The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:05 a.m., on Tuesday, March 30, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Mark Amodei

Senator Dean A. Rhoads

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Crystal Suess, Committee Secretary

OTHERS PRESENT:

Chairman Townsend opened the work session on Senate Bill (S.B.) 438.

Ernest E. Adler, Lobbyist, Idaho Power Company (IPC), testified on a bill draft request to modify Nevada Revised Statutes (NRS) 704.975 (Exhibit C) on vertically integrated electric utility defined. He said IPC provides power to approximately 1,200 customers along the northern part of the State of Nevada. This service generates about $1.7 million in revenue per year, about 1 percent of operating revenues. The retail rate is $.036 per kilowatt-hour (kWh), and the residential rate is $.039 per kWh. Mr. Adler asked to amend NRS 704.975 by adding the words, "in Nevada." He stressed that without this simple change IPC’s Nevada customers will see their utility rates go up.

Thane T. Twiggs, Regulatory Affairs Representative, Idaho Power Company, stated that IPC has been servicing that small area of Nevada for a very long time and those customers have not had a rate increase since 1985. He stated IPC would work with the changes in Nevada’s utility regulations, but that one simple change to NRS will make those utility customers very happy.

Chairman Townsend closed testimony on the bill draft request, and opened the work session on chapter 703 of NRS. He elucidated that the main reason the proposed changes to chapter 703 of NRS was to delineate the role of the commission staff, define definitions, clean up redundancies, and define the utility commission’s role (Exhibit D).

Michael A. Pitlock, Commissioner, Public Utilities Commission of Nevada (PUCN), stated they are looking at duplication of effort and thus duplication of cost between the regulatory operations staff of the commission, and the office of the consumer advocate. He expounded that in calendar year 1998 the commission opened 520 dockets (cases for resolution). Of those 520 cases the office of the consumer advocate participated in 24, and less than 5 percent of these cases were addressed by the commission, thereby solving the duplication problem. Of the 5 percent of cases, where both the staff and the consumer advocate are parties, the possibility of duplication or the appearance of duplication usually becomes a factor when there is a proposed or actual adjustment. The consumer advocate has very clear statutory responsibility in terms of who he represents when he is in front of the commission. Mr. Pitlock explained what needs to be done is to balance the interest of the customers and the interest of the utility company, and it appears that over time the balance has been lost in terms of actual staff performance. Mr. Pitlock asked if you have the utility company on one side and the consumer advocate on the other would it be necessary to have someone presenting that middle of the road approach. Mr. Pitlock stated, "We at the PUCN believe we do." Mr. Pitlock noted that the commission is required to make its decisions based on the record that has been developed at a hearing; the one thing that a judge can overturn is if the PUCN is arbitrary and capricious in our decisions. Mr. Pitlock stated if the only thing in the record is the utilities version, which may be extreme in one direction, and the consumer advocates view, which may be extreme in the other direction, it is very difficult for the PUCN to come down in the middle.

Senator Amodei asked if the staff works for the commission, and Mr. Pitlock stated that was correct. Mr. Pitlock further explained that there is a director of regulatory operations who oversees the staff, the staff is divided into divisions under the supervision of the director, and the commission has administrative responsibility through the chair that is the executive officer of the agency. The control that the commission has at the current time is limited to those administrative matters.

Senator Amodei asked if a contested case, which the commission stands in judgement, would be a quasi-judicial function, and also asked Mr. Pitlock if a staff member, who works for the commission and appears as a party to the action, would cause a concern as to how that appears publicly. Mr. Pitlock stressed his concern that a staff member being a party to an action might create the conception of some impropriety, although from a practical standpoint the PUCN goes to great efforts to make sure that no ex parte communication takes place. He further stated the control over the staff by the commission is limited to administrative matters.

Senator Amodei pointed out that if the staff were removed from the role that section 2, proposes to do, would it open up communication between the staff and the commission? Mr. Pittlock countered that the commission has policy advisors, and there is a small staff that provides that technical assistance to the commission. Mr. Pittlock clarified that the PUCN does not need 60 policy analyzers, but what is needed is 60 staff members that can recognize the details of a filing and make recommendations in those contested cases in a manner that would not violate ex parte communication rules.

Senator Amodei questioned if the staff were to prepare a staff report on contested matters and make that part of the public record, but not appear, could they not still fulfill that function. Mr. Pitlock pointed out the staff would only be able to fulfill part of that function because decisions in a contested matter, based on information not subject to cross examination in an open hearing, would cause problems with both the court and the other parties. Senator Amodei commented that he thinks it is the responsibility of the opposing party to build a record, and if they do not, that is their problem and a lower court judge should not have to force the opposing party to make a record. Senator Amodei continued by stating the PUCN sits in judgement with the utilities and the consumer advocates being the parties, and each are responsible for building their own record. Mr. Pittlock replied that the PUCN renders its decision based on evidence of record, and the PUCN’s decision needs to be based on evidence of record in order to defend their decision. Senator Amodei asked what would prohibit the PUCN from directing the parties to supplement the record if the PUCN does not feel there is enough information to make a decision. Mr. Pitlock replied that would be hard to enforce if information is needed on a matter that would be contrary to a party’s case, which would be in opposition to their case, and this is why an impartial party is needed to provide this information. Senator Amodei asserted that his point is that each party should be responsible for providing information to support their case, and is not the responsibility of the PUCN. Mr. Pitlock emphasized that he believes it is critical for the development of the record that the staff provide "middle of the road" evidence for a balanced approach to a case.

Chairman Townsend queried what percent of the dollar amount is represented in the approximately 5 percent of noncontested cases in which the Bureau of Consumer Protection is involved. Mr. Pitlock replied that he does not have that information. Frederick Schmidt, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, clarified that the number of cases the PUCN represented are not the number of cases affected by section 2 of S.B. 438, and only the contested would be affected by this section. Mr. Schmidt noted that his office does not just participate in 5 percent of the cases, but reviews applications and notices of all the cases filed at the PUCN unless they involve transportation. Mr. Schmidt clarified that his office does not intervene in cases where the public interest does not have to be represented.

Mr. Schmidt explained that the role of the consumer advocate is to represent residential and small commercial customers, but is not limited to these parameters, and statute states the consumer advocate must represent the public interest. Mr. Schmidt added there is a statutory provision that in the event of a conflict of representation, an outside counsel can be hired to represent the other interest, but is rarely done. Mr. Schmidt pointed out that if section 2 of S.B. 438 were passed it would shift a significant amount of the workload currently being performed by the PUCN staff to his office, as well as duplicating staff work. Mr. Schmidt concluded by saying another aspect to consider under section 2 of S.B. 438 is how the utility industry would change along with consumer advocacy, which would have a fiscal effect on his office.

Chairman Townsend commented that he is still perplexed by the need for the record to be set by a third party, and added that he is aware of the responsibilities of the Bureau of Consumer Protection to only address significant problems that will benefit the public interest. Chairman Townsend asserted that there is nothing in statute that he can find to control the PUCN staff being an independent third party to these cases. Mr. Pitlock commented if there is a perception that the staff is not fulfilling the appropriate role then they need guidance provided to outline their role, as well as consequences associated with deviating from that defined role.

Senator Shaffer queried if this will lead to writing job descriptions for these staff positions or if the PUCN will be responsible for the definition of these roles. Chairman Townsend stated he hopes that is not the case, but he does need to know the roles of the staff. Mr. Pitlock concurred, and added this could be accomplished through general guidance from the Legislature directed at the PUCN for the roles of the staff. Chairman Townsend asked all parties involved to come together to work out the problems associated with section 2 of S.B. 438.

Chairman Townsend opened comment on section 2.5 of a proposed amendment to S.B. 438 (Exhibit E) addressing administrative law judges.

Mr. Pitlock commented that previous discussion on section 2.5 of Exhibit D outlined provisions for administrative law judges with respect to the workload on the PUCN. Mr. Pitlock explained that this provision should not be mandatory, but give the PUCN the discretion to hire administrative law judges on a case-by-case basis if the workload warrants extra staff. Mr. Pitlock also emphasized that he would not want the commissioners removed from the hearing rooms because he feels they would be at a disadvantage to render a fair decision. Chairman Townsend asked how many jurisdictions use administrative law judges in utility regulatory proceedings. Mr. Pitlock replied that he does not know, but he does know that they are used in other states in this procedure.

Ray E. Bacon, Lobbyist, Nevada Manufacturers Association, stated he thinks the administrative law judges would be treated as "mini-commissioners" with the same authority as the commissioner and believes they should be appointed by the Governor, and not hired by the PUCN.

Douglas R. Ponn, Lobbyist, Sierra Pacific Power Company, referred to section 4 of Exhibit D that outlines the time frames that administrative law judges would have to propose decisions, and believes the total time frame should be cut to under 180 days for a final decision. Chairman Townsend asked if the 30-day notice provision is functional and could be changed. Mr. Pitlock replied that these time frames are set in statute, and designed to provide adequate time for interested parties to participate in the proceeding.

Mr. Schmidt stated he also looked at this provision and has his own concerns with the time frames, but the wording "not later than" satisfies his concerns. Mr. Schmidt stated for the record:

Mr. Schmidt added he thinks the administrative law judge systems are good because they do not burden commissioners with minor legal matters and issues.

Chairman Townsend opened discussion on section 6 of Exhibit D, which would move the people currently in the Consumer Affairs Division to the Bureau of Consumer Protection. Richard Hackman, Manager, Consumer Services Division, Public Utilities Commission of Nevada, asserted that his division has a close relationship with the PUCN and this move would hinder his ability to solving the complaints of the public.

Mr. Schmidt asserted that he did not ask for this section to be included, and if this section is adopted he will take every effort to implement it. Mr. Schmidt added that he does not think that it would be better or worse for this division to be included with the Bureau of Consumer Protection because they currently do a great job.

Chairman Townsend asked Mr. Hackman if he could bring statistics regarding to the types of complaints they receive, and how they are resolved. Mr. Hackman said he would bring the statistics on the types of complaints received.

Senator Amodei commented that he thinks section 5, subsection 2, paragraph (c) of Exhibit D has language that is too broad, and has no provisions for legislative oversight. Senator Amodei added that paragraph (d) of section 5, subsection 2 also has broad language, also section 5, subsection 3 has no language requiring approval. Senator Amodei continued by stating section 6, subsection 2, paragraph (b) needs to be more specific, and section 6, subsection 2, paragraph (c) is also very broad.

Harvey Whittemore, Lobbyist, Nevada Resort Association, and Nevada Athletic Trainers Association, commented on Senator Amodei’s comments relating to sections 5 and 6 of Exhibit D, saying that his concerns are appropriate. Mr. Whittemore commented on section 14.3 of Exhibit D, saying that this definition is needed to make section 24 work. Chairman Townsend stated that discussion on the definition under sections 14.3 and 14.5 would be held until section 24 of Exhibit D is heard.

Chairman Townsend opened comment on section 15 of Exhibit D. Mr. Schmidt clarified that section 15 of Exhibit D should state the minimum rights of customers receiving service from either an electric distribution facility, a vertically integrated electric utility or an alternative seller be nondiscriminatory and consistent. Mr. Whittemore stated that he agreed that this section should be perceived as giving the same consistent rights to customers from all three entities.

Chairman Townsend opened comments on section 16 of Exhibit D. Senator O’Connell commented that she believes it is the responsibility of the market place, and not a regulatory responsibility to supply customers with information on their power bill. Mr. Schmidt concurred with Senator O’Connell’s comment, but added he thinks there should be a regulatory role outlining what kinds of information should be on a customer’s electric bill. Mr. Schmidt added if this is done in the beginning it will remove much of the customer confusion, and this has been done by other states moving to a competitive market.

Senator O’Connell asked for clarification to the language in section 14.5 of Exhibit D in regards to the term "Qualified facility," and asked if it should be "Qualifying facility" instead. Mr. Ponn clarified that it should read "Qualifying" instead of "Qualified" in Exhibit D.

Samuel P. McMullen, Lobbyist, Enron Corporation, and Las Vegas Chamber of Commerce, commented that he will be submitting a proposed amendment for changes to section 16 to further clarify the points of consistent rates to all end users, as well as proprietary pricing information not being divulged.

Ernest K. Nielson, Lobbyist, Washoe County Senior Law Project, called attention to the fact that a fuel-type comparison, which would explain what type of fuel is generating the electricity, has not been included in a regulatory format.

Chairman Townsend opened discussion on section 17 of Exhibit D. Mr. Whittemore commented that he believes a clarification should be included to say, "the actual and reasonable costs incurred." This is because there are circumstances where the actual costs exceed the reasonable costs.

Senator Amodei asked if this section outlines a cost for everyone or would it be weighted to each customer. Mr. Schmidt replied the PUCN has recently adopted a proposed regulation that would define the licensing fee for alternative sellers, and section 17 of Exhibit D would negate this regulation and replace it with a fee based upon the cost of processing an application. Mr. Schmidt added that there were legal questions raised at the PUCN regulation hearings that heard the above mentioned regulation by the public utilities and his office, as whether the alternative sellers have to pay the same assessments as public utilities. Mr. Schmidt added that section 17 of Exhibit D does not reflect any work the PUCN may have to do in order to oversee alternative sellers, and does not define a funding source. Mr. Pitlock agreed with Mr. Schmidt’s testimony and reiterated his comments.

Senator Amodei asked for clarification if the same funding levels and costs are going to be maintained, or if the funding needs are going to be higher under a competitive market. Mr. Pitlock replied that the roles of the PUCN and the Bureau of Consumer Protection would change over time along with the costs, as well as who the service will be provided for in the long run. Mr. Pitlock added in the short run there would not be an immediate change in the cost of regulating this industry. Chairman Townsend stated the revenue is not really the issue, but where the revenues are spent.

Mr. Schmidt, responding to Senator Amodei’s question, stated he believes the way section 17 is drafted allows for flexibility for the PUCN to set the fees for renewal or an application, but more limiting to the current practices. Mr. Schmidt added that section 17 only refers to the PUCN collecting their fees and does not give any stipulations for the Bureau of Consumer Protection to collect their fees. Senator Amodei asked Mr. Schmidt if he thinks this would put them in the two-thirds approval category, and Mr. Schmidt replied the question should be directed at the Legislative Counsel Bureau attorneys.

Mr. McMullen commented that his client, who is an alternative seller, has no problem with paying a licensing fee, but does feel there should be clarification on the annual fee issue versus the licensing fee issue. Senator O’Connell asked Mr. McMullen if he has language that could be added which would address this problem, and he stated he does not at this time. Mr. Whittemore commented that he and others would meet in a work group to discuss section 17 and other concerns.

Senator O’Connell opened discussion on section 18 of Exhibit D. Mr. Whittemore noted that section 18 would impose a 5-year phase out of stranded costs, and in conjunction with other sections of Exhibit D would allow existing utilities to recover these costs.

Norman Ty Hilbrecht, Lobbyist, Las Vegas Cogeneration LP, stated he feels the language "or any succeeding period established pursuant to section 21" after "NRS 704.976" of section 18 be added because section 21 allows the bundled rate period to be reestablished. Mr. Hilbrecht noted this would avoid front loading that would be undesirable if this wording were not included.

Mr. Whittemore stated that he believes section 18 could be read separately from the other provisions, and the proposed symmetry is not needed. Mr. Schmidt concurred with Mr. Whittemore’s comments, and added this is an issue, which is critical to a competitive market that has a time frame set for the stranded costs to be recovered. Senator O’Connell asked what this would do to the current rates. Mr. Schmidt answered he does not think there would be an increase in rates. Mr. Whittemore pointed out he thinks section 18 is not designed to preclude the recovery of stranded costs or to impact the qualifying facilities. Mr. Whittemore outlined that section 18 needs to be read in concert with section 24, subsection 2 of Exhibit D along with section 20, subsection 2 of Exhibit D. Mr. Whittemore gave the example of a company being out of the market by $50 million, the bill would allow the proceeds associated with sale of the generation facility be used to reimburse the qualifying facilities to get them into the market or buy the contracts outright. Mr. Whittemore noted that section 20 clarifies that the contracts between the customers and the vertically integrated utilities would not be impacted, as well as the contracts between a qualifying facility and a utility. Mr. Whittemore stated:

Mr. Hilbrecht agreed with avoiding unwarranted tax consequences, but section 18 correctly anticipated the possible bundled rate situation in 5 years and his amendment was designed to recognize this fact. Mr. Schmidt stated he understands Mr. Hilbrecht’s concerns, but the purpose of the 5-year period is to allow the PUCN to determine if there is sufficiently developed competition. Mr. Schmidt added that he does not think symmetry would be achieved if a new recovery time frame were implemented if the stranded-cost issue is resolved after the 5 years. Mr. Whittemore remarked that he believes Mr. Hilbrecht’s concerns lie not with adding a new 5-year time period if the process was not completed, but to language in the bill allowing for an extension to fix what has not been fixed.

Mr. Hilbrecht commented that the language contained in section 20, paragraph 2 should be changed to similar language in Assembly Bill (A.B.) 366 of the Sixty-ninth Session, which would authorize the PUCN to reopen, renegotiate or interfere with the enforcement of existing contracts with qualifying facilities.

Mr. Hilbrecht added he believes there is strong precedent that the PUCN does not have the authority to pass along the contract costs that have not been negotiated down. Mr. Hilbrecht noted that the utility does not regulate qualifying facilities, but the PUCN does have an effect on an opportunity for the qualifying facilities and utilities to discuss adjustments or accommodations in section 20 of Exhibit D.

Chairman Townsend commented that if there are clauses in a contract between a utility and a qualifying facility that allow for mitigation then the parties must make a good-faith effort, otherwise it would be a 100-percent recovery. Mr. Hilbrecht concurred with Chairman Townsend’s comments, but reiterated that all of these contracts were required by the PUCN, as a condition of approval, to have any alterations approved by the PUCN. Mr. Whittemore added that Exhibit D outlines the only control the PUCN would have is to fix the portion of the contract, the stranded costs, that would be out of market to avoid the taxes.

Terry K. Graves, Lobbyist, Nevada Independent Energy Coalition; Pioneer Chlor Alkali; and Saguro Power Company, handed out a proposed amendment to Exhibit D (Exhibit F) and commented that section 20, subsection 2 be amended to delete the language after "electric utility." Mr. Graves explained this language is vague, which could lead to litigation, and the terms and conditions of assignment are specific to each contract.

Steven C. Oldham, Vice President, Transmission Services Group and Strategic Development, Sierra Pacific Power Company, commented that currently all the costs considered stranded costs are included in the rates being charged and are being recovered over time periods previously agreed upon by all parties involved. Mr. Oldham continued by saying if the time period to recover the stranded costs is shortened to the proposed 5 years, the current time period being approximately 20 years, would result in a considerable rate increase, or the utility be denied recovery of these cost expenditures. Mr. Oldham continued by saying:

Mr. Oldham claimed that a 5-year rate freeze that does not allow for adjustments to reflect the market value of energy would not be possible. Mr. Oldham suggested that it would be unwise to declare metering and billing services as aspects of being competitive at this time because of technology availability, and cannot be accomplished by an act of law but when the technology is developed. Mr. Oldham explained that he does not think there would not be a massive amount of proceeds or huge savings from the divestiture proceeds.

Senator Amodei asked if the qualifying facility contract amounts are currently included in Sierra Pacific Power Company (SPPC) rates, and Mr. Oldham replied that they are. Senator Amodei asked Mr. Oldham what his position would be if the committee decided that the qualifying facility contracts were not stranded costs and the SPPC was left with those costs. Mr. Oldham replied, first SPPC needs to afford all contract terms and terminology in order to renegotiate, and it has been SPPC’s position that these contracts run their course. Senator Amodei asked Mr. Oldham if it is his intent to claim qualifying facility agreements as a stranded cost, and Mr. Oldham replied they believe they are stranded costs. Senator Amodei continued by asking Mr. Oldham if he would object to legislation that outlined these qualifying facility contracts as not being stranded costs, and Mr. Oldham replied no. Mr. Ponn noted they would want some clarity on how the contracts would be treated if this were the legislation that passed.

Senator Amodei asked Mr. Oldham if he feels SPPC has sufficient tax advice in regards to qualifying facility contracts and sale of generation assets. Mr. Oldham stated they do have enough advice, and the timing of the proceeds being rolled into a buy down of purchase power contracts is very important.

Senator O’Connell asked Mr. Oldham if he sees any possible litigation relating to section 23 and 24 of Exhibit D. Mr. Oldham replied that SPPC has great concern relating to these sections, which would affect the ability to collect on historical costs as well as the costs associated with the qualifying facilities. Mr. Graves commented that the cogenerators and the qualifying facilities are both concerned with the treatment of stranded costs throughout this bill, and are supportive of a full recovery of these costs.

Chairman Townsend asked Mr. Oldham if the same contract requirements would remain in effect if the market price fell below the contracted price or the market price was above the contracted price, and Mr. Oldham responded yes. Chairman Townsend stated that he thought these contracts still have around 20 years left, and Mr. Oldham replied that most are under 20 years, but in terms of capacity are usually over 20 years.

Chairman Townsend called attention to the debate of reliability and if the power companies are going to have enough power for the demand in the future. Mr. Oldham responded that reliability and safety are held as the highest standards they try and maintain, and companies have committed to constructing new interstate transmission lines to address the power-demand issues.

Chairman Townsend queried if the U.S. Environmental Protection Agency (EPA) requires the Mojave power plant to be closed down due to emissions, how that would affect power in the southern part of the state. Dwight D. Etheridge, Leader, Industry Restructuring Team, Nevada Power Company, stated the Mojave power plant produces less than 10 percent at peak demand, and has a plan to buy power on the open market, if needed. Chairman Townsend asked what could or has been done to remedy the situation, if this plant is shut down, in order to prevent a spike in rates. Mr. Oldham replied that the open market could provide a service that would provide customers with a flat rate regardless of price fluctuations.

Senator O’Connell queried if a power customer would be informed of a rate spike prior to receiving their bill. Mr. Oldham replied that they probably would not know and under current regulations these price spikes are averaged over time and customers may not see a change in their bill for over 1 year. Senator O’Connell pointed out because of what happened in the mid-west last summer, the United States Congress did not pursue this issue. Mr. Oldham replied there were many new supply contracts in the mid-west from new suppliers that could not deliver the power they contracted to deliver, which caused pricing to rise drastically. Mr. Oldham added they do not wish to defer these costs for any lengthy period of time, and thinks this could be one aspect of regulation that could be changed.

Joyce A. Newman, Lobbyist, Utility Shareholders Association of Nevada, spoke from prepared comments (Exhibit G), and added that section 39 of Exhibit D states stranded costs should be limited to $100 million, or 50 percent of the total, whichever is less. Ms. Newman explained that the remaining stranded costs over this amount would have to be absorbed by the shareholders, which causes the people she represents "grave concern." Ms. Newman asked an opinion from the PUCN to be read into the record:

Ms. Newman explained that if these qualified facility contracts become stranded costs and the power companies cannot recover these costs then the shareholders would have to bear the brunt of this situation. Ms. Newman suggested if the shareholders are going to have to absorb these costs then it might be appropriate to reconsider the whole idea of an open market in Nevada.

Chairman Townsend asked Ms. Newman what her standpoint would be if the issues of a cap for the stranded costs were maintained, but their earnings could be unlimited. Ms. Newman replied if these companies cannot recuperate the stranded costs because of the cap there are not many other places from where they can get that money. Mr. Ponn stated they would not be considering supporting a bill that would limit any stranded costs recovery. Chairman Townsend reiterated the same question to Mr. Ponn, and he answered they are in opposition because they will not have control over the cost of service they will provide for a 5-year extended period of time. Chairman Townsend asked Mr. Ponn if leaving the regulations and having an open market is not what this is about, and do not they have to take risks to get rewards. Mr. Ponn replied this is a different situation because the proceeds from divestiture do not outweigh the stranded costs.

Mr. Oldham pointed out when the charges to customers change to unbundled costs there will be several jurisdictions making rate decisions.

Mr. Whittemore commented on the process outlined in sections 21 and 22 of Exhibit D, which would allow for protection and flexibility that previous legislation did not. Mr. Whittemore also noted that there has not been discussion on whether large industrial customers would be defined as a 1 megawatt or ½ megawatt customer and determine the process on how they will be able to leave the competitive market on the February 2000 date.

Chairman Townsend asked if there is research that shows the most important component in choosing a power company to a residential customer. Mr. Pitlock answered that he has not seen any studies that indicated what amount of savings would cause a customer to leave, but has seen studies showing people leaving for environmental reasons. Mr. Schmidt added that Pennsylvania is the only state where frozen rates in a competitive market has worked, and noted that sections 21 and 22 of Exhibit D give the utility an opportunity to compete in a competitive market. Mr. Schmidt pointed out that every state that is going to a competitive market is giving the residential customers a rate freeze, a rate cap or a rate reduction in the beginning, and this is the protection that the small customers want and need.

Chairman Townsend closed the hearing on S.B. 438 and opened the hearing on S.B. 357.

Mr. Whittemore stated he agrees with Amendment No. 192 to S.B. 357, which includes the agreements between the athletic trainers association and the physical therapists.

Senator O’Connell closed the hearing on S.B. 357 and opened the hearing on S.B. 196.

Senator Schneider explained that S.B. 196 would propose a health care ombudsman for the State of Nevada, and referred to an amendment to the bill (Exhibit H).

Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Health Care, and Nevada Resort Association, commented that this would be an important piece of consumer-oriented legislation and believes this would be a step in the right direction for Nevadan’s health care.

Helen A. Foley, Lobbyist, Humana Healthcare Inc., noted that section 5.1 of S.B. 196 does not refer to this person or office outlined in the bill as an ombudsman, and calls the office, "Office of Consumer Health Assistance." Ms. Foley stated this office would be located in the Division of Insurance and should have all of the powers and duties afforded to the commissioner, as well as being under the control of the commissioner.

Janice C. Pine, Lobbyist, Saint Mary’s Health Network, concurred with the previous speakers and added her support to this bill.

Mr. McMullen commented that he is in full support of S.B. 196.

Senator O’Connell asked how many people would be involved in this office. Senator Schneider replied that there would be seven and a half people to start in the office. Ms. Foley added that this office now handles all types of insurance, and the commissioner will add another two employees to handle the health care aspect. Senator Schneider pointed out that they took out the auto insurance aspect of this office to help accommodate the health care issues.

Ms. Foley pointed out that section 5.2 of the bill outlines a provision for this office to collect data for the Legislature to review for further evaluation next session.

With no further business before the committee, the chairman adjourned the meeting at 11:20 a.m.

RESPECTFULLY SUBMITTED:

Scott Corbett,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: