Senate Bill No. 226–Senators Amodei, Schneider, Mathews, O’Connell, Shaffer and Carlton

February 19, 1999

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Referred to Committee on Commerce and Labor

 

SUMMARY—Revises various provisions relating to competitive provision of electric service. (BDR 58-721)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

 

AN ACT relating to electric service; extending the statutory deadline by which customers may begin obtaining potentially competitive services; requiring legislative approval for a determination of whether an electric service is potentially competitive or its market has effective competition; authorizing the use of the name or logo of a provider of a noncompetitive service by its affiliate; revising the provisions governing the switching of providers of electric services; revising the provisions governing recoverable costs; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1-1 Section 1. NRS 704.970 is hereby amended to read as follows:

1-2 704.970 "Electric distribution utility" means a utility that is in the

1-3 business of supplying noncompetitive electric distribution or transmission

1-4 service, or both, or a noncompetitive service pursuant to NRS 704.982, on

1-5 or after [July 1, 1999, or] the date on which alternative sellers are

1-6 authorized to provide potentially competitive services to customers in this

1-7 state . [, as appropriate.]

1-8 Sec. 2. NRS 704.973 is hereby amended to read as follows:

1-9 704.973 "Noncompetitive service" means any electric service

1-10 [determined] deemed by specific statute , or [by the commission]

1-11 determined pursuant to NRS 704.976 , to be unsuitable for purchase by

1-12 customers from alternative sellers.

2-1 Sec. 3. NRS 704.974 is hereby amended to read as follows:

2-2 704.974 "Potentially competitive service" means a component of

2-3 electric service determined [by the commission] pursuant to NRS 704.976

2-4 to be suitable for purchase by customers from alternative sellers. The term

2-5 includes any potentially competitive electric service that is deemed to be

2-6 competitive pursuant to subsection 5 of NRS 704.976.

2-7 Sec. 4. NRS 704.976 is hereby amended to read as follows:

2-8 704.976 1. The date upon which customers may begin obtaining

2-9 generation, aggregation and any other potentially competitive services from

2-10 an alternative seller must be no later than December 31, [1999,] 2000,

2-11 unless the commission determines , and the legislature, or the legislative

2-12 commission if the legislature is not in session, approves, that a different

2-13 date is necessary to protect the public interest. If the commission

2-14 determines that a different date is necessary, the commission shall provide a

2-15 report to the director of the legislative counsel bureau for transmittal to the

2-16 legislature [by February 1, 1999, which:

2-17 (a) Explains the reason that the commission has not granted such an

2-18 authorization; and

2-19 (b) States whether the commission will grant such an authorization by

2-20 December 31, 1999.] or legislative commission, as appropriate, which

2-21 states the reasons why the commission has determined that a different

2-22 date is necessary.

2-23 2. The commission may [:] , with the approval of the legislature or

2-24 legislative commission, as appropriate:

2-25 (a) Establish different dates for the provision of different services by

2-26 alternative sellers in different geographic areas; and

2-27 (b) Authorize, in gradual phases, the right to buy from alternative

2-28 sellers.

2-29 3. The commission shall [determine] submit a recommendation that

2-30 an electric service is a potentially competitive service to the legislature or

2-31 legislative commission, as appropriate, if the commission determines that

2-32 the provision of the service by alternative sellers:

2-33 (a) Will not harm any class of customers;

2-34 (b) Will decrease the cost of providing the service to customers in this

2-35 state or increase the quality or innovation of the service to customers in this

2-36 state;

2-37 (c) Is a service for which effective competition in the market is likely to

2-38 develop;

2-39 (d) Will advance the competitive position of this state relative to

2-40 surrounding states; and

2-41 (e) Will not otherwise jeopardize the safety and reliability of the electric

2-42 service in this state.

3-1 4. If the commission determines , and the legislature or legislative

3-2 commission, as appropriate, approves, that a market for a potentially

3-3 competitive service does not have effective competition, the commission

3-4 shall, by regulation, establish the method for determining prices for the

3-5 service and the terms and conditions for providing the service. The

3-6 regulations must ensure that the pricing method, terms and conditions are

3-7 just and reasonable and not unduly discriminatory. The regulations may

3-8 include pricing alternatives which authorize the seller to reduce prices

3-9 below maximum pricing levels specified by the commission or any other

3-10 form of alternative pricing which the commission determines to be

3-11 consistent with the provisions of this subsection. In determining whether a

3-12 market for an electric service has effective competition, the commission

3-13 shall:

3-14 (a) Identify the relevant market;

3-15 (b) Identify, where feasible, the alternative sellers that participate and

3-16 are reasonably expected to participate in the relevant market; and

3-17 (c) Calculate, where feasible, the market share of each participant in the

3-18 market and evaluate the significance of each share.

3-19 5. On [or before October 1, 2000, the commission shall submit to the

3-20 director of the legislative counsel bureau for transmittal to the appropriate

3-21 legislative committee a report which:

3-22 (a) Evaluates the effectiveness of competition in the market for each

3-23 service which customers have the right to purchase from alternative sellers;

3-24 and

3-25 (b) Recommends actions which the legislature should take to increase

3-26 the effectiveness of competition in the markets for all potentially

3-27 competitive services.

3-28 6. On or before] October 1, 2001, an electric service that has been

3-29 found on or before that date to be potentially competitive shall be deemed

3-30 to be competitive.

3-31 [7.] 6. The commission may reconsider any determination made

3-32 pursuant to this section upon its own motion or upon a showing of good

3-33 cause by a party requesting a reconsideration. [Upon a finding by the

3-34 commission that the market for a service previously found not to have

3-35 effective competition has become effectively competitive, the commission

3-36 shall repeal the regulations which established the pricing methods and the

3-37 terms and conditions for providing that service.] The commission shall

3-38 conduct any proceedings for the reconsideration of any such determination

3-39 as expeditiously as practicable considering the current work load of the

3-40 commission and the need to protect the public interest. If the commission

3-41 determines that the market for a service previously determined not to

3-42 have effective competition has become effectively competitive, the

3-43 commission shall submit its finding to the legislature or legislative

4-1 commission, as appropriate. If the legislature or legislative commission,

4-2 as appropriate, agrees with the finding of the commission, the

4-3 commission shall repeal the regulations adopted pursuant to this section

4-4 that established the pricing methods and the terms and conditions for

4-5 providing that service.

4-6 [8.] 7. A vertically integrated electric utility shall not provide a

4-7 potentially competitive service except through an affiliate:

4-8 (a) On or after December 31, [1999;] 2000; or

4-9 (b) The date on which the legislature or legislative commission, as

4-10 appropriate, approves the determination of the commission [determines]

4-11 that the service is potentially competitive,

4-12 whichever is later.

4-13 Sec. 5. NRS 704.977 is hereby amended to read as follows:

4-14 704.977 1. It is unlawful for an alternative seller to sell any electric

4-15 service to a customer for consumption within this state without having first

4-16 obtained a license from the commission to do so.

4-17 2. Not later than January 1, [1999,] 2000, or any different date [as]

4-18 determined by the commission [pursuant to NRS 704.976,] and approved

4-19 by the legislature, or legislative commission if the legislature is not in

4-20 session, as being appropriate, the commission shall by regulation set forth

4-21 the procedures and conditions that alternative sellers must satisfy to obtain

4-22 a license to sell any electric services to a customer in this state, including,

4-23 but not limited to, procedures and conditions relating to:

4-24 (a) Safety and reliability of service;

4-25 (b) Financial and operational fitness; and

4-26 (c) Billing practices and customer service, including the initiation and

4-27 termination of service.

4-28 3. If, after reviewing the application of an alternative seller for a

4-29 license, the commission finds that the applicant is qualified to be an

4-30 alternative seller, the commission shall issue a license to the applicant.

4-31 4. The commission may deny the application of an applicant for a

4-32 license to operate as an alternative seller and may limit, suspend or revoke

4-33 a license issued to an alternative seller if the action is necessary to protect

4-34 the interests of the public or to enforce the provisions of NRS 704.965 to

4-35 704.990, inclusive, or a regulation of the commission.

4-36 5. In determining whether an applicant is qualified for a license,

4-37 whether to deny an application for a license to operate as an alternative

4-38 seller or whether to limit, suspend or revoke a license issued to an

4-39 alternative seller, the commission may consider whether the applicant for or

4-40 holder of the license, or any affiliate thereof, has engaged in any activities

4-41 which are inconsistent with effective competition.

5-1 6. A city, county or other local governmental entity or a public utility,

5-2 or any affiliate thereof, which is authorized to provide electric service

5-3 within the State of Nevada and which has an annual operating revenue of

5-4 less than $250,000,000, is subject to the provisions of NRS 704.965 to

5-5 704.990, inclusive, and any regulations adopted by the commission that are

5-6 in effect on the date on which the city, county or other local governmental

5-7 entity or a public utility, or an affiliate thereof:

5-8 (a) Applies to obtain a license as an alternative seller; or

5-9 (b) Directly or indirectly attempts to provide, or act on behalf of an

5-10 alternative seller in the provision of, electric service in the territory served

5-11 by another city, county or other local governmental entity or public utility,

5-12 or an affiliate thereof, unless the city, county or other local governmental

5-13 entity or public utility, or an affiliate thereof, is otherwise required or

5-14 permitted by specific statute to provide such service.

5-15 7. Notwithstanding the provisions of subsection 6, a city, county or

5-16 other local governmental entity or a public utility, or any affiliate thereof,

5-17 does not become subject to the provisions of NRS 704.965 to 704.990,

5-18 inclusive, or any regulations adopted pursuant thereto, solely because the

5-19 city, county or other local governmental entity or a public utility, or any

5-20 affiliate thereof, provides transmission or distribution services to an

5-21 alternative seller pursuant to a contract, tariff or requirement of any state or

5-22 federal law, except that the city, county or other local governmental entity

5-23 or public utility, or an affiliate thereof, shall provide such transmission and

5-24 distribution services on an open and nondiscriminatory basis to alternative

5-25 sellers in accordance with such standards as the commission may establish

5-26 by regulation for the provision of transmission and distribution services in

5-27 accordance with this subsection.

5-28 8. Regulations adopted pursuant to subsection 2:

5-29 (a) Must not be unduly burdensome;

5-30 (b) Must not unnecessarily delay or inhibit the initiation and

5-31 development of competition for any service in any market; and

5-32 (c) May establish different requirements for licensing alternative sellers

5-33 of:

5-34 (1) Different services; or

5-35 (2) Similar services to different classes of customers,

5-36 whenever such different requirements are appropriate to carry out the

5-37 provisions of NRS 704.965 to 704.990, inclusive.

5-38 Sec. 6. NRS 704.978 is hereby amended to read as follows:

5-39 704.978 1. The commission shall prohibit a provider of a

5-40 noncompetitive service from providing a potentially competitive service,

5-41 except through an affiliate of the provider.

6-1 2. The commission shall require each provider of a noncompetitive

6-2 service that is necessary to the provision of a potentially competitive

6-3 service to make its facilities or services available to all alternative sellers on

6-4 equal and nondiscriminatory terms and conditions.

6-5 3. In providing a potentially competitive service, an affiliate of a

6-6 provider of a noncompetitive service that is providing a competitive

6-7 service may use the name or logo, or both, of the provider of the

6-8 noncompetitive service.

6-9 Sec. 7. NRS 704.982 is hereby amended to read as follows:

6-10 704.982 1. The commission shall designate a vertically integrated

6-11 electric utility to provide electric service to customers who are unable to

6-12 obtain electric service from an alternative seller . [or who fail to select an

6-13 alternative seller.] The provider so designated by the commission is

6-14 obligated to provide electric service to the customers. Electric service

6-15 provided by the utility pursuant to this section shall be deemed to be a

6-16 noncompetitive service for which the utility may recover its costs pursuant

6-17 to NRS 704.001 to 704.655, inclusive, 704.701 to 704.751, inclusive, and

6-18 704.800 to 704.900, inclusive.

6-19 2. Upon a finding by the commission that the public interest will be

6-20 promoted, the commission may prescribe alternate methods for providing

6-21 electric service to those customers described in subsection 1. The alternate

6-22 methods may include, but are not limited to, the direct assignment of

6-23 customers to alternative sellers or electric distribution utilities or a process

6-24 of competitive bidding for the right to provide electric service to the

6-25 designated customers.

6-26 3. The commission shall establish minimum terms and conditions

6-27 under which electric service must be provided pursuant to this section,

6-28 including a minimum period during which a customer must be obligated to

6-29 pay for the electric service from the assigned provider. The price charged

6-30 for electric service for a particular group of customers must reflect the

6-31 incremental cost of serving the group.

6-32 4. If the designated provider of the electric service is a vertically

6-33 integrated electric utility, the utility shall provide the electric service

6-34 through an affiliate whose sole business activity is the provision of electric

6-35 service.

6-36 5. Except as otherwise provided in this subsection and subsection 6,

6-37 the rate charged for residential service provided pursuant to subsection 1

6-38 must not exceed the rate charged for that service on July 1, 1997. The

6-39 limitation set forth in this subsection is effective until 2 years after the date

6-40 upon which, in accordance with NRS 704.976, the commission repeals the

6-41 regulations which established the pricing method for that service and the

6-42 terms and conditions for providing that service.

7-1 6. The commission may, in accordance with NRS 704.110, 704.120

7-2 and 704.130, approve an increase in the rate charged for residential service

7-3 provided pursuant to subsection 1 in an amount that does not exceed the

7-4 increase necessitated, if any, to ensure the recovery by the vertically

7-5 integrated electric utility of its just and reasonable costs. The provisions of

7-6 this section do not limit or prohibit in any manner the operation of any

7-7 order issued by the commission before July 1, 1997.

7-8 Sec. 8. NRS 704.983 is hereby amended to read as follows:

7-9 704.983 1. The commission shall determine the recoverable costs

7-10 associated with assets and obligations that are documented in the

7-11 accounting records of a vertically integrated electric utility and that are

7-12 properly allocable to a particular potentially competitive service as of the

7-13 date on which alternative sellers of similar potentially competitive services

7-14 begin providing such service to customers in this state. Shareholders of the

7-15 vertically integrated electric utility must be compensated fully for all such

7-16 costs determined by the commission. In determining the recoverable costs,

7-17 the commission shall take into account:

7-18 (a) The extent to which the utility was legally required to incur the costs

7-19 of the assets and obligations;

7-20 (b) The extent to which the market value of the assets and obligations of

7-21 the utility, relating to the provision of potentially competitive services,

7-22 exceeds the costs of the assets and obligations;

7-23 (c) The effectiveness of the efforts of the utility to increase the market

7-24 value and realize the market value of any assets, and to decrease the costs

7-25 of any obligations, associated with the provision of potentially competitive

7-26 services;

7-27 (d) The extent to which the rates previously established by the

7-28 commission have compensated shareholders for the risk of not recovering

7-29 the costs of the assets and obligations;

7-30 (e) The effects of the difference between the market value and the cost,

7-31 including, without limitation, tax considerations, for the assets and

7-32 obligations; and

7-33 (f) If the utility had the discretion to determine whether to incur or

7-34 mitigate the costs, the conduct of the utility with respect to the costs of the

7-35 assets and obligations when compared to other utilities with similar

7-36 obligations to serve the public.

7-37 2. For the purposes of this section, the commission may impose a

7-38 procedure for the direct and unavoidable recovery from ratepayers of the

7-39 portion of the past costs which are determined by the commission to be

7-40 owed by the ratepayers. The procedure must include a determination of the

7-41 period over which the recovery may occur and include the authority for the

7-42 commission to assess charges on those customers on whose behalf the

8-1 vertically integrated electric utility incurred costs who are no longer

8-2 receiving transmission or distribution service, or both, from the vertically

8-3 integrated electric utility. Such determinations and procedures must not

8-4 discriminate against a participant in the market.

8-5 3. Notwithstanding the provisions of any specific statute to the

8-6 contrary, an electric utility that is subject to an existing contract with a

8-7 qualified facility on October 1, 1999, shall continue to honor that

8-8 obligation. Nothing in NRS 704.965 to 704.990, inclusive, shall be

8-9 deemed to authorize the commission to reopen, force the renegotiation

8-10 of, or interfere with the enforcement of any such existing contract with a

8-11 qualified facility. Nothing in this section requires an electric utility and a

8-12 qualified facility to modify any contract that was in existence on October

8-13 1, 1999, between the electric utility and the qualified facility. As used in

8-14 this subsection:

8-15 (a) "Contract" means an executed power purchase agreement

8-16 between an electric utility and a qualified facility.

8-17 (b) "Qualified facility" means a cogeneration facility or small power

8-18 production facility that meets the criteria of and is certified as a qualified

8-19 facility pursuant to Subpart B of Part 292 of Title 18 of the Code of

8-20 Federal Regulations, as that subpart existed on January 1, 1999.

8-21 Sec. 9. NRS 704.985 is hereby amended to read as follows:

8-22 704.985 1. The commission shall establish procedures to ensure that

8-23 a customer of a vertically integrated electric utility, an electric

8-24 distribution utility or an alternative seller is not switched to another

8-25 vertically integrated electric utility, electric distribution utility or

8-26 alternative seller without a reliable confirmation of the customer’s intent to

8-27 make such a change and approval of the specific details of the change.

8-28 2. The commission shall establish minimum standards for the form and

8-29 content of all disclosures, explanations or sales information disseminated

8-30 by a person selling a competitive service to ensure that the person provides

8-31 adequate, accurate and understandable information about the service which

8-32 enables a customer to make an informed decision relating to the source and

8-33 type of electric service purchased. Such standards:

8-34 (a) Must not be unduly burdensome;

8-35 (b) Must not unnecessarily delay or inhibit the initiation and

8-36 development of competition for any service in any market; and

8-37 (c) May establish different requirements for disclosures, explanations or

8-38 sales information relating to:

8-39 (1) Different services; or

8-40 (2) Similar services to different classes of customers,

8-41 whenever such different requirements are appropriate to carry out the

8-42 provisions of NRS 704.965 to 704.990, inclusive.

9-1 3. The commission, before the commencement of direct access to

9-2 alternative sellers for an electric service, shall carry out an educational

9-3 program for customers to:

9-4 (a) Inform customers of the changes in the provision of electric service,

9-5 including, but not limited to, the availability of alternative sellers of electric

9-6 service;

9-7 (b) Inform customers of the requirements relating to disclosures,

9-8 explanations or sales information for sellers of competitive services; and

9-9 (c) Provide assistance to customers in understanding and using the

9-10 information to make reasonably informed choices about which service to

9-11 purchase and from whom to purchase it.

9-12 Sec. 10. On or before October 1, 2000, the public utilities commission

9-13 of Nevada shall submit to the director of the legislative counsel bureau for

9-14 transmittal to the appropriate legislative committee a report which:

9-15 1. Evaluates the effectiveness of competition in the market for each

9-16 service which customers have the right to purchase from alternative sellers;

9-17 and

9-18 2. Recommends actions which the legislature should take to increase

9-19 the effectiveness of competition in the markets for all potentially

9-20 competitive services.

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