The Select Committee on Senate Bill 438 was called to order at 5:20 p.m., on Thursday, May 13, 1999. Chairman Douglas Bache presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. Joseph E. Dini, Vice Chairman

Mr. Greg Brower

Mrs. Barbara E. Buckley

Mr. Lynn C. Hettrick

Ms. Sheila Leslie

Mr. P.M. "Roy" Neighbors

Mr. David Parks

Ms. Sandra J. Tiffany

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Bache called the meeting to order at 5:20 p.m. and continued hearings on Senate Bill 438.

Chairman Bache: I thought today we could possibly do a couple of small amendments. First, I see we have a number of papers here. Is there anybody here wishing to provide testimony to the committee? Or on some proposed amendments or whatever? Mr. Ashleman?

Chairman Bache: The second one I thought we’d deal with today is the proposed amendment to NRS 704.984, that I proposed (see Exhibit E), adding language to the section where it says, "Adverse effects of competitive service on employees of vertically integrated electric utilities." It says [adds], "The vertically integrated electric utility shall be given a reasonable opportunity to recover the legitimate costs incurred under this section including without limitation the costs for severance pay, retraining, job placement, and early retirement for employees of the vertically integrated utility." I think the intent here is this is not to be an ongoing cost, it’s a transitional cost and possibly would fall somewhere in the stranded costs. Some of it would be stranded, some of it transitional.

Anybody from the audience wish to comment on this one?

Assemblywoman Buckley: Would the commission get to look at the reasonableness of these types of costs? I mean, for example, severance pay probably would be fine, but you know sometimes folks – at least I see it in my world – they really waste money. They contract with a – I won’t name any government agencies – they kind of put together some real ineffective things, and then of course the ratepayer ends up paying for it. How are we going to know it’s a good package and it’s what the workers really want, and it’s – you know, the tightest it could be. How would that be done?

Chairman Bache: I believe the commission – the commissioners aren’t here – I do see a member of their staff – I could put you on the spot – I believe the commissioners have the authority to review this and that’s –

Rick Hackman: Chairman Bache, my name is Rick Hackman, I am the manager of the staff’s Consumer Division [of the Public Utilities Commission]. You’re right, I’m not authorized to speak for the commission, and thanks so much for putting me on the spot. My layman’s interpretation of this would lead me to conclude that the commission, as it said, has the opportunity to review this and presumably make a finding one way or the other. The utility has the opportunity to make a showing and the commission presumably has the opportunity to review it and make a determination one way or the other. So for whatever that opinion is worth, there you have it. You get what you pay for.

Chairman Bache: Mrs. Buckley, does that answer your concerns?

Assemblywoman Buckley: Yes. Thank you. Perhaps, since we’ll be looking at the bill as a whole, it’s something else we could come back to in a week. I certainly like the concept of trying to provide for some of the workers.

Assemblyman Hettrick: I guess my question is – it says "shall be given reasonable opportunity to recover." What does that mean? Does that mean, they have an opportunity to – I don’t understand what that means. I don’t know how to express it. I don’t understand what that means.

Chairman Bache: Let me ask maybe the two providers, the utility providers it would affect. What they think it means. I believe – what I was looking at in their stranded costs and their transition costs what the amount of money they expend on this, they – I would think they would bring that to the commission and say, "These are our costs." Then the commission would say, "Yes, these are appropriate costs related to that," and approve them. But that’s the process I’m looking at.

Assemblyman Hettrick: Well, if I may, I don’t have a problem with the intent of this at all, and I understand exactly what you’re trying to do. I guess it’s the language of "reasonable opportunity to recover" that bothers me. I wonder why we don’t just say, "The costs incurred under this section including, without limitation, ta da, ta da, ta da . . . may be requested to be reviewed or considered for reimbursement by the commission," or something so it says exactly what it intends to do. Because otherwise what it says to me is "reasonable opportunity." I don’t know whether that means they can earn more money or they can go ask for the money from the commission or what it means. That’s my only concern with it.

Douglas R. Ponn: Douglas Ponn, Sierra Pacific. Perhaps Mr. Rigazio and I can be of help. Whenever I read the words "reasonable opportunity to recover" that sort of language appears in a number of places in the statutes that we deal with in our regulatory matters. In my mind that means that someday we will file something at the PUC (Public Utilities Commission) for their approval, adjudication, and ultimately disposition of how much of these funds will be recovered. I think, as the Chairman stated, this is likely to become a "transitional cost related to restructuring," and the most likely place it is to be recovered is in a stranded cost proceeding at some point in time.

Chairman Bache: Any other discussion from members of the committee? Mr. Thompson, I see you at the edge of your seat wishing to address the committee?

Danny Thompson: Danny Thompson, representing the Nevada State AFL-CIO (American Federation of Labor – Congress of Industrial Organizations). This originally was my proposed amendment. Actually last session. It was the intent – and whatever word-smithing is done to make it fit, it would be part of the stranded costs or the transitional costs, or whatever you want to deem it to provide for these displaced workers that will come about as a result of deregulating generation and whatever else is decided to be deregulated.

Assemblyman Hettrick: If this is a term of art which I’m not familiar with, as explained by Mr. Ponn, they know what they understand it to mean, it’s fine with me and I certainly don’t have a problem with what you said at all. I believe those are part of the costs that are going to be involved in trying to get to deregulation, so it seems appropriate.

Michael R. Reed: Mike Reed, representing IBEW (International Brotherhood of Electrical Workers) Locals 1245 and 396, which represent the employees of Sierra Pacific and Nevada Power. We agree with the language in the amendment and we think it goes a long way toward insuring that employees are protected and treated fairly. Last week at the first session of the Select Committee, I was unable to attend. Mr. Thompson presented a copy of an amendment that we would also like to have considered. That’s the one that requires the utility and the affiliates to honor any of the labor contracts that have been signed with bargaining units that represent employees of the two utilities. (See Exhibit E of the Minutes of the Assembly Select Committee on S.B. 438 of April 29, 1999.) We think that’s important, particularly as it relates to the affiliates and we’ve had, in the past, assurances from the CEOs (Chief Executive Officers) of both Nevada Power and Sierra Pacific that they had no problems with that language.

Chairman Bache: Questions from members of the committee? Thank you. Is there anyone else wishing to provide testimony on this particular proposed amendment? I don’t see anyone. Any discussion from the committee?

Assemblywoman Leslie: (off microphone and unintelligible)

Chairman Bache: I will accept a motion if there’s no discussion.

Assemblywoman Leslie: I move that we adopt this amendment as presented.

Chairman Bache: I don’t think we really have any other testimony on any aspects of the bill. I’ve indicated to the audience here that we’re not going to meet tomorrow. I’m working with some people to try to get some amendments for sections 13 and 14 to maybe clarify them in a manner in which we could possibly process the bill. I would be looking at the next meeting – I need to coordinate with you, Mrs. Buckley, on that. The next meeting next Monday or Tuesday, on this bill, since we do have a waiver and we can hopefully finish it up this next week. I’ll take a motion on it by next Friday.

Is there any further business to come before the committee?

With that, this meeting’s adjourned. I know there’s a lot of other meetings going on right now.

The Chairman adjourned the meeting at 5:45 p.m.

RESPECTFULLY SUBMITTED:

Charlotte Tucker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

Assembly Select Committee on S.B. 438

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