV bus.

Vojdani testified that WAPA first became aware of a problem 

with MEAN’s transmission path to Sidney in February 2014, as 

a result of MEAN’s questions regarding its problems with its 

transmission path. Vojdani stated that at that time, he realized 

WAPA’s 115 kV bus was the last segment of the transmission 

path to Sidney and that WAPA needed to be compensated for 

the use of its bus, because the Tri-State Agreement did not 

provide such a right. He testified that he informed MEAN of 

this during the February 2014 conference call with MEAN 

and Tri-State staff. Vojdani also stated that WAPA considered 

penalizing MEAN for its unreserved use of WAPA’s 115 kV 

bus but decided not to do so.

(b) Compliance With Exhibit A

Sidney employees provided testimony regarding their 

understanding of exhibit A and MEAN’s actions in placing 

Sidney on LAP NITS. They testified that the favorable and 

stable transmission rate provided by MEAN under the TriState Agreement was a primary motivation in Sidney’s entering the SSM. Sidney employees testified that they believed 

exhibit A represented a contractual requirement that MEAN 

transmit Sidney’s energy through the MBPP line and the 

Tri-State facilities, under the Tri-State Agreement. They also 

stated that Sidney never consented to amending exhibit A and 
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that MEAN unilaterally decided to place Sidney on LAP NITS 

and cancel the Tri-State Agreement, without providing Sidney 

with any alternative options.

Sidney’s expert testified that the POD in exhibit A was 

located at the fence of Tri-State’s substation at Sidney West 

on the MBPP line and that MEAN was in breach of exhibit 

A because WAPA had no right to deliver energy on MBPP’s 

line. He stated that typically, a transmission line owned by one 

entity would connect to a transmission line at the fence line of 

another entity’s facilities so that the first entity would not have 

to enter the second’s facilities to service its transmission line. 

The expert acknowledged that the diagram of Sidney West in 

evidence did not show a change in line ownership at the fence 

line to Tri-State’s substation but explained that it was likely 

because the diagram was created by WAPA and not Tri-State 

or MBPP.

MEAN’s expert testified that MEAN had not breached 

exhibit A, because the POD was Tri-State’s 230 kV bus and 

LAP NITS had transmission lines connecting to the bus and 

rights to transmit energy through it. He explained that a POD 

is the end point of transmission service and is generally an 

entire substation but, occasionally, a bus if there is an internal 

voltage transfer within a substation. The expert, and Vojdani, 

testified that a POD cannot be located on a transmission 

line itself, because energy cannot be forced to travel along 

a specific path; instead, energy travels on the path of least 

resistance, which could be any transmission line regardless 

of ownership. Sidney’s expert contested that WAPA did not 

have the ability to transmit energy to serve Sidney across TriState’s transformer.

MEAN staff detailed their several communications with 

Sidney staff regarding the issue and recommending the option 

it had determined would be the most cost-effective solution, 

discussed above. They also detailed the price comparisons 

that they had made, and shared with Sidney staff, in reaching 

their conclusion regarding the most cost-effective solution. 
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MEAN’s expert agreed with the recommendation of MEAN 

staff that the lowest cost option for Sidney was being placed 

on LAP NITS and canceling the Tri-State Agreement.

(c) Charges Under LAP NITS

MEAN staff testified that under the SSM, transmission 

charges are to be passed through to the customer at the cost 

charged by the third party. They admitted that as of the hearing, 

MEAN still had not executed an agreement with WAPA placing Sidney on LAP NITS, but that Sidney was receiving and 

being charged for energy and transmission on LAP NITS. They 

explained that WAPA charges customers based on the number 

of MW transferred through LAP NITS, not by the distance 

energy is transmitted.

MEAN staff testified that WAPA calculated the charges for 

all of MEAN’s members under the same formula and passed 

the single charge to MEAN. They testified that MEAN then 

used the same formula as WAPA to determine each of its 

community’s charges, which it passed on to each community 

without markup. MEAN staff stated that Sidney’s transmission costs for using LAP NITS are about 10 percent of its 

total energy costs, which is the same average transmission 

cost ratio for all 54 of MEAN’s members with an SSM agreement. MEAN staff also testified that Sidney’s transmission 

costs under the Tri-State Agreement alone were extremely low, 

amounting to transmission costs of less than 1 percent of total 

energy costs.

7. Arbitration Board’s De

The arbitration board concluded that MEAN breached the 

SSM because it had unilaterally changed the POD and charged 

Sidney the increased transmission rate. Consequently, it ruled 

that the transmission rate MEAN was charging Sidney for 

electric wholesale service to Sidney was excessive, unfair, 

and unreasonable. The board ruled that it was not authorized to terminate or rescind the SSM, under § 70-1314, 

so it set the fair, reasonable, and nondiscriminatory rate for 
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transmission charges at $2,367.40 per month, the rate charged 

before MEAN’s breach. The board did not make any finding 

regarding the alleged breach of the implied covenant of good 

faith and fair dealing.

The board ruled that the POD in exhibit A was located on 

the MBPP line at the fence of the Tri-State substation and that 

MEAN had breached exhibit A, because WAPA had no rights 

on the MBPP line, could not use Tri-State’s transformer to 

serve Sidney, and served Sidney from the Archer switchyard 

at 115 kV. It found that MEAN changed the path without 

consulting with Sidney and that Sidney did not consent to 

the change.

The board determined that MEAN’s breach of exhibit A 

damaged Sidney because changing the transmission path was 

unnecessary. It ruled there was no gap in the transmission 

path to Sidney by making the following findings: The transmission path had been sufficient before December 2014, and 

neither WAPA nor the Federal Energy Regulatory Commission 

required the change; both parties’ experts testified that there 

was no cost to use WAPA’s bus; and the evidence showed 

that Tri-State had the right to use WAPA’s 115 kV bus at no 

charge. The board determined that the entirety of Vojdani’s 

testimony was not entitled to weight, because it was partially 

based on incorrect facts from Cutsor.

The board also ruled that MEAN breached the SSM’s 

requirement that it charge Sidney energy rates that were fair, 

reasonable, and nondiscriminatory. It determined that the rate 

was unfair, because it interpreted the SSM to require MEAN to 

contract for a complete transmission path to Sidney at its own 

expense, and discriminatory, because MEAN’s board of directors inconsistently socialize transmission costs.

MEAN appealed the decision of the arbitration board to the 

Nebraska Court of Appeals, under § 70-1326. We then granted 

MEAN’s petition to bypass the Court of Appeals.2

2 See Neb. Rev. Stat. § 24-1106(2) (Supp. 2017).
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II. ASSIGNMENTS OF ERROR

On appeal, MEAN assigned—reordered, restated, and consolidated—that the arbitration board erred in (1) concluding 

that it had subject matter jurisdiction to hear breach of contract 

claims; (2) allowing Sidney to amend its notice of dispute; (3) 

finding WAPA’s facilities did not create a “‘gap’” in the transmission path to Sidney, because they could be used without 

charge; (4) finding LAP NITS was unnecessary and not the 

lowest cost alternative to transmit energy to Sidney; (5) finding 

that MEAN breached the SSM by changing the POD; (6) finding that MEAN breached the SSM by passing unfair, unreasonable, and discriminatory transmission charges to Sidney; 

(7) receiving exhibit 100 into evidence; and (8) altering and 

modifying the parties’ contract in setting the fair, reasonable, 

and nondiscriminatory rate for transmission service.

III. STANDARD OF REVIEW

[1,2] On an appeal from the decision of an arbitration board 

convened under § 70-1301 et seq., trial in the appellate court 

is de novo on the record.3 Despite our de novo review, when 

credible evidence is in conflict on material issues of fact, the 

appellate court will consider and may give weight to the fact 

that the arbitration board observed the witnesses and accepted 

one version of the facts over another.4

IV. ANALYSIS

1. Arbitration Board

Subject Matter Jurisd

MEAN argues the arbitration board, as a statutorily created 

body, lacked subject matter jurisdiction to decide Sidney’s 

contract-based claims. Instead, it argues the statutes expressly 

limit the arbitration board’s jurisdiction to deciding rate dispute 

3 § 70-1327; In re Application of Northeast Neb. Pub. Power Dist., 300 Neb. 

237, 912 N.W.2d 884 (2018).

4 Id.
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claims by determining whether the rate charged is adequate, 

fair, reasonable, and nondiscriminatory.

[3] We recently considered whether an arbitration board, 

created under § 70-1301 et seq., had jurisdiction to consider 

breach of contract and breach of an implied covenant of good 

faith and fair dealing claims, in In re Application of Northeast 

Neb. Pub. Power Dist.5 We stated that “[t]he Legislature clearly 

contemplated the existence of power contracts” in the statutes 

and that rate disputes are often intertwined with contractual issues of the rights and obligations regarding the rate.6

Accordingly, we held that where “contractual issues are intertwined with a rate dispute, such contractual issues are within 

the arbitration board’s jurisdiction.”7

Section 70-1302 explicitly states that a board’s authority 

to “resolve wholesale electric rate disputes [includes] rate 

disputes relating to transmission and delivery of electrical 

energy.” Therefore, the board had subject matter jurisdiction 

to consider whether MEAN breached the SSM or the implied 

covenant of good faith and fair dealing to the extent that such 

breaches resulted in transmission rate charges that are unfair, 

unreasonable, and discriminatory.

2. Arbitration Board Did No

in Allowing Sidney t

Amended Not

MEAN contends that the arbitration board erred in allowing Sidney to file an amended notice, because § 70-1301 et 

seq. does not provide a mechanism for amending a notice 

of dispute.

When a purchaser elects to dispute a wholesale electric 

charge, § 70-1304 requires that the purchaser “shall give 

notice in writing to the supplier stating such election. The 

5 In re Application of Northeast Neb. Pub. Power Dist., supra note 3.

6 Id. at 248, 912 N.W.2d at 892.

7 Id.
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notice shall fully describe the basis for the dispute and set 

forth a detailed statement of disputed issues and the relief 

sought by the purchaser.” Section 70-1318 states that “[t]he 

arbitration board shall be bound by the rules of evidence applicable in district court.” Section 70-1306 provides the default 

procedural rules governing the arbitration, stating, in part, 

the following:

Except as otherwise provided in sections 70-1301 

to 70-1329, the Commercial Arbitration Rules of the 

American Arbitration Association, as amended and in 

effect March 1, 1977, shall be used to the extent that they 

are determined by the arbitration board to be applicable to 

the procedures set forth in sections 70-1301 to 70-1329.

The Commercial Arbitration Rules address the ability of a 

party to amend its claim, or notice in this case. Rule R-6(b) 

provides that “[a]fter the arbitrator is appointed, . . . no new or 

different claim may be submitted except with the arbitrator’s 

consent.”8 This provision’s grant of authority to the arbitrator 

to allow substantive changes to the claims before him or her 

necessarily includes the lesser power to permit nonsubstantive changes.

[4] Section 70-1301 et seq. does not otherwise provide for 

amendments of a notice or prohibit such. Accordingly, we find 

that under § 70-1306, an arbitration board is authorized to permit amendments to a notice, substantive or not, at any time in 

the arbitrative proceedings.

At the arbitration board’s first meeting, the board ruled 

that the Commercial Arbitration Rules would be inapplicable 

regarding the rules of evidence but made no similar ruling 

regarding procedural matters. Sidney later moved to file an 

amended notice of election to dispute, and the board considered whether the arbitration rules would permit Sidney to 

amend its notice. The arbitration board ultimately found that it 

8 American Arbitration Association, Commercial Arbitration Rules and 

Mediation Procedures R-6(b) at 13 (Oct. 1, 2013).
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had the power to allow Sidney to amend its notice and ruled 

that Sidney could, after concluding that the issues presented in 

the amended notice were not a substantial deviation from those 

in the original notice.

Because the arbitration board had the authority to allow 

Sidney to amend its notice and did allow the amendment, this 

assignment of error is without merit.

3. Sidney’s Clai

The board did not consider Sidney’s implied covenant of 

good faith and fair dealing claim. In addition, Sidney did not 

file a motion for rehearing or a cross-appeal on this issue, so 

we do not consider it.

Sidney’s breach of contract claims, in the limited context of 

this dispute, depend on showing that MEAN’s breach resulted 

in an unfair, unreasonable, or discriminatory rate. The board 

determined that there was no gap in the transmission path serving Sidney, so it ruled that MEAN’s unilateral and unnecessary change to the transmission path, in breach of exhibit A, 

was unfair to Sidney to the extent that it increased Sidney’s 

transmission rate. The board also found that the rate increase 

to Sidney was unfair because the SSM required MEAN to bear 

that expense and discriminatory because MEAN inconsistently 

socialized transmission costs. Upon our de novo review, we 

find that the arbitration board erred in its ultimate conclusions 

on the breach of contract claims and certain underlying factual findings.

(a) MEAN’s Change to Transmission 

Path Substantially Complied 

With Exhibit A

(i) MEAN Could Not Transmit 

Energy Across WAPA’s Facilities 

Without Contractual Rights

The crux of this claim is whether WAPA’s 115 kV bus constituted a gap in the transmission path serving Sidney. As the 
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arbitration board found, if there was no gap, then MEAN’s 

action of placing Sidney on LAP NITS was unnecessary. 

However, if there was a gap, at least some additional cost was 

required for performance of the SSM.

MEAN contends that the arbitration board erred in determining WAPA’s facilities did not constitute a gap in the 

transmission path. It contends that Vojdani testified to telling 

MEAN that MEAN could not transmit energy across WAPA’s 

115 kV bus without contractual rights to do so and that the 

Tri-State Agreement did not provide such rights. Further, it 

argues that the fact that WAPA had not charged for the usage 

of its facilities in the past did not preclude it from penalizing 

for that unreserved use or charging for any future use.

Sidney contends that there was no gap in the transmission 

path. It argues that MEAN staff admitted that a complete transmission path could be created with the LAPT SCSW>SCSW 

e-tag, which proved that the Tri-State Agreement itself provided MEAN the right to use WAPA’s facilities and that 

no charge was necessary—based on both experts’ testimony. 

Sidney also argues that the board found Vojdani’s testimony 

was not entitled to weight, because it was based on the incorrect information about the Tri-State Agreement provided to him 

by Cutsor.

We disagree with Sidney and the arbitration board that 

Vojdani’s testimony was not entitled to weight. Vojdani testified there were two independent bases for placing Sidney 

on LAP NITS: (1) MEAN had insufficient firm capacity on 

the MBPP line and insufficient total capacity on the TriState facilities to serve Sidney, and (2) MEAN had no right 

to transmit energy across WAPA’s 115 kV bus. Vojdani’s 

testimony regarding insufficient capacity on the Tri-State 

facilities was clearly based on erroneous information from 

Cutsor. However, as Cutsor acknowledged, that incorrect 

information had no relevance to Vojdani’s determination that 

MEAN lacked any right to transmit energy across WAPA’s 

bus. Accordingly, we find that Vojdani’s testimony regarding 
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such is entitled to significant weight based on his employment 

with WAPA.

The communications between MEAN, Tri-State, and WAPA 

while troubleshooting the transmission issue and the testimony 

of MEAN staff also support a conclusion that the WAPA bus 

constituted a gap in the transmission path. Vojdani and MEAN 

staff testified that they were unaware of any contractual insufficiency in the transmission path to Sidney before the grandfathered e-tag was discontinued. After grandfathered e-tags were 

discontinued, however, the evidence shows MEAN was unable 

to complete a transmission path without relying on PtP or the 

LAPT SCSW>SCSW e-tag.

While MEAN initially believed the gap was caused by TriState’s transformer, its understanding evolved as a result of 

Tri-State’s being unable to offer any solution to the gap other 

than recommending MEAN use the LAPT SCSW>SCSW e-tag, 

which Vojdani confirmed would express a contractual right to 

use WAPA’s bus. On a conference call to discuss the issue 

further, Vojdani informed MEAN that it could not schedule a 

complete transmission path to Sidney without using WAPA’s 

115 kV bus and that MEAN had no contractual right to do so. 

MEAN staff testified that they obtained LAP NITS for Sidney 

to acquire the right to transmit energy to Sidney across WAPA’s 

115 kV bus.

The board discounted Cutsor’s testimony that the WAPA 

bus was the gap in transmission service, because he also testified that the gap was the Tri-State transformer. This statement, 

however, stood in contradiction to his identification of the 

WAPA bus as the gap during at least two other portions of his 

testimony and his description of the development of his understanding regarding the gap.

Sidney argues that Tri-State’s suggestion that MEAN use 

the LAPT SCSW>SCSW e-tag was either an acknowledgment that the Tri-State Agreement assigned MEAN a license 

to use WAPA’s facilities or that the suggestion itself assigned 

MEAN the right to do so. The Tri-State Agreement, however, 
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provides MEAN a right to use only those facilities that TriState “owns, operates, and maintains.” There is no language 

granting or assigning any right to use WAPA’s facilities at 

Sidney West or even mentioning WAPA. Additionally, TriState’s suggestion that MEAN schedule its transmissions on 

WAPA’s facilities cannot be construed as a contractual assignment of any right that Tri-State may have had.

Both MEAN’s and Sidney’s experts testified that transmitting energy across a bus at the same voltage level is generally not charged for as a professional courtesy in the “west” 

region of the country. However, neither expert claimed to do 

any work or to have specific knowledge of the customs in the 

Rocky Mountain region, where the parties and the relevant 

division of WAPA are located. Accordingly, regardless of the 

accuracy of these statements, they provide no insight regarding WAPA’s policies, as a tariff administrator, concerning the 

use of facilities at the same voltage level or WAPA’s practices, 

as a transmission service provider, in charging for the use of 

its own facilities. In addition, Vojdani explicitly testified that 

the transmission across its facilities to serve Sidney at Sidney 

West would require a contractual right and compensation to do 

so. This testimony was uncontested and more persuasive than 

the experts’ generalities.

Sidney also argues that WAPA’s 115 kV bus is not an asset 

that WAPA can charge for the use of, because the bus was 

not a posted path on OASIS. The arbitration board agreed 

that the failure to list the bus as a posted path was inconsistent with the claim that WAPA could charge for the use 

of the bus. However, MEAN’s expert qualified his testimony 

on this subject by stating that registering the available transfer capability is applicable only to line segments. We also 

find the limited testimony on this issue contradicted by the 

undisputed testimony that WAPA had registered the LAPT 

SCSW>SCSW e-tag.

Based on the preceding evidence, we conclude, on our de 

novo review, that there was a gap in the transmission path 
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serving Sidney’s energy at the WAPA 115 kV bus and that it 

was necessary for MEAN to acquire contractual rights for any 

future use.

We reject Sidney’s attempt to fault MEAN for acting in 

compliance with federal regulations that prohibit the unreserved use of transmission facilities. While it is undisputed 

that MEAN alerted WAPA to its unreserved use of WAPA’s 

facilities, MEAN did so in a good faith attempt to obtain a 

valid transmission path to serve Sidney. The actions of MEAN 

staff were also motivated by the directive of MEAN’s board 

of directors, which Sidney is represented upon, implementing a culture of compliance. The evidence shows that MEAN 

could have incurred an unreserved-use penalty of approximately $1.16 million annually for scheduling transmission on 

WAPA’s bus.

Further, although WAPA had not charged MEAN for using 

its bus for 18 years, Sidney provides no support for its contention that WAPA would have been precluded from charging 

MEAN for that unreserved use or any future use. Vojdani testified that he considered penalizing MEAN for its use of the bus, 

but did not because of MEAN’s active and immediate action to 

correct the issue once it discovered it, but that any future use 

of WAPA facilities required compensation. Additionally, the 

evidence shows Sidney was fully informed of the unreserveduse issue before being placed on LAP NITS.

(ii) LAP NITS Was Lowest 

Cost Transmission Path

MEAN argues that LAP NITS was the most cost-effective 

solution to create a complete transmission path to Sidney. It 

asserts that it diligently considered alternate options but that 

each would have cost more and been unable to provide Sidney 

with all of its energy at firm capacity.

WAPA’s 115 kV bus constituted a gap in the transmission 

service to Sidney, and Sidney’s facilities connected only to 

WAPA’s bus, so a solution had to be implemented in order for 
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Sidney to continue receiving energy. Accordingly, the parties’ 

arguments concerning whether the existing transmission path 

could have been utilized by simply waiving any firm energy 

requirement imposed by the SSM are without merit. Instead, 

the limited options available to create a complete transmission path to Sidney included obtaining rights to WAPA’s bus, 

connecting Sidney’s facilities to the facilities of an entity 

other than WAPA, or making Sidney self-sufficient regarding 

energy generation.

[5] MEAN admitted that it did not consider using Sidney’s 

existing generators as an option to serve Sidney’s energy 

needs. However, Sidney admitted the energy rate from its 

generators was substantially higher than under the rate schedule, there would have been substantial costs to fix and make 

its generators compliant with federal regulations, and at full 

capacity, the generators could produce only 8 MW of energy. 

The evidence does not suggest the cost of fixing the existing 

generators or acquiring sufficient additional generators and 

facilities to produce the other 8 MW of energy Sidney needs. 

There was also no evidence about the costs or ability of Sidney 

to build facilities that could connect directly to those owned by 

Tri-State or another entity. Sidney had the burden of proving 

that the transmission rate charged by MEAN was unfair, unreasonable, or discriminatory.9

 Thus, Sidney failed to prove these 

to be viable alternatives to LAP NITS.

The record shows that MEAN considered several alternative 

options to LAP NITS for serving Sidney. MEAN staff testified 

that WAPA would not offer any service less than full tariff 

service, that full tariff service with Tri-State would still require 

LAP NITS, and that PtP service over WAPA’s bus would have 

cost more than LAP NITS and been less reliable. MEAN’s 

expert also testified that he examined whether other entities 

could have served Sidney’s energy needs and concluded that 

9 See In re Application of Northeast Neb. Pub. Power Dist., supra note 3.
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service from any other entity would have been infeasible 

because each would have run into at least three points requiring 

additional transmission contracts.

Based on the evidence presented, we conclude that LAP 

NITS was the lowest cost solution for transmitting energy 

to Sidney.

(iii) Sidney Is Responsible 

for Costs of Transmission 

Rights at Sidney West

MEAN contends that the arbitration board erred in finding the POD was located on the MBPP transmission line at 

the fence of Tri-State’s facilities and not on Tri-State’s 230 

kV bus. MEAN argues that the language of the SSM defines 

a POD as the “outlet of the interconnected transmission system,” which cannot logically be located on a transmission 

line, and that based on its nature, energy cannot be forced on 

a specific transmission line. It also argues that the SSM does 

not require it to transmit Sidney’s energy along any specific 

path. Instead, it asserts that the POD is relevant only because 

it represents the change in the possession of energy and that 

the SSM makes Sidney responsible for all transmission costs 

after the POD.

Sidney argues that exhibit A depicts the POD at the MBPP 

and Tri-State interconnect on the MBPP line, which testimony 

established was at the fence around Tri-State’s substation. It 

argues that exhibit A ensured MEAN would transmit Sidney’s 

energy on the MBPP line at 230 kV and across the TriState transformer. Sidney also argues that the contract requires 

MEAN to contract, at its own expense, for all transmission 

rights necessary to reach Sidney’s facilities.

[6,7] In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous.10

10 Frohberg Elec. Co. v. Grossenburg Implement, 297 Neb. 356, 900 N.W.2d 

32 (2017).
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A contract written in clear and unambiguous language is not 

subject to interpretation or construction and must be enforced 

according to its terms.11 A contract is ambiguous when a 

word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations 

or meanings.12

The SSM defines the POD as that point “at the outlet of 

the interconnected transmission system . . . at which MEAN 

is obligated to deliver, and [Sidney] is obligated to accept 

delivery of, [energy].” Exhibit A places the symbol indicated 

as the POD on the MBPP line prior to a place identified as TriState’s 230 kV/115 kV transformer. The POD is identified as 

the “MBPP/Tri-State 230 kV Interconnection.”

The clear and unambiguous meaning of the SSM’s definition 

of the POD is that it is the point where the MBPP line ends—

the outlet—and connects to the facilities owned by Tri-State. 

Sidney argues that the contract would have specified the 230 

kV bus if it had intended for the bus to be the POD, as opposed 

to the interconnect which was actually listed. In fact, there is 

no 230 kV bus depicted on exhibit A.

The contract is ambiguous regarding where the interconnect 

between MBPP and Tri-State is located. While Sidney’s expert 

testified that the interconnect is generally located at the fence 

line of the substation being entered, he acknowledged that 

there was no change of possession depicted on the diagram 

in evidence. Nevertheless, it is not necessary to determine 

the exact location of the POD, whether it is on the transmission line or the specific breaker of Tri-State’s 230 kV bus 

that the MBPP line connects to, because the contract makes 

the POD relevant only regarding the change of ownership of 

energy. Therefore, it is sufficient to conclude that the contract 

places all of Tri-State’s facilities on Sidney’s side of the point 

of delivery.

11 Id.

12 Id.
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The contract contains no provision specifying a generating 

source or transmission path required to serve Sidney or any 

reason for requiring a specific path. However, the placement 

of the POD in exhibit A does constitute a requirement that 

MEAN deliver energy to the interconnect of the MBPP and 

Tri-State facilities. While MEAN argues that it is impossible 

to actually ensure energy would be transmitted on the MBPP 

line, there is nothing in the contract that would support deviating from the clear language describing the POD. Instead, 

MEAN’s argument, at best, supports an interpretation that the 

POD in exhibit A was established for the purely administrative 

purpose of allocating ownership of the energy and separation 

of costs.

Sidney argues, and the arbitration board decided, that the 

SSM requires MEAN to contract for all facilities necessary to 

connect to Sidney’s facilities at its own expense.

Section 5.01 of the SSM states: “MEAN shall furnish, 

install, lease, contract for and maintain, at its own expense, 

all equipment and facilities necessary for connecting electric lines and facilities to [Sidney’s] facilities at the [POD], 

including stepdown transformers where service is supplied at 

[Sidney’s] distribution voltage, unless [Sidney] otherwise provides such facilities.”

Section 5.04 of the SSM, “[Sidney’s] Lines and Equipment,” 

states that “[a]ll lines, substations and other electrical facilities 

. . . located on [Sidney’s] side of the [POD] shall be furnished, 

installed and maintained by [Sidney].”

The SSM also requires Sidney to pay MEAN for energy 

in accordance with the provisions of the rate schedule and 

states that any additional charges for supplying energy through 

an intervening agency’s system, incurred beyond the service 

included in the rate schedule, will be paid by MEAN and billed 

to Sidney. The rate schedule specifies that “[t]ransmission service charges . . . for delivery of [Sidney’s entire energy needs in 

excess of its WAPA allocation] shall be billed at the transmission service provider’s then-current transmission rates.”
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The provisions of the standard form SSM regarding the 

POD indicate that the POD is typically located at the facilities owned by the city that MEAN is contracting with. In this 

case, however, exhibit A places the POD at a place requiring 

at least some contractual rights with intervening transmission service providers to get the energy to Sidney’s facilities. Because the contract states that MEAN will contract for 

the facilities necessary to connect to Sidney’s facilities, the 

arbitration board determined that the right to transmit energy 

across WAPA’s bus to Sidney’s facilities was MEAN’s responsibility to acquire at its own expense. It was also persuaded 

by the fact that the contract did not state that Sidney had any 

requirement to contract for facilities in the article discussing facilities.

However, a complete reading of § 5.01 provides that MEAN 

is only responsible for contracting facilities connecting “to 

[Sidney’s] facilities at the [POD].” While the SSM only discusses requirements for Sidney to provide and maintain facilities on its side of the POD, the contract also clearly envisions 

circumstances where Sidney will be responsible for reimbursing MEAN for transmission charges incurred to deliver its 

energy. The arbitration board’s reading of the contract ignores 

both the qualifying language regarding MEAN’s responsibility 

to bear the expense for acquiring transmission rights and renders all language regarding Sidney’s responsibility to pay for 

transmission cost superfluous.

The SSM discusses the POD only as a mechanism for shifting ownership of the energy, which also shifts the responsibility for the transmission. Accordingly, we find that the plain 

language of the SSM allows MEAN to contract for transmission rights on Sidney’s side of the POD and pass those 

expenses on to Sidney. Therefore, the SSM allowed MEAN to 

contract for transmissions right within Sidney West and pass 

those expenses to Sidney.
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(iv) Transmission Path With 

LAP NITS Is in Substantial 

Performance of Exhibit A

MEAN argues that its delivery of energy to Sidney through 

LAP NITS is in substantial compliance with the SSM. It 

asserts that LAP NITS was required to complete a transmission 

path to Sidney and that once Sidney was on LAP NITS, the 

Tri-State Agreement was an unnecessary additional expense. 

Further, it asserts that the SSM does not require it to deliver 

energy on any specific path, so its delivery through a new path 

at a higher capacity level and without unnecessary expenses 

complies with the SSM.

Sidney argues that exhibit A required MEAN to deliver 

its energy through the MBPP line and the Tri-State facilities, 

because that path was highly favorable to Sidney, and that 

MEAN’s change to the POD caused it to incur the additional 

transmission charges. However, its argument is prefaced on its 

conclusion that there was no gap in the transmission path.

[8-10] To establish substantial performance under a contract, 

any deviations from the contract must be relatively minor and 

unimportant.13 Substantial performance is shown when the following circumstances are established by the evidence: (1) The 

party made an honest endeavor in good faith to perform its 

part of the contract, (2) the results of the endeavor are beneficial to the other party, and (3) such benefits are retained by the 

other party.14 Substantial performance is a relative term, and 

whether it exists is a question to be determined in each case 

with reference to the existing facts and circumstances.15

Based on the facts of this case, we conclude that the specific transmission line the POD was placed on is irrelevant 

13 RM Campbell Indus. v. Midwest Renewable Energy, 294 Neb. 326, 886 

N.W.2d 240 (2016).

14 VRT, Inc. v. Dutton-Lainson Co., 247 Neb. 845, 530 N.W.2d 619 (1995).

15 Id.
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to MEAN’s performance under the SSM; instead, the POD is 

relevant only to the extent that, as we stated above, it places 

all financial risk for transmitting energy through Sidney West 

on Sidney. Thus, we need not consider where the new POD is 

located specifically, beyond concluding its placement on the 

interconnect of a transmission line to a facility in Sidney West 

would be of the same effect.

Sidney elicited extensive testimony regarding the extremely 

low transmission rate enabled by the transmission path memorialized in exhibit A and Sidney’s belief that exhibit A was 

an agreement with MEAN that ensured a continuation of this 

low rate. However, the SSM does not protect Sidney from any 

changes to its transmission path from the third parties who own 

facilities in Sidney West. Instead, unlike the “Service Schedule 

J,” a previous supplemental agreement which placed all facilities in Sidney West on MEAN’s side of the POD and required 

MEAN to maintain the Tri-State Agreement, the SSM placed 

the Tri-State facility on Sidney’s side of the POD. This change 

required Sidney to accept all financial risks for changes with 

the Tri-State Agreement.

Before the SSM was executed, Cutsor specifically informed 

Sidney that the Tri-State Agreement was terminable at will and 

that the consequence of termination by Tri-State would be a 

$300,000 increase in transmission costs. While aware of this 

issue, Sidney chose to not continue with the previous arrangement which placed all facilities in Sidney West on MEAN’s 

side of the POD and required MEAN to maintain the Tri-State 

Agreement. By executing the SSM, Sidney accepted the full 

financial burden of the ever-looming possibility that Tri-State 

could terminate its favorable transmission path. While the 

expense for transmitting energy across WAPA facilities was 

unforeseen, it was another risk for which Sidney accepted 

financial responsibility.

As we concluded above, Sidney’s facilities connect only to 

WAPA’s 115 kV bus, which created a gap in the transmission 

path to Sidney, and MEAN billed Sidney for the costs of the 
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lowest cost option to close the gap, placing Sidney on LAP 

NITS, pursuant to the SSM. Under exhibit A, Sidney had the 

financial risk for an issue with WAPA’s facilities and had to 

incur this expense. After placing Sidney on LAP NITS, MEAN 

was able to continue transmitting energy to Sidney as required 

by exhibit A, if Sidney waived any firm capacity requirements. 

Thus, Sidney’s increased transmission costs did not result from 

a change in the transmission path but, instead, were incurred 

because it accepted the financial risk for WAPA’s facilities 

within Sidney West.

Only after Sidney was scheduled to incur the costs to close 

the gap on its side of the POD with LAP NITS did MEAN 

decide to change the transmission path required in exhibit A. 

This change offered substantial benefits to Sidney, which it has 

since retained. First, Sidney saves the monthly costs of the TriState Agreement, which provided rights that were unnecessarily duplicative to transmission rights provided by LAP NITS. 

Second, Sidney receives all of its energy at firm capacity and 

has additional protection against curtailment, because WAPA 

has several lines connecting to Sidney West. Third, LAP NITS 

includes generation and transmission resources to Sidney, 

which allows MEAN to redirect LRS and MBPP resources to 

lower energy rates for all members.

Because Sidney’s increased transmission costs resulted 

solely from its agreement to bear the financial risk for transmission right changes in Sidney West and because MEAN’s 

decision to use a new transmission path only benefited Sidney 

and MEAN, we conclude its decision to change the transmission path was a good faith effort to perform its duty under the 

SSM. Thus, we hold that MEAN substantially complied with 

the SSM and actually provided Sidney benefits by changing 

the POD.

While Sidney argues, and the board concluded, that MEAN 

acted in bad faith by unilaterally changing the POD, the evidence presented shows that MEAN’s unilateral action to place 

Sidney on LAP NITS was required because of the use of the 
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WAPA 115 kV bus. We are not unsympathetic to the consequences of the parties’ mistake of fact regarding the transmission path and the fact that MEAN may have been able to better 

communicate the issue to Sidney. However, the record shows 

numerous communications from MEAN to Sidney from July 

through October 2014, in which MEAN communicated the 

issue with the transmission path, how it arose, a recommendation for the best solution, justification for its recommendation, 

the consequences of inaction, and the results of obtaining 

LAP NITS.

Sidney staff responded that they would make their own 

independent investigations, but the record does not show that 

Sidney did so. Further, Sidney refused to accept the changes on 

the schedule WAPA required to avoid unreserved-use penalties, 

which MEAN complied with and seemingly convinced WAPA 

to accept. While Sidney staff testified that MEAN had provided 

them with no alternatives, the record does not support that testimony. Instead, MEAN exercised its right to incur additional 

transmission expenses on Sidney’s behalf only after Sidney had 

made no suggestions for alternative options and expressed an 

unwillingness to accept that a material change in circumstances 

had occurred.

We conclude that Sidney’s rate dispute based on its allegation that MEAN changed the POD in breach of the SSM is 

without merit. Thus, the arbitration board erred in finding that 

MEAN breached exhibit A of the SSM to Sidney’s detriment.

(b) MEAN Did Not Breach SSM by 

Charging Unfair, Unreasonable, or 

Discriminatory Transmission Rate

The arbitration board made two findings that supported 

a conclusion that MEAN breached the SSM by charging an 

unfair, unreasonable, or discriminatory transmission rate: (1) 

The contract required MEAN to acquire any transmission rights 

necessary to connect to Sidney’s facilities at its own expense, 

and (2) MEAN inconsistently passed through transmission 
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charges. As discussed above, the plain language of the SSM 

made Sidney responsible for all transmission costs on its side 

of the POD. Therefore, the arbitration board erred in concluding that MEAN was required to pay the transmission costs 

incurred from LAP NITS.

MEAN argues that it cannot socialize the transmission costs 

incurred solely to transmit energy to Sidney, because doing 

such would result in discriminatory charges to its other members. It argues that the charges passed through to Sidney were 

fair because they are incurred exclusively for Sidney’s benefit, 

reasonable because they are based on the number of MW transmitted to Sidney, and nondiscriminatory both because they are 

calculated the same by WAPA and MEAN as the charges for 

every member on LAP NITS and because they were consistent 

with the average transmission cost ratio for all MEAN members on LAP NITS.

Sidney argues that MEAN should have socialized the cost 

of its LAP NITS, because MEAN has socialized other communities’ transmission costs and MEAN is now benefiting from 

Sidney’s no longer using the LRS and MBPP resources. It also 

argues that the transmission costs MEAN charges it is discriminatory because its transmission cost ratio had been 1 percent 

but is now 10 percent of total energy costs.

The arbitration board cited MEAN’s socialization of the 

LRS and MBPP resource costs, the Southwestern Power Pool 

settlement costs, and the PtP costs for serving Sidney’s transmission needs after the 2013 e-tag changes to conclude that 

MEAN could have socialized the increased transmission costs 

to Sidney. However, we find that each of these circumstances is 

distinguishable from the LAP NITS expenses incurred to solely 

benefit Sidney.

First, the LRS and MBPP resources were obtained for 

the benefit of all MEAN members, not just Sidney. MEAN 

obtained about 28 MW of energy from LRS in the early 

1980’s. The Electrical Resources Pooling Agreement explicitly authorizes MEAN to purchase generation capacity, upon 
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approval by the member communities, for the benefit of members. Sidney and the arbitration board seem to presume that 

because some of these resources served Sidney for 18 years, 

Sidney is entitled to them, or that they were acquired solely for 

Sidney’s benefit. The board of directors approved the acquisition of these resources and the socialization of their costs to 

obtain lower energy rates for all of the member communities, 

so socializing the costs to obtain them across all members was 

nondiscriminatory.

Second, the costs of the Southwestern Power Pool settlement and PtP used to serve Sidney for 10 months represent 

expenses incurred because of the actions of MEAN staff, so it 

is reasonable to socialize them as an organizational expense. 

While Sidney might not have directly benefited from the 

unreserved use that led to the Southwestern Power Pool settlement, MEAN staff were responsible for the scheduling of that 

unreserved use. Accordingly, this expense may be traced to the 

actions of MEAN as an organization, just as an unreserveduse penalty for the use of WAPA’s 115 kV bus for Sidney 

could have been. In recognition of this organizational risk, 

the board of directors passed the culture-of-compliance directive to help ensure that the organization would not again incur 

such expenses.

Additionally, the PtP costs were seemingly incurred because 

MEAN staff did not act timely in addressing the issue with 

Sidney’s transmission path. MEAN was unable to e-tag a 

complete path to Sidney for nearly 20 months. It took MEAN 

staff almost 11 months to even determine what the problem 

was and another almost 5 months to start working with Sidney 

on a solution. The record does not establish how MEAN’s 

transmitting energy to Sidney for 10 of the 20 months but 

the costs of the PtP for the other 10 months, while serving 

Sidney exclusively, is attributable to an organization expense 

of MEAN’s insufficient response to the problem. Despite the 

arbitration board’s findings, the evidence shows that the PtP 

was acquired to sell excess organizational energy to lower 
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energy rates. The fact that the PtP benefited Sidney exclusively for a justifiable reason did not entitle Sidney to exclusively benefit from the service for the remainder of the SSM. 

Therefore, the arbitration board erred in ruling that MEAN 

could have socialized the costs for transmitting energy to 

Sidney on LAP NITS.

The evidence also shows that the costs of LAP NITS was 

fair, reasonable, and nondiscriminatory. Sidney is paying for 

transmission service that solely benefits Sidney and is necessary to transmit Sidney’s energy. As MEAN argues, the fact 

that Sidney had benefited from low transmission costs because 

of its location historically does not entitle it to such benefit in 

perpetuity. The evidence shows that WAPA charges all customers based on MW used, not distance traveled. Accordingly, 

the charges were reasonably based on MEAN’s usage of LAP 

NITS and nondiscriminatory because all LAP NITS customers 

are charged under the same formula.

4. We Do Not Consider 

Remaining Assignments o

The arbitration board and the parties considered exhibit 

100 relevant to establishing whether (1) Tri-State had a right 

to use WAPA’s 115 kV bus and (2) WAPA had a right to use 

Tri-State’s transformer to transmit energy to serve Sidney. 

Regardless of whether or not Tri-State had a right to use 

WAPA’s bus, there was no evidence that it ever assigned such 

a right to MEAN for transmitting Sidney’s energy. Further, 

we concluded that MEAN has substantially complied with 

the SSM even if it transmits Sidney’s energy from the Archer 

switchyard to WAPA’s 115 kV bus directly without going 

through Tri-State’s facilities. Accordingly, even if exhibit 100 

was inadmissible, it had no relevance to our decision.

MEAN’s remaining assignments of error concern the remedy ordered by the arbitration board. Because we hold that the 

arbitration board erred by ruling in favor of Sidney, we need 

not address the remaining assignments of error.
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[11] An appellate court is not obligated to engage in an 

analysis which is not needed to adjudicate the controversy 

before it.16

V. CONCLUSION

We conclude that Sidney’s increased transmission rate was 

incurred due to its unauthorized use of WAPA’s facilities. 

Sidney’s current transmission costs are approximately 10 percent of Sidney’s total energy costs, which is the same average 

transmission cost ratio for all of MEAN’s members. We further 

conclude that MEAN’s actions to gain authorized access to 

WAPA’s facilities, in order to ensure stable energy to Sidney, 

substantially complied with the requirements of the SSM and 

that MEAN properly passed the increased transmission rate 

to Sidney, pursuant to the terms of the SSM. Therefore, we 

reverse the decision of the arbitration board.

Reversed

Wright and Kelch, JJ., not participati

16 Eadie v. Leise Properties, 300 Neb. 141, 912 N.W.2d 715 (2018).