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).

1-1 Section 1. NRS 703.130 is hereby amended to read as follows:

1-2 703.130 1. The commission shall appoint a deputy commissioner

1-8 as may be necessary.

1-9 4. The commission may appoint one or more hearing officers for a

1-10 period specified by the commission to conduct proceedings or hearings

1-11 that may be conducted by the commission pursuant to chapters 704,

1-12 704A, 705, 708 and 711 of NRS. The commission shall prescribe by

2-1 regulation the procedure for appealing a decision of a hearing officer to

2-2 the commission.

2-3 Sec. 2. Chapter 704 of NRS is hereby amended by adding thereto the

2-4 provisions set forth as sections 3 to 6, inclusive, of this act.

2-5 Sec. 3. 1. A vertically integrated electric utility that is in existence

2-6 on January 1, 1999, or its successor electric distribution utility or any

2-7 assignee of the utility shall comply with the terms of any existing

2-8 obligations for the purchase of power as those terms have been

2-9 interpreted by the parties to the obligations.

2-10 2. To recover any costs associated with an obligation for the

2-11 purchase of power, a vertically integrated electric utility in existence on

2-12 January 1, 1999, or its successor electric distribution utility or any

2-13 assignee of the utility must demonstrate to the commission that it has

2-14 made reasonable efforts to reduce the cost or increase the value of the

2-15 obligation, including, without limitation, by:

2-16 (a) Evaluating the costs and benefits of the obligation and analyzing

2-17 whether there are any reasonable options under the existing provisions of

2-18 the obligation that may reduce the costs or increase the benefits of the

2-19 obligation;

2-20 (b) Reporting on the good faith attempts by the utility or its assignee to

2-21 seek an increase in value or reduction in cost from the provider of the

2-22 purchased power under the existing provisions of the obligation;

2-23 (c) Showing that the utility or its assignee has exercised to the extent

2-24 practicable the terms of the existing obligation to mitigate the cost of the

2-25 obligation or has assessed the value of retaining the obligation;

2-26 (d) Providing a citation to an order of the commission approving the

2-27 obligation, or if such an order does not exist or is not available, providing

2-28 all information, including, without limitation, any actions or statements

2-29 by the commission or any state or federal agency, that demonstrates the

2-30 commitment of the utility or its assignee to the obligation; and

2-31 (e) Providing all information indicating the extent to which the rates

2-32 previously established by the commission have compensated shareholders

2-33 for the risk of not recovering the costs of the obligation.

2-34 3. After a utility has made a showing pursuant to subsection 2, the

2-35 commission shall determine the recoverable costs associated with such

2-36 an obligation for the purchase of power and shall allow the utility or

2-37 assignee to recover those costs from all classes of customers through a

2-38 charge imposed for noncompetitive services.

2-39 4. The provisions of this section must not be construed to allow the

2-40 reinterpretation, modification or termination of any obligation for the

2-41 purchase of power in effect on July 1, 1999, without the agreement of the

2-42 parties to the obligation.

3-1 Sec. 4. The commission shall, for each class of customers of electric

3-2 service in this state, establish a total rate for the components of electric

3-3 service that are necessary to provide electric service to customers in this

3-4 state pursuant to subsection 1 of NRS 704.982. The total rate for each

3-5 class may not exceed the total rate for each class of customers of electric

3-6 service in this state which is in effect on July 1, 1999, except that the

3-7 commission shall modify the rates to account for the effects of any

3-8 decisions by the commission relating to any cases filed with the

3-9 commission before October 1, 1999, which involve the use of deferred

3-10 accounting. Upon approval by the commission, the provider designated

3-11 pursuant to subsection 1 of NRS 704.982 may reduce the total rate for

3-12 any class of customers. The total rates established pursuant to this

3-13 subsection do not apply to any customer who obtains generation,

3-14 aggregation or any other potentially competitive service from an

3-15 alternative seller.

3-16 Sec. 5. 1. The provider of electric service designated pursuant to

3-17 subsection 1 of NRS 704.982 is entitled to recover only from the gain, if

3-18 any, from the sale by the provider of its generation assets any shortfall

3-19 during the period commencing on March 1, 2000, and ending on March

3-20 1, 2003, that results from the netting of any difference between:

3-21 (a) The revenues generated by the total rates charged to all classes of

3-22 customers pursuant to section 4 of this act; and

3-23 (b) The total cost incurred by the provider to provide that service to all

3-24 classes of customers.

3-25 2. Upon approval of the amount of the net shortfall, if any, the

3-26 commission shall authorize the designated provider to recover that

3-27 amount from the gain if any, on the sale of its generation assets, after the

3-28 deduction of any taxes.

3-29 3. As used in this section, "total cost incurred by the provider" means

3-30 the total revenues generated by all classes by the rates in effect on July 1,

3-31 1999, as adjusted to account for the effects of any decision of the

3-32 commission relating to any cases filed with the commission before

3-33 October 1, 1999, which involve the use of deferred accounting.

3-34 Sec. 6. 1. At any time after July 1, 2001, a licensed alternative

3-35 seller may submit to the commission an offer to provide electric service

3-36 that is being provided by the provider designated pursuant to subsection 1

3-37 of NRS 704.982. The offer must:

3-38 (a) Request to serve at least 10 percent of the load of the provider

3-39 designated pursuant to subsection 1 of NRS 704.982;

3-40 (b) Provide that the service will be provided by the alternative seller to

3-41 more than one class of customers; and

3-42 (c) Provide that there will be a discount of 5 percent off the rate

3-43 prescribed in subsection 2 of NRS 704.982.

4-1 2. Upon the receipt of such an offer, the commission may conduct an

4-2 auction if the commission determines that it is in the public interest to

4-3 conduct such an auction. If the commission determines that such an

4-4 auction is in the public interest, the commission shall conduct the

4-5 auction as soon as practicable. The commission shall determine the

4-6 terms and conditions for continued service by the successful bidder at the

4-7 auction. Any licensed alternative seller or affiliate of an electric

4-8 distribution utility may submit a bid. Bidding must be done by sealed bid.

4-9 Each bid must be not less than 10 percent of the load, as measured in

4-10 megawatts or megawatt hours, of the load of the provider designated

4-11 pursuant to subsection 1 of NRS 704.982.

4-12 3. The commission shall review the bids. If the successful bidder is

4-13 an alternative seller or an affiliate of an electric distribution utility other

4-14 than the electric distribution utility that provided the service before the

4-15 auction, the successful bidder becomes the provider of the service for the

4-16 percentage of the load as indicated in its bid. For the remainder of the

4-17 load that is not awarded to a successful bidder, the electric distribution

4-18 utility which provided service to the customers before the auction

4-19 remains the provider of the service, and that service must continue to be

4-20 provided under the same terms and conditions as existed for the

4-21 provision of that service by the electric distribution utility immediately

4-22 before the auction.

4-23 Sec. 7. NRS 704.110 is hereby amended to read as follows:

4-24 704.110 Except as otherwise provided in NRS 704.075 or as otherwise

4-25 provided by the commission pursuant to NRS 704.095 or 704.097:

4-26 1. Whenever there is filed with the commission any schedule stating a

4-27 new or revised individual or joint rate or charge, or any new or revised

4-28 individual or joint regulation or practice affecting any rate or charge, or any

4-29 schedule resulting in a discontinuance, modification or restriction of

4-30 service, the commission may, upon complaint or upon its own motion

4-31 without complaint, at once, without answer or formal pleading by the

4-32 interested utility, investigate or, upon reasonable notice, conduct a hearing

4-33 concerning the propriety of the rate, charge, classification, regulation,

4-34 discontinuance, modification, restriction or practice.

4-35 2. Pending the investigation or hearing and the decision thereon, the

4-36 commission, upon delivering to the utility affected thereby a statement in

4-37 writing of its reasons for the suspension, may suspend the operation of the

4-38 schedule and defer the use of the rate, charge, classification, regulation,

4-39 discontinuance, modification, restriction or practice, but not for more than

4-40 150 days beyond the time when the rate, charge, classification, regulation,

4-41 discontinuance, modification, restriction or practice would otherwise go

4-42 into effect.

5-1 3. Whenever there is filed with the commission any schedule stating an

5-2 increased individual or joint rate or charge for service or equipment, the

5-3 public utility shall submit with its application a statement showing the

5-4 recorded results of revenues, expenses, investments and costs of capital for

5-5 its most recent 12 months for which data were available when the

5-6 application was prepared. During any hearing concerning the increased

5-7 rates or charges determined by the commission to be necessary, the

5-8 commission shall consider evidence in support of the increased rates or

5-9 charges based upon actual recorded results of operations for the same 12

5-10 months, adjusted for increased revenues, any increased investment in

5-11 facilities, increased expenses for depreciation, certain other operating

5-12 expenses as approved by the commission and changes in the costs of

5-13 securities which are known and are measurable with reasonable accuracy at

5-14 the time of filing and which will become effective within 6 months after the

5-15 last month of those 12 months, but no new rates or charges may be placed

5-16 into effect until the changes have been experienced and certified by the

5-17 utility to the commission. The commission shall also consider evidence

5-18 supporting expenses for depreciation, calculated on an annual basis,

5-19 applicable to major components of the public utility’s plant placed into

5-20 service during the recorded test period or the period for certification as set

5-21 forth in the application. Adjustments to revenues, operating expenses and

5-22 costs of securities must be calculated on an annual basis. Within 90 days

5-23 after the filing with the commission of the certification required in this

5-24 subsection, or before the expiration of any period of suspension ordered

5-25 pursuant to subsection 2, whichever time is longer, the commission shall

5-26 make such order in reference to those rates or charges as is required by this

5-27 chapter.

5-28 4. After full investigation or hearing, whether completed before or after

5-29 the date upon which the rate, charge, classification, regulation,

5-30 discontinuance, modification, restriction or practice is to go into effect, the

5-31 commission may make such order in reference to the rate, charge,

5-32 classification, regulation, discontinuance, modification, restriction or

5-33 practice as would be proper in a proceeding initiated after the rate, charge,

5-34 classification, regulation, discontinuance, modification, restriction or

5-35 practice has become effective.

5-36 5. [Whenever an application is filed by a public utility for an increase

5-37 in any rate or charge based upon increased costs in the purchase of fuel or

5-38 power, and the public utility has elected to use deferred accounting for

5-39 costs of the purchase of fuel or power in accordance with the commission’s

5-40 regulations, the commission, by appropriate order after a public hearing,

5-41 shall allow the public utility to clear the deferred account not more often

5-42 than every 6 months by refunding any credit balance or recovering any

5-43 debit balance over a period not to exceed 1 year as determined by the

6-1 commission. The commission shall not allow a recovery of a debit balance

6-2 or any portion thereof in an amount which would result in a rate of return in

6-3 excess of the rate of return most recently granted the public utility.

6-4 6.] Except as otherwise provided in subsection [7,] 6, whenever a

6-5 general rate application for an increased rate or charge for, or classification,

6-6 regulation, discontinuance, modification, restriction or practice involving

6-7 service or equipment has been filed with the commission, a public utility

6-8 shall not submit another general rate application until all pending general

6-9 rate applications for increases in rates submitted by that public utility have

6-10 been decided unless, after application and hearing, the commission

6-11 determines that a substantial financial emergency would exist if the other

6-12 application is not permitted to be submitted sooner.

6-13 [7.] 6. A public utility may not file an application to recover the

6-14 increased cost of purchased fuel, purchased power, or natural gas

6-15 purchased for resale more often than once every 30 days.

6-16 [8.] 7. A utility facility identified in a 3-year plan submitted pursuant to

6-17 NRS 704.741 and accepted by the commission for acquisition or

6-18 construction pursuant to NRS 704.751 and the regulations adopted pursuant

6-19 thereto shall be deemed to be a prudent investment. The utility may recover

6-20 all just and reasonable costs of planning and constructing such a facility.

6-21 Sec. 8. NRS 704.185 is hereby amended to read as follows:

6-22 704.185 1. A public utility which purchases [fuel, including] natural

6-23 gas for resale [, or power] may record upon its books and records all cost

6-24 increases or decreases in [fuels or purchased power] the natural gas

6-25 purchased for resale in deferred accounts. Any public utility which utilizes

6-26 deferred accounting to reflect changes in costs of [fuels and purchased

6-27 power] natural gas purchased for resale shall include in its annual report

6-28 to the commission a statement showing the allocated rate of return for each

6-29 of its operating departments in Nevada which uses deferred accounting.

6-30 2. If the rate of return for any department using deferred accounting is

6-31 greater than the rate of return allowed by the commission in the last rate

6-32 proceeding, the commission shall order the utility which recovered any

6-33 [deferred fuel and purchased power] costs of natural gas purchased for

6-34 resale through rates during the reported period to transfer to the next

6-35 energy adjustment period that portion of such recovered amounts which

6-36 exceeds the authorized rate of return.

6-37 Sec. 9. NRS 704.965 is hereby amended to read as follows:

6-38 704.965 As used in NRS 704.965 to 704.990, inclusive, and sections 3

6-39 to 6, inclusive, of this act, unless the context otherwise requires, the words

6-40 and terms defined in NRS 704.966 to 704.975, inclusive, have the

6-41 meanings ascribed to them in those sections.

7-1 Sec. 10. NRS 704.970 is hereby amended to read as follows:

7-2 704.970 "Electric distribution utility" means a utility that is in the

7-3 business of supplying noncompetitive electric distribution or transmission

7-4 service, or both, or a noncompetitive service pursuant to NRS 704.982, on

7-5 or after [July 1, 1999, or] the date on which alternative sellers are

7-6 authorized to provide potentially competitive services to customers in this

7-7 state . [, as appropriate.]

7-8 Sec. 11. NRS 704.975 is hereby amended to read as follows:

7-9 704.975 1. "Vertically integrated electric utility" means any public

7-10 utility in the business of supplying electricity or its successor in interest

7-11 that, as of December 31, 1996:

7-12 (a) Held a certificate of public convenience and necessity issued

7-13 pursuant to NRS 704.005 to 704.731, inclusive; and

7-14 (b) Had an annual operating revenue of $250,000,000 or more [.] in

7-15 Nevada.

7-16 2. The term does not include a cooperative association or nonprofit

7-17 corporation or association or other provider of electric service, which is

7-18 declared to be a public utility pursuant to NRS 704.673 and provides

7-19 service only to its members.

7-20 Sec. 12. NRS 704.976 is hereby amended to read as follows:

7-21 704.976 1. The date upon which customers may begin obtaining

7-22 generation, aggregation , metering, billing and any other potentially

7-23 competitive services from an alternative seller must be no later than

7-24 [December 31, 1999,] March 1, 2000, unless the commission determines

7-25 that a different date is necessary to protect the public interest. [If the

7-26 commission determines that a different date is necessary, the commission

7-27 shall provide a report to the director of the legislative counsel bureau for

7-28 transmittal to the legislature by February 1, 1999, which:

7-29 (a) Explains the reason that the commission has not granted such an

7-30 authorization; and

7-31 (b) States whether the commission will grant such an authorization by

7-32 December 31, 1999.]

7-33 2. The commission may:

7-34 (a) Establish different dates for the provision of different services by

7-35 alternative sellers in different geographic areas; and

7-36 (b) Authorize, in gradual phases, the right of customers to buy from

7-37 alternative sellers.

7-38 3. The commission shall determine that an electric service is a

7-39 potentially competitive service if provision of the service by alternative

7-40 sellers:

7-41 (a) Will not harm any class of customers;

8-1 (b) Will decrease the cost of providing the service to customers in this

8-2 state or increase the quality or innovation of the service to customers in this

8-3 state;

8-4 (c) Is a service for which effective competition in the market is likely to

8-5 develop;

8-6 (d) Will advance the competitive position of this state relative to

8-7 surrounding states; and

8-8 (e) Will not otherwise jeopardize the safety and reliability of the electric

8-9 service in this state.

8-10 4. If the commission determines that a market for a potentially

8-11 competitive service does not have effective competition, the commission

8-12 shall, by regulation, establish the method for determining prices for the

8-13 service and the terms and conditions for providing the service. The

8-14 regulations must ensure that the pricing method, terms and conditions are

8-15 just and reasonable and not unduly discriminatory. The regulations may

8-16 include pricing alternatives which authorize the seller to reduce prices

8-17 below maximum pricing levels specified by the commission or any other

8-18 form of alternative pricing which the commission determines to be

8-19 consistent with the provisions of this subsection. In determining whether a

8-20 market for an electric service has effective competition, the commission

8-21 shall:

8-22 (a) Identify the relevant market;

8-23 (b) Identify, where feasible, the alternative sellers that participate and

8-24 are reasonably expected to participate in the relevant market; and

8-25 (c) Calculate, where feasible, the market share of each participant in the

8-26 market and evaluate the significance of each share.

8-27 5. On [or before October 1, 2000, the commission shall submit to the

8-28 director of the legislative counsel bureau for transmittal to the appropriate

8-29 legislative committee a report which:

8-30 (a) Evaluates the effectiveness of competition in the market for each

8-31 service which customers have the right to purchase from alternative sellers;

8-32 and

8-33 (b) Recommends actions which the legislature should take to increase

8-34 the effectiveness of competition in the markets for all potentially

8-35 competitive services.

8-36 6. On] or before October 1, 2001, an electric service that has been

8-37 found on or before that date to be potentially competitive shall be deemed

8-38 to be competitive.

8-39 [7.] 6. The commission may reconsider any determination made

8-40 pursuant to this section upon its own motion or upon a showing of good

8-41 cause by a party requesting a reconsideration. Upon a finding by the

8-42 commission that the market for a service previously found not to have

8-43 effective competition has become effectively competitive, the commission

9-1 shall repeal the regulations which established the pricing methods and the

9-2 terms and conditions for providing that service. The commission shall

9-3 conduct any proceedings for the reconsideration of any such determination

9-4 as expeditiously as practicable considering the current work load of the

9-5 commission and the need to protect the public interest.

9-6 [8.] 7. A vertically integrated electric utility shall not provide a

9-7 potentially competitive service except through an affiliate:

9-8 (a) On or after [December 31, 1999;] March 1, 2000; or

9-9 (b) The date on which the commission determines that the service is

9-10 potentially competitive,

9-11 whichever is later.

9-12 Sec. 13. NRS 704.977 is hereby amended to read as follows:

9-13 704.977 1. It is unlawful for an alternative seller to sell any electric

9-14 service to a customer for consumption within this state without having first

9-15 obtained a license from the commission to do so.

9-16 2. [Not later than January 1, 1999, or any different date as determined

9-17 by the commission pursuant to NRS 704.976, as appropriate, the] The

9-18 commission shall by regulation set forth the procedures and conditions that

9-19 alternative sellers must satisfy to obtain a license to sell any electric

9-20 services to a customer in this state, including, but not limited to, procedures

9-21 and conditions relating to:

9-22 (a) Safety and reliability of service;

9-23 (b) Financial and operational fitness; and

9-24 (c) Billing practices and customer service, including the initiation and

9-25 termination of service.

9-26 3. If, after reviewing the application of an alternative seller for a

9-27 license, the commission finds that the applicant is qualified to be an

9-28 alternative seller, the commission shall issue a license to the applicant.

9-29 4. The commission may deny the application of an applicant for a

9-30 license to operate as an alternative seller and may limit, suspend or revoke

9-31 a license issued to an alternative seller if the action is necessary to protect

9-32 the interests of the public or to enforce the provisions of NRS 704.965 to

9-33 704.990, inclusive, and sections 3 to 6, inclusive, of this act, or a

9-34 regulation of the commission.

9-35 5. In determining whether an applicant is qualified for a license,

9-36 whether to deny an application for a license to operate as an alternative

9-37 seller or whether to limit, suspend or revoke a license issued to an

9-38 alternative seller, the commission may consider whether the applicant for or

9-39 holder of the license, or any affiliate thereof, has engaged in any activities

9-40 which are inconsistent with effective competition.

9-41 6. A city, county or other local governmental entity or a public utility,

9-42 or any affiliate thereof, which is authorized to provide electric service

9-43 within the State of Nevada and which has an annual operating revenue of

10-1 less than $250,000,000, [is] becomes subject to the provisions of NRS

10-2 704.965 to 704.990, inclusive, and sections 3 to 6, inclusive, of this act,

10-3 and any regulations adopted [by the commission that are in effect]

10-4 pursuant thereto, on the date on which the city, county or other local

10-5 governmental entity or a public utility, or an affiliate thereof:

10-6 (a) Applies to obtain a license as an alternative seller; or

10-7 (b) Directly or indirectly attempts to provide, or act on behalf of an

10-8 alternative seller in the provision of, electric service in the territory served

10-9 by another city, county or other local governmental entity or public utility,

10-10 or an affiliate thereof, unless the city, county or other local governmental

10-11 entity or public utility, or an affiliate thereof, is otherwise required or

10-12 permitted by specific statute to provide such service.

10-13 7. Notwithstanding the provisions of subsection 6, a city, county or

10-14 other local governmental entity or a public utility, or any affiliate thereof,

10-15 does not become subject to the provisions of NRS 704.965 to 704.990,

10-16 inclusive, and sections 3 to 6, inclusive, of this act, or any regulations

10-17 adopted pursuant thereto, solely because the city, county or other local

10-18 governmental entity or a public utility, or any affiliate thereof, provides

10-19 transmission or distribution services to an alternative seller pursuant to a

10-20 contract, tariff or requirement of any state or federal law, except that the

10-21 city, county or other local governmental entity or public utility, or an

10-22 affiliate thereof, shall provide such transmission and distribution services

10-23 on an open and nondiscriminatory basis to alternative sellers in accordance

10-24 with such standards as the commission may establish by regulation for the

10-25 provision of transmission and distribution services in accordance with this

10-26 subsection.

10-27 8. Regulations adopted pursuant to subsection 2:

10-28 (a) Must not be unduly burdensome;

10-29 (b) Must not unnecessarily delay or inhibit the initiation and

10-30 development of competition for any service in any market; and

10-31 (c) May establish different requirements for licensing alternative sellers

10-32 of:

10-33 (1) Different services; or

10-34 (2) Similar services to different classes of customers,

10-35 whenever such different requirements are appropriate to carry out the

10-36 provisions of NRS 704.965 to 704.990, inclusive [.] , and sections 3 to 6,

10-37 inclusive, of this act.

10-38 9. An alternative seller may combine two or more customers or any

10-39 group of customers to provide aggregation service. The commission may

10-40 not limit the ability of:

10-41 (a) An alternative seller to combine customers to provide aggregation

10-42 service; or

11-1 (b) Customers to form groups to obtain aggregation service from

11-2 alternative sellers.

11-3 Sec. 14. NRS 704.978 is hereby amended to read as follows:

11-4 704.978 1. The commission shall prohibit a provider of a

11-5 noncompetitive service from providing a potentially competitive service,

11-6 except through an affiliate of the provider.

11-7 2. The commission shall require each provider of a noncompetitive

11-8 service that is necessary to the provision of a potentially competitive

11-9 service to make its facilities or services available to all alternative sellers on

11-10 equal and nondiscriminatory terms and conditions.

11-11 3. In providing a potentially competitive service, an affiliate of a

11-12 provider of a noncompetitive service may use the name or logo, or both,

11-13 of the provider of noncompetitive service.

11-14 Sec. 15. NRS 704.981 is hereby amended to read as follows:

11-15 704.981 1. An electric distribution utility shall provide all

11-16 noncompetitive services within its territory unless the commission

11-17 authorizes another entity to provide the noncompetitive service.

11-18 2. A noncompetitive service is subject to NRS 704.001 to 704.655,

11-19 inclusive, 704.701 to 704.751, inclusive, and 704.800 to 704.900,

11-20 inclusive.

11-21 3. The component rates for noncompetitive services established by

11-22 the commission pursuant to NRS 704.986 must be used by customers

11-23 who elect to receive competitive or potentially competitive services from

11-24 alternative sellers or from the Colorado River Commission pursuant to

11-25 NRS 704.987.

11-26 4. The commission shall adopt regulations for noncompetitive services

11-27 that allow innovative pricing methods for noncompetitive services upon a

11-28 finding that the innovative pricing, when compared to pricing of services

11-29 provided pursuant to subsections 1 and 2, improves the performance of the

11-30 service or lowers the cost of the service to the customer, or both. The

11-31 regulations for innovative pricing must specify:

11-32 (a) The provisions that must be included in a plan of innovative pricing;

11-33 (b) The procedures for submitting an innovative plan for pricing to the

11-34 commission for approval and implementation; and

11-35 (c) Which provisions of this chapter do not apply to pricing changes that

11-36 are made during the period in which the innovative pricing plan is in effect.

11-37 [4.] 5. The commission shall adopt regulations which ensure that a

11-38 person who owns a transmission or distribution facility, or both, or a

11-39 facility that provides access to a competitive service shall make the

11-40 facilities available on equal and nondiscriminatory terms and conditions to

11-41 all alternative sellers or to the customers of the alternative sellers, or both,

11-42 as the commission may determine.

12-1 Sec. 16. NRS 704.982 is hereby amended to read as follows:

12-2 704.982 1. The commission shall designate a vertically integrated

12-43 limitation set forth in this subsection is effective until 2 years after the date

13-1 upon which, in accordance with NRS 704.976, the commission repeals the

13-2 regulations which established the pricing method for that service and the

13-3 terms and conditions for providing that service.

13-4 6. The commission may, in accordance with NRS 704.110, 704.120

13-5 and 704.130, approve an increase in the rate charged for residential service

13-6 provided pursuant to subsection 1 in an amount that does not exceed the

13-7 increase necessitated, if any, to ensure the recovery by the vertically

13-8 integrated electric utility of its just and reasonable costs. The provisions of

13-9 this section do not limit or prohibit in any manner the operation of any

13-10 order issued by the commission before July 1, 1997.]

13-11 6. Except upon the application of the designated provider to reduce

13-12 the total rate for any class of customers pursuant to section 4 of this act,

13-13 the commission shall not initiate or conduct any proceedings to adjust

13-14 the rates, earnings, rate base or rate of return of the designated provider

13-15 of electric service during the period in which the provider is providing

13-16 that service to customers pursuant to this section.

13-17 Sec. 17. NRS 704.982 is hereby amended to read as follows:

13-18 704.982 1. The commission shall designate [a vertically integrated

13-19 electric utility or its successor] an electric distribution utility to provide

13-20 electric service to customers who are unable to obtain electric service from

13-21 an alternative seller or who fail to select an alternative seller. The provider

13-22 so designated by the commission is obligated to provide electric service to

13-23 the customers. Electric service provided by the utility pursuant to this

13-24 section shall be deemed to be a noncompetitive service for which the utility

13-25 may recover its costs pursuant to NRS 704.001 to 704.655, inclusive,

13-26 704.701 to 704.751, inclusive, and 704.800 to 704.900, inclusive.

13-27 2. [The rate that the provider must charge a customer for the provision

13-28 of electric service pursuant to subsection 1 is the rate established for that

13-29 class of customer by the commission pursuant to section 4 of this act.

13-30 3.] Upon a finding by the commission that the public interest will be

13-31 promoted, the commission may prescribe alternate methods for providing

13-32 electric service to those customers described in subsection 1. The alternate

13-33 methods may include, but are not limited to, the direct assignment of

13-34 customers to alternative sellers or other electric distribution utilities or a

13-35 process of competitive bidding for the right to provide electric service to

13-36 the designated customers, including, without limitation, an auction

13-37 conducted pursuant to section 6 of this act. [Any alternate methods

13-38 prescribed by the commission pursuant to this subsection may not go into

13-39 effect before July 1, 2001.

13-40 4.] 3. The commission shall establish minimum terms and conditions

13-41 under which electric service must be provided pursuant to this section,

13-42 including a minimum period during which a customer must be obligated to

13-43 pay for the electric service from the assigned provider. The price charged

14-1 for electric service for a particular group of customers must reflect the

14-2 incremental cost of serving the group. A customer who has obtained

14-3 generation, aggregation or any other potentially competitive service from

14-4 an alternative seller [after March 1, 2000,] for at least 30 continuous days

14-5 may reacquire service from the designated provider pursuant to tariffs

14-6 approved by the commission.

14-7 [5.] 4. If the designated provider of the electric service pursuant to

14-8 subsection 1 is [a vertically integrated] an electric distribution utility, the

14-9 utility shall provide the electric service [on or after July 1, 2001,] only

14-10 through an affiliate whose sole business activity is the provision of electric

14-11 service.

14-12 [6. The commission shall not initiate or conduct any proceedings to

14-13 adjust the rates, earnings, rate base or rate of return of the designated

14-14 provider of electric service during the period in which the provider is

14-15 providing that service to customers pursuant to this section.]

14-16 Sec. 18. NRS 704.983 is hereby amended to read as follows:

14-17 704.983 1. The commission shall determine the recoverable costs

14-18 associated with assets and obligations that are documented in the

14-19 accounting records of a vertically integrated electric utility and its

14-20 successor electric distribution utility and that are properly allocable to a

14-21 particular potentially competitive service as of the date on which alternative

14-22 sellers of similar potentially competitive services begin providing such

14-23 service to customers in this state. Shareholders of the vertically integrated

14-24 electric utility must be compensated fully for all such costs determined by

14-25 the commission. [In] Except as otherwise provided in section 3 of this act,

14-26 in determining the recoverable costs, the commission shall take into

14-27 account:

14-28 (a) The extent to which the utility was legally required to incur the costs

14-29 of the assets and obligations . [;]

14-30 (b) The extent to which the market value of the assets and obligations of

14-31 the utility, relating to the provision of potentially competitive services,

14-32 exceeds the costs of the assets and obligations . [;]

14-33 (c) [The] Except as otherwise provided in this paragraph, the

14-34 effectiveness of the efforts of the utility to increase the market value and

14-35 realize the market value of any assets, and to decrease the costs of any

14-36 obligations, associated with the provision of potentially competitive

14-37 services . [;] If a utility purchases generation services pursuant to the

14-38 approval of the appropriate governmental agencies to meet its obligations

14-39 to provide electric service pursuant to NRS 704.982 from a generation

14-40 unit that the utility has divested, the commission shall not impute a value

14-41 to the generation unit other than the sales price of the unit.

15-1 (d) The extent to which the rates previously established by the

15-2 commission have compensated shareholders for the risk of not recovering

15-3 the costs of the assets and obligations . [;]

15-4 (e) The effects of the difference between the market value and the cost,

15-5 including, without limitation, tax considerations, for the assets and

15-6 obligations . [; and]

15-7 (f) If the utility had the discretion to determine whether to incur or

15-8 mitigate the costs, the conduct of the utility with respect to the costs of the

15-9 assets and obligations when compared to other utilities with similar

15-10 obligations to serve the public.

15-11 2. For the purposes of this section, the commission may impose a

15-12 procedure for the direct and unavoidable recovery from ratepayers of the

15-13 portion of the past costs which are determined by the commission to be

15-14 owed by the ratepayers. The procedure must include a determination of the

15-15 period over which the recovery may occur and include the authority for the

15-16 commission to assess charges on those customers on whose behalf the

15-17 vertically integrated electric utility incurred costs who are no longer

15-18 receiving transmission or distribution service, or both, from the vertically

15-19 integrated electric utility. Such determinations and procedures must not

15-20 discriminate against a participant in the market.

15-21 3. Failure by a utility to minimize, in a reasonable and prudent

15-22 manner, federal taxes resulting from the offsetting of gains and losses of

15-23 assets and obligations properly allocable to a potentially competitive

15-24 service must be considered by the commission in determining the

15-25 recoverable costs for the utility.

15-26 Sec. 19. NRS 704.984 is hereby amended to read as follows:

15-27 704.984 A vertically integrated electric utility shall take such

15-31 by alternative sellers. In determining the recoverable costs of the

15-32 vertically integrated electric utility pursuant to NRS 704.983, the

15-33 commission shall consider any reasonable costs incurred by the vertically

15-34 integrated electric utility pursuant to this section, including, without

15-35 limitation, the costs for severance pay, retraining, job placement and

15-36 early retirement for employees of the vertically integrated electric utility.

15-37 Sec. 20. NRS 704.997 is hereby amended to read as follows:

15-38 704.997 1. Upon the receipt of a specific request for an exemption by

15-39 a public utility that supplies natural gas, the commission may, to the extent

15-40 it deems necessary, exempt any service offered by the public utility from

15-41 the strict application of one or more provisions of this chapter. Such an

15-42 exemption may be made only upon a determination by the commission,

16-1 after notice and an opportunity for a hearing, that the service is competitive,

16-2 discretionary or potentially competitive.

16-3 2. The commission shall adopt regulations necessary to establish an

16-4 alternative plan of regulation of a public utility that supplies natural gas and

16-5 that is otherwise subject to regulation pursuant to the provisions of this

16-6 chapter. The alternative plan may include, but is not limited to, provisions

16-7 that:

16-8 (a) Allow adjustment of the rates charged by the public utility during the

16-9 period in which the utility elects the alternative plan of regulation.

16-10 (b) Specify the provisions of this chapter that do not apply to a public

16-11 utility which elects to be regulated under the alternative plan.

16-12 (c) Provide for flexibility of pricing for services that are discretionary,

16-13 competitive or potentially competitive.

16-14 3. A public utility that elects to be regulated under the alternative plan

16-15 established pursuant to this section is not subject to the remaining

16-16 provisions of this chapter to the extent specified pursuant to this section.

16-17 4. In providing a potentially competitive service, an affiliate of a

16-18 provider of a noncompetitive service may use the name or logo, or both,

16-19 of the provider of noncompetitive service.

16-20 5. It is unlawful for an alternative seller to sell any service relating to

16-21 the supply of natural gas to a customer for his consumption within this state

16-22 without first having obtained a license from the commission to do so.

16-23 Sec. 21. If, in accordance with NRS 704.976, the public utilities

16-24 commission of Nevada determines that a date other than March 1, 2000, on

16-25 which customers may begin obtaining generation, aggregation, metering,

16-26 billing and other potentially competitive services from alternative sellers, is

16-27 necessary to protect the public interest, the commission shall, not later than

16-28 December 1, 1999, provide a report to the director of the legislative

16-29 counsel bureau for transmittal to the legislature, or the legislative

16-30 commission if the legislature is not in session. The report must contain the

16-31 reasons for the commission’s determination that the different date is

16-32 necessary and a new proposed date on which the commission believes that

16-33 it would be appropriate for customers to begin obtaining generation,

16-34 aggregation, metering, billing and other potentially competitive services.

16-35 Sec. 22. On or before March 1, 2000, the commission shall, for the

16-36 purposes of NRS 704.986, establish for each class of customers of electric

16-37 service in this state the rate for each component and a total rate for electric

16-38 services for customers based on the cost to provide electric service to each

16-39 class of customers in this state. The total rate established for each class of

16-40 customers pursuant to this section must be the same as the total rate for

16-41 each class of customers that is in effect on July 1, 1999.

17-1 Sec. 23. On or before March 1, 2000, a vertically integrated electric

17-2 utility may negotiate and enter into a contract with a customer for the

17-3 provision of electric service, but no such contract is effective before
17-4 March 1, 2000.

17-5 Sec. 24. This act must not be construed to impair any existing rights

17-6 under contracts for electric service in effect on June 1, 1999.

17-7 Sec. 25. This act must not be construed to impair any existing rights

17-8 under any labor agreement to which a vertically integrated electric utility or

17-9 its successor electric distribution utility or an affiliate thereof is a party on

17-10 July 1, 1999.

17-11 Sec. 26. 1. This section and sections 1 to 6, inclusive, 9 to 16,

17-12 inclusive, 18 to 23, inclusive, 25 and 27 of this act become effective on

17-13 July 1, 1999.

17-14 2. Section 24 becomes effective upon passage and approval.

17-15 3. Sections 7 and 8 of this act become effective on October 1, 1999.

17-16 4. Sections 4 and 16 expire by limitation on March 1, 2003.

17-17 5. Section 5 expires by limitation on September 1, 2003.

17-18 6. Section 17 becomes effective on March 1, 2003.

17-19 Sec. 27. If the pending merger between Sierra Pacific Resources and

17-20 Nevada Power Company, referred to in the records of the Public Utilities

17-21 Commission of Nevada as Docket No. 98-7023, is terminated for any

17-22 reason before the completion of the merger, this act expires by limitation on

17-23 the date on which the pending merger is terminated.