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).

1-12 adopted by the commission.

2-1 Sec. 3. After hearing a contested matter, an administrative law judge

2-2 shall prepare and file with the commission an opinion setting forth his

2-3 recommendations, findings and conclusions. The opinion of the

2-4 administrative law judge is the proposed decision for the matter and must

2-5 be made a part of the public record in the proceedings. The proposed

2-6 decision must be filed with the commission and served on all parties to

2-7 the action or proceedings not later than 45 days after the conclusion of

2-8 the hearing. Not later than 30 days after the date on which the proposed

2-9 decision is filed with the commission, the commission shall approve,

2-10 modify or reject the proposed decision. The ruling of the commission

2-11 must be based on the record and the contents of the proposed decision,

2-12 except that the commission may allow the parties to submit briefs and

2-13 may hold oral argument on the matter.

2-14 Sec. 4. NRS 703.320 is hereby amended to read as follows:

2-15 703.320 1. When, in any matter pending before the commission, a

2-16 hearing is required by law, or is normally required by the commission, the

2-17 commission shall give notice of the pendency of the matter to all persons

2-18 entitled to notice of the hearing. The commission shall by regulation

2-19 specify:

2-20 (a) The manner of giving notice; and

2-21 (b) Where not specified by law, the persons entitled to notice in each

2-22 type of proceeding.

2-23 2. Unless, within 10 days after the date of the notice of pendency, a

2-24 person entitled to notice of the hearing files with the commission a request

2-25 that the hearing be held, the commission may dispense with a hearing and

2-26 act upon the matter pending.

2-27 3. If a request for a hearing is filed, the commission shall give at least

2-28 10 days’ notice of the hearing [.] and assign the matter to an

2-29 administrative law judge.

2-30 Sec. 5. NRS 703.330 is hereby amended to read as follows:

2-31 703.330 1. A complete record must be kept of all hearings , [before

2-32 the commission,] and all testimony must be taken down by [the] a

2-33 stenographer appointed by the commission, or, under the direction of any

2-34 competent person appointed by the commission, reported by sound

2-35 recording equipment in the manner authorized for reporting testimony in

2-36 district courts. The testimony reported by [a] the stenographer must be

2-37 transcribed, and the transcript filed with the record in the matter. The

2-38 commission may by regulation provide for the transcription or safekeeping

2-39 of sound recordings. [Cost] The costs of recording and transcribing

2-40 testimony at any hearing, except those hearings ordered pursuant to NRS

2-41 703.310 , must be paid by the applicant. If a complaint is made pursuant to

2-42 NRS 703.310 by a customer or by a political subdivision of the state or

2-43 municipal organization, the complainant is not liable for any costs.

3-1 Otherwise, if there are several applicants or parties to any hearing, the

3-2 commission may apportion the costs among them in its discretion.

3-3 2. Whenever any complaint is served upon the commission as provided

3-4 in NRS 703.373 for the bringing of an action against the commission,

3-5 before the action is reached for trial, the commission shall file a certified

3-6 copy of all proceedings and testimony taken with the clerk of the court in

3-7 which the action is pending.

3-8 3. A copy of the proceedings and testimony must be furnished to any

3-9 party, on payment of a reasonable amount, to be fixed by the commission,

3-10 and the amount must be the same for all parties.

3-11 4. The provisions of this section do not prohibit the commission or an

3-12 administrative law judge, as appropriate, from restricting access to the

3-13 records and transcripts of a hearing pursuant to paragraph (a) of subsection

3-14 3 of NRS 703.196.

3-15 Sec. 6. NRS 703.340 is hereby amended to read as follows:

3-16 703.340 1. Either party is entitled to an order by the commission or

3-17 an administrative law judge, as appropriate, for the appearance of

3-18 witnesses or the production of books, papers and documents containing

3-19 material testimony.

3-20 2. Witnesses appearing upon the order of the commission or an

3-21 administrative law judge, as appropriate, are entitled to the same fees and

3-22 mileage as witnesses in civil actions in the courts of the state, and the fees

3-23 and mileage must be paid out of the state treasury in the same manner as

3-24 other claims against the state are paid. No fees or mileage may be allowed

3-25 unless the chairman of the commission certifies the correctness of the

3-26 claim.

3-27 Sec. 7. NRS 703.350 is hereby amended to read as follows:

3-28 703.350 The commission or an administrative law judge, as

3-29 appropriate, may require, by order to be served on any person regulated by

3-30 the commission in the same manner as a subpoena in a civil action, the

3-31 production at a time and place designated by the commission or

3-32 administrative law judge of any books, accounts, papers or records kept by

3-33 the person in any office or place outside this state, or verified copies in lieu

3-34 thereof [,] if the commission or administrative law judge so directs, so that

3-35 an examination may be made by or under the direction of the commission

3-36 or administrative law judge, or [under its direction, or] for use as

3-37 testimony.

3-38 Sec. 8. NRS 703.360 is hereby amended to read as follows:

3-39 703.360 1. If any person ordered to appear before the commission or

3-40 an administrative law judge as a witness fails to obey the order, the

3-41 commission or any commissioner , [or] the secretary of the commission or

3-42 the administrative law judge, as appropriate, may apply to the clerk of the

4-1 nearest district court for a subpoena commanding the attendance of the

4-2 witness before the commission [.] or administrative law judge.

4-3 2. The clerk shall issue the subpoena, and a peace officer shall serve it.

4-4 3. Disobedience to a subpoena [is a] constitutes contempt of court and

4-5 must be punished accordingly.

4-6 Sec. 9. NRS 703.370 is hereby amended to read as follows:

4-7 703.370 1. The district court for the county in which any

4-8 investigation or hearing is being conducted by the commission or an

4-9 administrative law judge pursuant to the provisions of this Title may

4-10 compel the attendance of witnesses, the giving of testimony , and the

4-11 production of books and papers as required by any subpoena issued by the

4-12 commission [.] or administrative law judge.

4-13 2. If any witness refuses to attend or testify or produce any books or

4-14 papers required by a subpoena , the commission or administrative law

4-15 judge may report to the district court for the county in which the

4-16 investigation or hearing is pending by petition, setting forth:

4-17 (a) That due notice has been given of the time and place of attendance of

4-18 the witness or the production of the books and papers;

4-19 (b) That the witness has been subpoenaed in the manner prescribed in

4-20 this chapter; and

4-21 (c) That the witness has failed and refused to attend or produce the

4-22 books or papers required by subpoena before the commission or

4-23 administrative law judge in the investigation or hearing named in the

4-24 subpoena, or has refused to answer questions propounded to him in the

4-25 course of the investigation or hearing,

4-26 and asking an order of the court compelling the witness to attend and testify

4-27 or produce the books or papers before the commission [.] or administrative

4-28 law judge.

4-29 3. The court, upon petition of the commission, shall enter an order

4-30 directing the witness to appear before the court at a time and place to be

4-31 fixed by the court in its order, not more than 10 days [from] after the date

4-32 of the order, and show cause why he has not attended or testified or

4-33 produced the books or papers before the commission [.] or administrative

4-34 law judge. A certified copy of the order must be served upon the witness. If

4-35 it appears to the court that the subpoena was regularly issued by the

4-36 commission [,] or administrative law judge, the court shall thereupon enter

4-37 an order that the witness appear before the commission or administrative

4-38 law judge at the time and place fixed in the order and testify or produce the

4-39 required books or papers, and upon failure to obey the order , the witness

4-40 must be dealt with as if in contempt of court.

5-1 Sec. 10. NRS 703.377 is hereby amended to read as follows:

5-2 703.377 1. No certificate of public convenience and necessity, permit

5-3 or license issued in accordance with the terms of NRS 704.005 to 704.751,

5-4 inclusive, is either a franchise or irrevocable.

5-5 2. Upon receipt of a written complaint or on its own motion, the

5-6 commission may, after investigation , and a hearing [,] by an

5-7 administrative law judge, revoke any certificate, permit or license, but as

5-8 to a public utility only if the commission has arranged for another public

5-9 utility to provide the service for which the certificate was granted.

5-10 3. The proceedings thereafter are governed by the provisions of NRS

5-11 703.373 to 703.376, inclusive [.] , and sections 2 and 3 of this act.

5-12 Sec. 11. Chapter 704 of NRS is hereby amended by adding thereto the

5-13 provisions set forth as sections 12, 13 and 14 of this act.

5-14 Sec. 12. A vertically integrated electric utility and its successor

5-15 electric distribution utility shall act in accordance with existing contract

5-16 terms relating to obligations for the purchase of power. A vertically

5-17 integrated electric utility and its successor electric distribution utility

5-18 seeking to recover costs associated with an obligation for the purchase of

5-19 power which are documented in the accounting records of the utility and

5-20 which are allocable to a particular potentially competitive service must:

5-21 1. Demonstrate that the utility has made reasonable efforts to reduce

5-22 the cost or increase the value of the obligation, including, without

5-23 limitation, by:

5-24 (a) Evaluating the costs and benefits of renegotiating the obligation;

5-25 (b) Initiating a good faith attempt to renegotiate the obligation with

5-26 the provider of the purchased power;

5-27 (c) Responding in good faith to any attempt initiated by the provider

5-28 of the purchased power to renegotiate the obligation; and

5-29 (d) Exercising all existing contract terms relating to the obligation to

5-30 mitigate the cost of the obligation;

5-31 2. If the utility was legally required to incur the obligation by a state

5-32 or federal agency or authority, provide all information, including actions

5-33 and statements by the commission, if any, demonstrating that fact;

5-34 3. If the utility had discretion whether to incur or mitigate the cost,

5-35 provide all information demonstrating the conduct of the utility with

5-36 respect to the costs of the obligation, as compared to other utilities with

5-37 similar obligations; and

5-38 4. Provide all information indicating the extent to which the rates

5-39 previously established by the commission have compensated shareholders

5-40 for the risk of not recovering the costs of the obligations.

5-41 Sec. 13. 1. Notwithstanding the provisions of subsection 5 of NRS

5-42 704.982 to the contrary, the commission shall, for each class of

5-43 customers of electric service in this state, establish a total rate for electric

6-1 services that are necessary to provide basic electric service to customers

6-2 in this state. The rates may not vary from the rates for each class of

6-3 customers of electric service in this state which are in effect on the

6-4 effective date of this section, except that the commission may modify the

6-5 rates to account for the effects of any cases filed with the commission

6-6 before October 1, 1999, which involve the use of deferred accounting.

6-7 The rates established by the commission pursuant to this subsection

6-8 remain in effect until March 1, 2003.

6-9 2. Notwithstanding the provisions of subsection 4 of NRS 704.982 to

6-10 the contrary, during the period that the rates are in effect pursuant to

6-11 subsection 1, services subject to the rates, including generation services

6-12 owned by a vertically integrated electric utility which may be subject to

6-13 divestiture, must be provided by a vertically integrated electric utility or

6-14 its successor electric distribution utility, which is a provider of last resort.

6-15 3. If a utility repurchases generation services to meet its obligation

6-16 pursuant to this section from a generation unit that the utility has

6-17 divested, the commission, in determining recoverable costs pursuant to

6-18 NRS 704.983, shall not impute a value to the generation unit other than

6-19 the sales price of the unit.

6-20 4. To the extent that the rate established pursuant to subsection 1 for

6-21 any class of customers does not reflect the costs incurred by a utility to

6-22 provide the services to that class of customers, the utility may accumulate

6-23 any shortfall through March 1, 2003. Such a shortfall may be recovered

6-24 only from the gain, if any, from the sale by the utility of its generation

6-25 assets.

6-26 5. During the period that the rates are in effect pursuant to

6-27 subsection 1, the commission shall not subject an electric distribution

6-28 utility or its successor electric distribution utility to any review of

6-29 earnings, the rate base of the utility, or the rate of return of the utility.

6-30 Sec. 14. 1. At any time after July 1, 2001, a licensed alternative

6-31 seller may submit to the commission a bid to provide a potentially

6-32 competitive service that is being provided by an electric distribution utility

6-33 in accordance with section 13 of this act. The bid must:

6-34 (a) Request to serve at least 10 percent of the market for a specific

6-35 geographical region of this state;

6-36 (b) Provide that the service will be provided by the alternative seller to

6-37 more than one class of customers; and

6-38 (c) Provide that there will be a discount of 5 percent off the rate

6-39 established by the commission pursuant to section 13 of this act.

6-40 2. Upon the receipt of such a bid, the commission may conduct an

6-41 auction if the commission determines that it is in the public interest to

6-42 conduct such an auction. If the commission determines that such an

6-43 auction is in the public interest, the commission shall conduct the

7-1 auction as soon as practicable. The commission shall determine the

7-2 terms and conditions for continued service by the successful bidder at the

7-3 auction. Any licensed alternative seller or affiliate of an electric

7-4 distribution utility may submit a bid. Bidding must be done by sealed bid.

7-5 Each bid by an alternative seller must be not less than 10 percent of the

7-6 load, as measured in megawatts or megawatt hours, for the geographical

7-7 region for which the bid is being made.

7-8 3. The commission shall review the bids. If the successful bidder is

7-9 an alternative seller or an affiliate of an electric distribution utility other

7-10 than the electric distribution utility that provided the service before the

7-11 auction, the successful bidder becomes the provider of the service for the

7-12 percentage of the load as indicated in its bid. For the percentage of the

7-13 market that is not awarded to a successful bidder, the affiliate of the

7-14 electric distribution utility which provided service to the customers before

7-15 the auction remains the provider of the service, and that service must

7-16 continue to be provided under the same terms and conditions as existed

7-17 for the provision of that service by the affiliate of the electric distribution

7-18 utility immediately before the auction.

7-19 Sec. 15. NRS 704.110 is hereby amended to read as follows:

7-20 704.110 Except as otherwise provided in NRS 704.075 or as otherwise

7-21 provided by the commission pursuant to NRS 704.095 or 704.097:

7-22 1. Whenever there is filed with the commission any schedule stating a

7-23 new or revised individual or joint rate or charge, or any new or revised

7-24 individual or joint regulation or practice affecting any rate or charge, or any

7-25 schedule resulting in a discontinuance, modification or restriction of

7-26 service, the commission may, upon complaint or upon its own motion

7-27 without complaint, at once, without answer or formal pleading by the

7-28 interested utility, investigate or, upon reasonable notice, conduct a hearing

7-29 concerning the propriety of the rate, charge, classification, regulation,

7-30 discontinuance, modification, restriction or practice.

7-31 2. Pending the investigation or hearing and the decision thereon, the

7-32 commission, upon delivering to the utility affected thereby a statement in

7-33 writing of its reasons for the suspension, may suspend the operation of the

7-34 schedule and defer the use of the rate, charge, classification, regulation,

7-35 discontinuance, modification, restriction or practice, but not for more than

7-36 150 days beyond the time when the rate, charge, classification, regulation,

7-37 discontinuance, modification, restriction or practice would otherwise go

7-38 into effect.

7-39 3. Whenever there is filed with the commission any schedule stating an

7-40 increased individual or joint rate or charge for service or equipment, the

7-41 public utility shall submit with its application a statement showing the

7-42 recorded results of revenues, expenses, investments and costs of capital for

7-43 its most recent 12 months for which data were available when the

8-1 application was prepared. During any hearing concerning the increased

8-2 rates or charges determined by the commission to be necessary, the

8-3 commission shall consider evidence in support of the increased rates or

8-4 charges based upon actual recorded results of operations for the same 12

8-5 months, adjusted for increased revenues, any increased investment in

8-6 facilities, increased expenses for depreciation, certain other operating

8-7 expenses as approved by the commission and changes in the costs of

8-8 securities which are known and are measurable with reasonable accuracy at

8-9 the time of filing and which will become effective within 6 months after the

8-10 last month of those 12 months, but no new rates or charges may be placed

8-11 into effect until the changes have been experienced and certified by the

8-12 utility to the commission. The commission shall also consider evidence

8-13 supporting expenses for depreciation, calculated on an annual basis,

8-14 applicable to major components of the public utility’s plant placed into

8-15 service during the recorded test period or the period for certification as set

8-16 forth in the application. Adjustments to revenues, operating expenses and

8-17 costs of securities must be calculated on an annual basis. Within 90 days

8-18 after the filing with the commission of the certification required in this

8-19 subsection, or before the expiration of any period of suspension ordered

8-20 pursuant to subsection 2, whichever time is longer, the commission shall

8-21 make such order in reference to those rates or charges as is required by this

8-22 chapter.

8-23 4. After full investigation or hearing, whether completed before or after

8-24 the date upon which the rate, charge, classification, regulation,

8-25 discontinuance, modification, restriction or practice is to go into effect, the

8-26 commission may make such order in reference to the rate, charge,

8-27 classification, regulation, discontinuance, modification, restriction or

8-28 practice as would be proper in a proceeding initiated after the rate, charge,

8-29 classification, regulation, discontinuance, modification, restriction or

8-30 practice has become effective.

8-31 5. [Whenever an application is filed by a public utility for an increase

8-32 in any rate or charge based upon increased costs in the purchase of fuel or

8-33 power, and the public utility has elected to use deferred accounting for

8-34 costs of the purchase of fuel or power in accordance with the commission’s

8-35 regulations, the commission, by appropriate order after a public hearing,

8-36 shall allow the public utility to clear the deferred account not more often

8-37 than every 6 months by refunding any credit balance or recovering any

8-38 debit balance over a period not to exceed 1 year as determined by the

8-39 commission. The commission shall not allow a recovery of a debit balance

8-40 or any portion thereof in an amount which would result in a rate of return in

8-41 excess of the rate of return most recently granted the public utility.

8-42 6.] Except as otherwise provided in subsection [7,] 6, whenever a

8-43 general rate application for an increased rate or charge for, or classification,

9-1 regulation, discontinuance, modification, restriction or practice involving

9-2 service or equipment has been filed with the commission, a public utility

9-3 shall not submit another general rate application until all pending general

9-4 rate applications for increases in rates submitted by that public utility have

9-5 been decided unless, after application and hearing, the commission

9-6 determines that a substantial financial emergency would exist if the other

9-7 application is not permitted to be submitted sooner.

9-8 [7.] 6. A public utility may not file an application to recover the

9-9 increased cost of purchased fuel, purchased power, or natural gas

9-10 purchased for resale more often than once every 30 days.

9-11 [8.] 7. A utility facility identified in a 3-year plan submitted pursuant to

9-12 NRS 704.741 and accepted by the commission for acquisition or

9-13 construction pursuant to NRS 704.751 and the regulations adopted pursuant

9-14 thereto shall be deemed to be a prudent investment. The utility may recover

9-15 all just and reasonable costs of planning and constructing such a facility.

9-16 Sec. 15.5. NRS 704.185 is hereby amended to read as follows:

9-17 704.185 1. A public utility which purchases [fuel, including] natural

9-18 gas for resale [, or power] may record upon its books and records all cost

9-19 increases or decreases in [fuels or purchased power] the natural gas

9-20 purchased for resale in deferred accounts. Any public utility which utilizes

9-21 deferred accounting to reflect changes in costs of [fuels and purchased

9-22 power] natural gas purchased for resale shall include in its annual report

9-23 to the commission a statement showing the allocated rate of return for each

9-24 of its operating departments in Nevada which uses deferred accounting.

9-25 2. If the rate of return for any department using deferred accounting is

9-26 greater than the rate of return allowed by the commission in the last rate

9-27 proceeding, the commission shall order the utility which recovered any

9-28 [deferred fuel and purchased power] costs of natural gas purchased for

9-29 resale through rates during the reported period to transfer to the next

9-30 energy adjustment period that portion of such recovered amounts which

9-31 exceeds the authorized rate of return.

9-32 Sec. 16. NRS 704.285 is hereby amended to read as follows:

9-33 704.285 1. The commission, upon its own information or knowledge

9-34 or upon a complaint by any person, firm, partnership or corporation that

9-35 any public utility is acting in violation of the provisions of NRS 179.410 to

9-36 179.515, inclusive, or [NRS] 200.610 to 200.690, inclusive, or is

9-37 knowingly allowing another person to violate those provisions, shall

9-38 proceed without notice to make an investigation of the information or

9-39 complaint.

9-40 2. If, after its investigation, the commission determines that there is

9-41 probable cause to believe that the utility is acting in violation of the

9-42 provisions of NRS 179.410 to 179.515, inclusive, or [NRS] 200.610 to

9-43 200.690, inclusive, or allowing another to act in violation of those

10-1 provisions, the commission shall forthwith issue a cease and desist order to

10-2 the utility. The order is permanent unless the utility, within 20 days after

10-3 receipt of the order, files a written request for a hearing with the

10-4 commission.

10-5 3. When a written request for a hearing is filed pursuant to subsection

10-6 2, the [commission shall conduct the] hearing must be conducted pursuant

10-7 to the provisions of NRS 703.320 to 703.370, inclusive [.] , and sections 2

10-8 and 3 of this act.

10-9 4. If, as the result of a hearing, it is determined that the utility is acting

10-10 in violation of the provisions of NRS 179.410 to 179.515, inclusive, or

10-11 [NRS] 200.610 to 200.690, inclusive, or allowing another to act in

10-12 violation of those provisions, the commission shall issue a permanent cease

10-13 and desist order and notify the district attorney of the county where the

10-14 violation occurred of its determination.

10-15 5. This section is applicable whether or not the utility involved is

10-16 required to have a certificate of public convenience and necessity from the

10-17 commission.

10-18 Sec. 17. NRS 704.965 is hereby amended to read as follows:

10-19 704.965 As used in NRS 704.965 to 704.990, inclusive, and sections

10-20 12, 13 and 14 of this act, unless the context otherwise requires, the words

10-21 and terms defined in NRS 704.966 to 704.975, inclusive, have the

10-22 meanings ascribed to them in those sections.

10-23 Sec. 18. NRS 704.970 is hereby amended to read as follows:

10-24 704.970 "Electric distribution utility" means a utility that is in the

10-25 business of supplying noncompetitive electric distribution or transmission

10-26 service, or both, or a noncompetitive service pursuant to NRS 704.982, on

10-27 or after [July 1, 1999, or] the date on which alternative sellers are

10-28 authorized to provide potentially competitive services to customers in this

10-29 state . [, as appropriate.]

10-30 Sec. 19. NRS 704.975 is hereby amended to read as follows:

10-31 704.975 1. "Vertically integrated electric utility" means any public

10-32 utility in the business of supplying electricity or its successor in interest

10-33 that, as of December 31, 1996:

10-34 (a) Held a certificate of public convenience and necessity issued

10-35 pursuant to NRS 704.005 to 704.731, inclusive; and

10-36 (b) Had an annual operating revenue of $250,000,000 or more [.] in

10-37 Nevada.

10-38 2. The term does not include a cooperative association or nonprofit

10-39 corporation or association or other provider of electric service, which is

10-40 declared to be a public utility pursuant to NRS 704.673 and provides

10-41 service only to its members.

11-1 Sec. 20. NRS 704.976 is hereby amended to read as follows:

11-2 704.976 1. The date upon which customers may begin obtaining

11-3 generation, aggregation , metering, billing and any other potentially

11-4 competitive services from an alternative seller must be no later than

11-5 [December 31, 1999,] March 1, 2000, unless the commission determines

11-6 that a different date is necessary to protect the public interest. [If the

11-7 commission determines that a different date is necessary, the commission

11-8 shall provide a report to the director of the legislative counsel bureau for

11-9 transmittal to the legislature by February 1, 1999, which:

11-10 (a) Explains the reason that the commission has not granted such an

11-11 authorization; and

11-12 (b) States whether the commission will grant such an authorization by

11-13 December 31, 1999.]

11-14 2. The commission may:

11-15 (a) Establish different dates for the provision of different services by

11-16 alternative sellers in different geographic areas; and

11-17 (b) Authorize, in gradual phases, the right of customers to buy from

11-18 alternative sellers.

11-19 3. The commission shall determine that an electric service is a

11-20 potentially competitive service if provision of the service by alternative

11-21 sellers:

11-22 (a) Will not harm any class of customers;

11-23 (b) Will decrease the cost of providing the service to customers in this

11-24 state or increase the quality or innovation of the service to customers in this

11-25 state;

11-26 (c) Is a service for which effective competition in the market is likely to

11-27 develop;

11-28 (d) Will advance the competitive position of this state relative to

11-29 surrounding states; and

11-30 (e) Will not otherwise jeopardize the safety and reliability of the electric

11-31 service in this state.

11-32 4. If the commission determines that a market for a potentially

11-33 competitive service does not have effective competition, the commission

11-34 shall, by regulation, establish the method for determining prices for the

11-35 service and the terms and conditions for providing the service. The

11-36 regulations must ensure that the pricing method, terms and conditions are

11-37 just and reasonable and not unduly discriminatory. The regulations may

11-38 include pricing alternatives which authorize the seller to reduce prices

11-39 below maximum pricing levels specified by the commission or any other

11-40 form of alternative pricing which the commission determines to be

11-41 consistent with the provisions of this subsection. In determining whether a

11-42 market for an electric service has effective competition, the commission

11-43 shall:

12-1 (a) Identify the relevant market;

12-2 (b) Identify, where feasible, the alternative sellers that participate and

12-3 are reasonably expected to participate in the relevant market; and

12-4 (c) Calculate, where feasible, the market share of each participant in the

12-5 market and evaluate the significance of each share.

12-6 5. On [or before October 1, 2000, the commission shall submit to the

12-7 director of the legislative counsel bureau for transmittal to the appropriate

12-8 legislative committee a report which:

12-9 (a) Evaluates the effectiveness of competition in the market for each

12-10 service which customers have the right to purchase from alternative sellers;

12-11 and

12-12 (b) Recommends actions which the legislature should take to increase

12-13 the effectiveness of competition in the markets for all potentially

12-14 competitive services.

12-15 6. On] or before October 1, 2001, an electric service that has been

12-16 found on or before that date to be potentially competitive shall be deemed

12-17 to be competitive.

12-18 [7.] 6. The commission may reconsider any determination made

12-19 pursuant to this section upon its own motion or upon a showing of good

12-20 cause by a party requesting a reconsideration. Upon a finding by the

12-21 commission that the market for a service previously found not to have

12-22 effective competition has become effectively competitive, the commission

12-23 shall repeal the regulations which established the pricing methods and the

12-24 terms and conditions for providing that service. The commission shall

12-25 conduct any proceedings for the reconsideration of any such determination

12-26 as expeditiously as practicable considering the current work load of the

12-27 commission and the need to protect the public interest.

12-28 [8.] 7. A vertically integrated electric utility shall not provide a

12-29 potentially competitive service except through an affiliate:

12-30 (a) On or after [December 31, 1999;] March 1, 2000; or

12-31 (b) The date on which the commission determines that the service is

12-32 potentially competitive,

12-33 whichever is later.

12-34 Sec. 21. NRS 704.977 is hereby amended to read as follows:

12-35 704.977 1. It is unlawful for an alternative seller to sell any electric

12-36 service to a customer for consumption within this state without having first

12-37 obtained a license from the commission to do so. A licensed alternative

12-38 seller or a vertically integrated utility may negotiate with a customer for

12-39 the provision of electric service before March 1, 2000, but no such

12-40 contract is effective before March 1, 2000.

12-41 2. [Not later than January 1, 1999, or any different date as determined

12-42 by the commission pursuant to NRS 704.976, as appropriate, the] The

12-43 commission shall by regulation set forth the procedures and conditions that

13-1 alternative sellers must satisfy to obtain a license to sell any electric

13-2 services to a customer in this state, including, but not limited to, procedures

13-3 and conditions relating to:

13-4 (a) Safety and reliability of service;

13-5 (b) Financial and operational fitness; and

13-6 (c) Billing practices and customer service, including the initiation and

13-7 termination of service.

13-8 3. If, after reviewing the application of an alternative seller for a

13-9 license, the commission finds that the applicant is qualified to be an

13-10 alternative seller, the commission shall issue a license to the applicant.

13-11 4. The commission may deny the application of an applicant for a

13-12 license to operate as an alternative seller and may limit, suspend or revoke

13-13 a license issued to an alternative seller if the action is necessary to protect

13-14 the interests of the public or to enforce the provisions of NRS 704.965 to

13-15 704.990, inclusive, and sections 12, 13 and 14 of this act, or a regulation

13-16 of the commission.

13-17 5. In determining whether an applicant is qualified for a license,

13-18 whether to deny an application for a license to operate as an alternative

13-19 seller or whether to limit, suspend or revoke a license issued to an

13-20 alternative seller, the commission may consider whether the applicant for or

13-21 holder of the license, or any affiliate thereof, has engaged in any activities

13-22 which are inconsistent with effective competition.

13-23 6. A city, county or other local governmental entity or a public utility,

13-24 or any affiliate thereof, which is authorized to provide electric service

13-25 within the State of Nevada and which has an annual operating revenue of

13-26 less than $250,000,000, [is] becomes subject to the provisions of NRS

13-27 704.965 to 704.990, inclusive, and sections 12, 13 and 14 of this act, and

13-28 any regulations adopted [by the commission that are in effect] pursuant

13-29 thereto, on the date on which the city, county or other local governmental

13-30 entity or a public utility, or an affiliate thereof:

13-31 (a) Applies to obtain a license as an alternative seller; or

13-32 (b) Directly or indirectly attempts to provide, or act on behalf of an

13-33 alternative seller in the provision of, electric service in the territory served

13-34 by another city, county or other local governmental entity or public utility,

13-35 or an affiliate thereof, unless the city, county or other local governmental

13-36 entity or public utility, or an affiliate thereof, is otherwise required or

13-37 permitted by specific statute to provide such service.

13-38 7. Notwithstanding the provisions of subsection 6, a city, county or

13-39 other local governmental entity or a public utility, or any affiliate thereof,

13-40 does not become subject to the provisions of NRS 704.965 to 704.990,

13-41 inclusive, and sections 12, 13 and 14 of this act, or any regulations

13-42 adopted pursuant thereto, solely because the city, county or other local

13-43 governmental entity or a public utility, or any affiliate thereof, provides

14-1 transmission or distribution services to an alternative seller pursuant to a

14-2 contract, tariff or requirement of any state or federal law, except that the

14-3 city, county or other local governmental entity or public utility, or an

14-4 affiliate thereof, shall provide such transmission and distribution services

14-5 on an open and nondiscriminatory basis to alternative sellers in accordance

14-6 with such standards as the commission may establish by regulation for the

14-7 provision of transmission and distribution services in accordance with this

14-8 subsection.

14-9 8. Regulations adopted pursuant to subsection 2:

14-10 (a) Must not be unduly burdensome;

14-11 (b) Must not unnecessarily delay or inhibit the initiation and

14-12 development of competition for any service in any market; and

14-13 (c) May establish different requirements for licensing alternative sellers

14-14 of:

14-15 (1) Different services; or

14-16 (2) Similar services to different classes of customers,

14-17 whenever such different requirements are appropriate to carry out the

14-18 provisions of NRS 704.965 to 704.990, inclusive [.] , and sections 12, 13

14-19 and 14 of this act.

14-20 Sec. 22. NRS 704.978 is hereby amended to read as follows:

14-21 704.978 1. The commission shall prohibit a provider of a

14-22 noncompetitive service from providing a potentially competitive service,

14-23 except through an affiliate of the provider.

14-24 2. The commission shall require each provider of a noncompetitive

14-25 service that is necessary to the provision of a potentially competitive

14-26 service to make its facilities or services available to all alternative sellers on

14-27 equal and nondiscriminatory terms and conditions.

14-28 3. In providing a potentially competitive service, an affiliate of a

14-29 provider of a noncompetitive service may use the name or logo, or both,

14-30 of the provider of noncompetitive service.

14-31 Sec. 23. NRS 704.982 is hereby amended to read as follows:

14-32 704.982 1. The commission shall designate a vertically integrated

14-33 electric utility , or its successor electric distribution utility, to provide

14-34 electric service to customers who are unable to obtain electric service from

14-35 an alternative seller or who fail to select an alternative seller. The provider

14-36 so designated by the commission is obligated to provide electric service to

14-37 the customers. Electric service provided by the utility pursuant to this

14-38 section shall be deemed to be a noncompetitive service for which the utility

14-39 may recover its costs pursuant to NRS 704.001 to 704.655, inclusive,

14-40 704.701 to 704.751, inclusive, and 704.800 to 704.900, inclusive.

14-41 2. Upon a finding by the commission that the public interest will be

14-42 promoted, the commission may prescribe alternate methods for providing

14-43 electric service to those customers described in subsection 1. The alternate

15-1 methods may include, but are not limited to, the direct assignment of

15-2 customers to alternative sellers or electric distribution utilities or a process

15-3 of competitive bidding for the right to provide electric service to the

15-4 designated customers. Any alternative methods prescribed by the

15-5 commission pursuant to this subsection may not go into effect before

15-6 July 1, 2001.

15-7 3. The commission shall establish minimum terms and conditions

15-8 under which electric service must be provided pursuant to this section,

15-9 including a minimum period during which a customer must be obligated to

15-10 pay for the electric service from the assigned provider. The price charged

15-11 for electric service for a particular group of customers must reflect the

15-12 incremental cost of serving the group.

15-13 4. If the designated provider of the electric service is a vertically

15-14 integrated electric utility, the utility shall provide the electric service

15-15 through an affiliate whose sole business activity is the provision of electric

15-16 service.

15-17 5. Except as otherwise provided in this subsection and subsection 6,

15-18 the rate charged for residential service provided pursuant to subsection 1

15-19 must not exceed the rate charged for that service on July 1, 1997. The

15-20 limitation set forth in this subsection is effective until 2 years after the date

15-21 upon which, in accordance with NRS 704.976, the commission repeals the

15-22 regulations which established the pricing method for that service and the

15-23 terms and conditions for providing that service.

15-24 6. The commission may, in accordance with NRS 704.110, 704.120

15-25 and 704.130, approve an increase in the rate charged for residential service

15-26 provided pursuant to subsection 1 in an amount that does not exceed the

15-27 increase necessitated, if any, to ensure the recovery by the vertically

15-28 integrated electric utility , or its successor electric distribution utility, of its

15-29 just and reasonable costs. The provisions of this section do not limit or

15-30 prohibit in any manner the operation of any order issued by the commission

15-31 before July 1, 1997.

15-32 Sec. 24. NRS 704.983 is hereby amended to read as follows:

15-33 704.983 1. The commission shall determine the recoverable costs

15-34 associated with assets and obligations that are documented in the

15-35 accounting records of a vertically integrated electric utility and its

15-36 successor electric distribution utility and that are properly allocable to a

15-37 particular potentially competitive service as of the date on which alternative

15-38 sellers of similar potentially competitive services begin providing such

15-39 service to customers in this state. Shareholders of the vertically integrated

15-40 electric utility must be compensated fully for all such costs determined by

15-41 the commission. In determining the recoverable costs, the commission shall

15-42 take into account:

16-1 (a) The extent to which the utility was legally required to incur the costs

16-2 of the assets and obligations;

16-3 (b) The extent to which the market value of the assets and obligations of

16-4 the utility, relating to the provision of potentially competitive services,

16-5 exceeds the costs of the assets and obligations;

16-6 (c) The effectiveness of the efforts of the utility to increase the market

16-7 value and realize the market value of any assets, and to decrease the costs

16-8 of any obligations, associated with the provision of potentially competitive

16-9 services;

16-10 (d) The extent to which the rates previously established by the

16-11 commission have compensated shareholders for the risk of not recovering

16-12 the costs of the assets and obligations;

16-13 (e) The effects of the difference between the market value and the cost,

16-14 including, without limitation, tax considerations, for the assets and

16-15 obligations; and

16-16 (f) If the utility had the discretion to determine whether to incur or

16-17 mitigate the costs, the conduct of the utility with respect to the costs of the

16-18 assets and obligations when compared to other utilities with similar

16-19 obligations to serve the public.

16-20 2. For the purposes of this section, the commission may impose a

16-21 procedure for the direct and unavoidable recovery from ratepayers of the

16-22 portion of the past costs which are determined by the commission to be

16-23 owed by the ratepayers. The procedure must include a determination of the

16-24 period over which the recovery may occur and include the authority for the

16-25 commission to assess charges on those customers on whose behalf the

16-26 vertically integrated electric utility incurred costs who are no longer

16-27 receiving transmission or distribution service, or both, from the vertically

16-28 integrated electric utility. Such determinations and procedures must not

16-29 discriminate against a participant in the market.

16-30 3. Failure by a utility to minimize, in a reasonable and prudent

16-31 manner, federal taxes resulting from the offsetting of gains and losses of

16-32 assets and obligations properly allocable to a potentially competitive

16-33 service must be considered by the commission in determining the

16-34 recoverable costs for the utility.

16-35 Sec. 25. NRS 704.997 is hereby amended to read as follows:

16-36 704.997 1. Upon the receipt of a specific request for an exemption by

16-37 a public utility that supplies natural gas, the commission may, to the extent

16-38 it deems necessary, exempt any service offered by the public utility from

16-39 the strict application of one or more provisions of this chapter. Such an

16-40 exemption may be made only upon a determination by the commission,

16-41 after notice and an opportunity for a hearing, that the service is competitive,

16-42 discretionary or potentially competitive.

17-1 2. The commission shall adopt regulations necessary to establish an

17-2 alternative plan of regulation of a public utility that supplies natural gas and

17-3 that is otherwise subject to regulation pursuant to the provisions of this

17-4 chapter. The alternative plan may include, but is not limited to, provisions

17-5 that:

17-6 (a) Allow adjustment of the rates charged by the public utility during the

17-7 period in which the utility elects the alternative plan of regulation.

17-8 (b) Specify the provisions of this chapter that do not apply to a public

17-9 utility which elects to be regulated under the alternative plan.

17-10 (c) Provide for flexibility of pricing for services that are discretionary,

17-11 competitive or potentially competitive.

17-12 3. A public utility that elects to be regulated under the alternative plan

17-13 established pursuant to this section is not subject to the remaining

17-14 provisions of this chapter to the extent specified pursuant to this section.

17-15 4. In providing a potentially competitive service, an affiliate of a

17-16 provider of a noncompetitive service may use the name or logo, or both,

17-17 of the provider of noncompetitive service.

17-18 5. It is unlawful for an alternative seller to sell any service relating to

17-19 the supply of natural gas to a customer for his consumption within this state

17-20 without first having obtained a license from the commission to do so.

17-21 Sec. 26. If, in accordance with NRS 704.976, the public utilities

17-22 commission of Nevada determines that a date other than March 1, 2000, on

17-23 which customers may begin obtaining generation, aggregation, metering,

17-24 billing and other potentially competitive services from alternative sellers, is

17-25 necessary to protect the public interest, the commission shall, not later than

17-26 December 1, 1999, provide a report to the director of the legislative

17-27 counsel bureau for transmittal to the legislature, or the legislative

17-28 commission if the legislature is not in session. The report must contain the

17-29 reasons for the commission’s determination that the different date is

17-30 necessary and a new proposed date on which the commission believes that

17-31 it would be appropriate for customers to begin obtaining generation,

17-32 aggregation, metering, billing and other potentially competitive services.

17-33 Sec. 27. 1. This section and sections 1 to 14, inclusive, 16 to 26,

17-34 inclusive, 28 and 29 of this act become effective upon passage and

17-35 approval.

17-36 2. Sections 15 and 15.5 of this act become effective on October 1,

17-37 1999.

17-38 Sec. 28. If the pending merger between Sierra Pacific Resources and

17-39 Nevada Power Company, referred to in the records of the Public Utilities

17-40 Commission of Nevada as Docket No. 98-7023, is terminated for any

17-41 reason before the completion of the merger, this act expires by limitation on

17-42 the date on which the pending merger is terminated.

18-1 Sec. 29. Except as otherwise provided in section 28 of this act,

18-2 sections 13 and 14 of this act expire by limitation on March 1, 2003.