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,

2-1 704A, 705, 708 and 711 of NRS. The commission shall prescribe by

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

2-3 the commission.

2-4 Sec. 2. Chapter 704 of NRS is hereby amended by adding thereto the

2-5 provisions set forth as sections 3 to 6, inclusive, of this act.

2-6 Sec. 3. 1. A vertically integrated electric utility that is in existence

2-7 on January 1, 1999, or its successor electric distribution utility or any

2-8 assignee of the utility shall comply with the terms of any existing

2-9 obligations for the purchase of power.

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. The provisions of this section must not be construed to allow the

2-35 commission, by direct or indirect action, to modify or terminate any

2-36 obligation for the purchase of power in effect on June 1, 1999.

2-37 Sec. 4. The commission shall, for each class of customers of electric

2-38 service in this state, establish a total rate for the components of electric

2-39 service that are necessary to provide electric service to customers in this

2-40 state pursuant to subsection 1 of NRS 704.982. The total rate for each

2-41 class must be established at and must not exceed the total rate for each

2-42 class of customers of electric service in this state which is in effect on

2-43 July 1, 1999, except that the commission shall modify the rates to

3-1 account for the effects of any decisions by the commission relating to any

3-2 cases filed with the commission before October 1, 1999, which involve

3-3 the use of deferred accounting. Upon approval by the commission, the

3-4 provider designated pursuant to subsection 1 of NRS 704.982 may reduce

3-5 the total rate for any class of customers. The total rates established

3-6 pursuant to this subsection do not apply to any customer who obtains

3-7 generation, aggregation or any other potentially competitive service from

3-8 an alternative seller.

3-9 Sec. 5. 1. The provider of electric service designated pursuant to

3-10 subsection 1 of NRS 704.982 is entitled to recover only from the gain, if

3-11 any, from the sale by the provider of its generation assets any shortfall

3-12 during the period commencing on March 1, 2000, or such other date that

3-13 is determined to be in the public interest by the governor pursuant to

3-14 NRS 704.976, and ending on March 1, 2003, that results from the netting

3-15 of any difference between:

3-16 (a) The revenues generated by the total rates charged to all classes of

3-17 customers pursuant to section 4 of this act; and

3-18 (b) The total cost incurred by the provider to provide that service to all

3-19 classes of customers.

3-20 2. Upon approval of the amount of the net shortfall, if any, the

3-21 commission shall authorize the designated provider to recover that

3-22 amount from the gain if any, on the sale of its generation assets, after the

3-23 deduction of any taxes.

3-24 3. As used in this section, "total cost incurred by the provider" means

3-25 the total revenues generated by all classes by the rates in effect on July 1,

3-26 1999, as adjusted to account for the effects of any decision of the

3-27 commission relating to any cases filed with the commission before

3-28 October 1, 1999, which involve the use of deferred accounting.

3-29 Sec. 6. 1. At any time after July 1, 2001, a licensed alternative

3-30 seller may submit to the commission an offer to provide electric service

3-31 that is being provided by the provider designated pursuant to subsection 1

3-32 of NRS 704.982. The offer must:

3-33 (a) Request to serve at least 10 percent of the load of the provider

3-34 designated pursuant to subsection 1 of NRS 704.982;

3-35 (b) Provide that the service will be provided by the alternative seller to

3-36 more than one class of customers; and

3-37 (c) Provide that there will be a discount of 5 percent off the rate

3-38 prescribed in subsection 2 of NRS 704.982.

3-39 2. Upon the receipt of such an offer, the commission may conduct an

3-40 auction if the commission determines that it is in the public interest to

3-41 conduct such an auction. If the commission determines that such an

3-42 auction is in the public interest, the commission shall conduct the

3-43 auction as soon as practicable. The commission shall determine the

4-1 terms and conditions for continued service by the successful bidder at the

4-2 auction. Any licensed alternative seller or affiliate of an electric

4-3 distribution utility may submit a bid. Bidding must be done by sealed bid.

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

4-5 megawatts or megawatt hours, of the load of the provider designated

4-6 pursuant to subsection 1 of NRS 704.982.

4-7 3. The commission shall review the bids. If the successful bidder is

4-8 an alternative seller or an affiliate of an electric distribution utility other

4-9 than the electric distribution utility that provided the service before the

4-10 auction, the successful bidder becomes the provider of the service for the

4-11 percentage of the load as indicated in its bid. For the remainder of the

4-12 load that is not awarded to a successful bidder, the electric distribution

4-13 utility which provided service to the customers before the auction

4-14 remains the provider of the service, and that service must continue to be

4-15 provided under the same terms and conditions as existed for the

4-16 provision of that service by the electric distribution utility immediately

4-17 before the auction.

4-18 Sec. 7. NRS 704.110 is hereby amended to read as follows:

4-19 704.110 Except as otherwise provided in NRS 704.075 or as otherwise

4-20 provided by the commission pursuant to NRS 704.095 or 704.097:

4-21 1. Whenever there is filed with the commission any schedule stating a

4-22 new or revised individual or joint rate or charge, or any new or revised

4-23 individual or joint regulation or practice affecting any rate or charge, or any

4-24 schedule resulting in a discontinuance, modification or restriction of

4-25 service, the commission may, upon complaint or upon its own motion

4-26 without complaint, at once, without answer or formal pleading by the

4-27 interested utility, investigate or, upon reasonable notice, conduct a hearing

4-28 concerning the propriety of the rate, charge, classification, regulation,

4-29 discontinuance, modification, restriction or practice.

4-30 2. Pending the investigation or hearing and the decision thereon, the

4-31 commission, upon delivering to the utility affected thereby a statement in

4-32 writing of its reasons for the suspension, may suspend the operation of the

4-33 schedule and defer the use of the rate, charge, classification, regulation,

4-34 discontinuance, modification, restriction or practice, but not for more than

4-35 150 days beyond the time when the rate, charge, classification, regulation,

4-36 discontinuance, modification, restriction or practice would otherwise go

4-37 into effect.

4-38 3. Whenever there is filed with the commission any schedule stating an

4-39 increased individual or joint rate or charge for service or equipment, the

4-40 public utility shall submit with its application a statement showing the

4-41 recorded results of revenues, expenses, investments and costs of capital for

4-42 its most recent 12 months for which data were available when the

4-43 application was prepared. During any hearing concerning the increased

5-1 rates or charges determined by the commission to be necessary, the

5-2 commission shall consider evidence in support of the increased rates or

5-3 charges based upon actual recorded results of operations for the same 12

5-4 months, adjusted for increased revenues, any increased investment in

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

5-6 expenses as approved by the commission and changes in the costs of

5-7 securities which are known and are measurable with reasonable accuracy at

5-8 the time of filing and which will become effective within 6 months after the

5-9 last month of those 12 months, but no new rates or charges may be placed

5-10 into effect until the changes have been experienced and certified by the

5-11 utility to the commission. The commission shall also consider evidence

5-12 supporting expenses for depreciation, calculated on an annual basis,

5-13 applicable to major components of the public utility’s plant placed into

5-14 service during the recorded test period or the period for certification as set

5-15 forth in the application. Adjustments to revenues, operating expenses and

5-16 costs of securities must be calculated on an annual basis. Within 90 days

5-17 after the filing with the commission of the certification required in this

5-18 subsection, or before the expiration of any period of suspension ordered

5-19 pursuant to subsection 2, whichever time is longer, the commission shall

5-20 make such order in reference to those rates or charges as is required by this

5-21 chapter.

5-22 4. After full investigation or hearing, whether completed before or after

5-23 the date upon which the rate, charge, classification, regulation,

5-24 discontinuance, modification, restriction or practice is to go into effect, the

5-25 commission may make such order in reference to the rate, charge,

5-26 classification, regulation, discontinuance, modification, restriction or

5-27 practice as would be proper in a proceeding initiated after the rate, charge,

5-28 classification, regulation, discontinuance, modification, restriction or

5-29 practice has become effective.

5-30 5. [Whenever an application is filed by a public utility for an increase

5-31 in any rate or charge based upon increased costs in the purchase of fuel or

5-32 power, and the public utility has elected to use deferred accounting for

5-33 costs of the purchase of fuel or power in accordance with the commission’s

5-34 regulations, the commission, by appropriate order after a public hearing,

5-35 shall allow the public utility to clear the deferred account not more often

5-36 than every 6 months by refunding any credit balance or recovering any

5-37 debit balance over a period not to exceed 1 year as determined by the

5-38 commission. The commission shall not allow a recovery of a debit balance

5-39 or any portion thereof in an amount which would result in a rate of return in

5-40 excess of the rate of return most recently granted the public utility.

5-41 6.] Except as otherwise provided in subsection [7,] 6, whenever a

5-42 general rate application for an increased rate or charge for, or classification,

5-43 regulation, discontinuance, modification, restriction or practice involving

6-1 service or equipment has been filed with the commission, a public utility

6-2 shall not submit another general rate application until all pending general

6-3 rate applications for increases in rates submitted by that public utility have

6-4 been decided unless, after application and hearing, the commission

6-5 determines that a substantial financial emergency would exist if the other

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

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

6-8 increased cost of purchased fuel, purchased power, or natural gas

6-9 purchased for resale more often than once every 30 days.

6-10 [8.] 7. A utility facility identified in a 3-year plan submitted pursuant

6-11 to NRS 704.741 and accepted by the commission for acquisition or

6-12 construction pursuant to NRS 704.751 and the regulations adopted pursuant

6-13 thereto shall be deemed to be a prudent investment. The utility may recover

6-14 all just and reasonable costs of planning and constructing such a facility.

6-15 Sec. 8. NRS 704.185 is hereby amended to read as follows:

6-16 704.185 1. A public utility which purchases [fuel, including] natural

6-17 gas for resale [, or power] may record upon its books and records all cost

6-18 increases or decreases in [fuels or purchased power] the natural gas

6-19 purchased for resale in deferred accounts. Any public utility which utilizes

6-20 deferred accounting to reflect changes in costs of [fuels and purchased

6-21 power] natural gas purchased for resale shall include in its annual report

6-22 to the commission a statement showing the allocated rate of return for each

6-23 of its operating departments in Nevada which uses deferred accounting.

6-24 2. If the rate of return for any department using deferred accounting is

6-25 greater than the rate of return allowed by the commission in the last rate

6-26 proceeding, the commission shall order the utility which recovered any

6-27 [deferred fuel and purchased power] costs of natural gas purchased for

6-28 resale through rates during the reported period to transfer to the next

6-29 energy adjustment period that portion of such recovered amounts which

6-30 exceeds the authorized rate of return.

6-31 Sec. 9. NRS 704.965 is hereby amended to read as follows:

6-32 704.965 As used in NRS 704.965 to 704.990, inclusive, and sections 3

6-33 to 6, inclusive, of this act, unless the context otherwise requires, the words

6-34 and terms defined in NRS 704.966 to 704.975, inclusive, have the

6-35 meanings ascribed to them in those sections.

6-36 Sec. 10. NRS 704.970 is hereby amended to read as follows:

6-37 704.970 "Electric distribution utility" means a utility that is in the

6-38 business of supplying noncompetitive electric distribution or transmission

6-39 service, or both, or a noncompetitive service pursuant to NRS 704.982, on

6-40 or after [July 1, 1999, or the date on which alternative sellers are authorized

6-41 to provide potentially competitive services to customers in this state, as

6-42 appropriate.] March 1, 2000, or such other date that is determined to be

6-43 in the public interest by the governor pursuant to NRS 704.976.

7-1 Sec. 11. NRS 704.975 is hereby amended to read as follows:

7-2 704.975 1. "Vertically integrated electric utility" means any public

7-3 utility in the business of supplying electricity or its successor in interest

7-4 that, as of December 31, 1996:

7-5 (a) Held a certificate of public convenience and necessity issued

7-6 pursuant to NRS 704.005 to 704.731, inclusive; and

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

7-8 Nevada.

7-9 2. The term does not include a cooperative association or nonprofit

7-10 corporation or association or other provider of electric service, which is

7-11 declared to be a public utility pursuant to NRS 704.673 and provides

7-12 service only to its members.

7-13 Sec. 12. NRS 704.976 is hereby amended to read as follows:

7-14 704.976 1. The date upon which customers may begin obtaining

7-15 generation, aggregation , metering, billing and any other potentially

7-16 competitive services from an alternative seller must be no later than

7-17 [December 31, 1999,] March 1, 2000, unless the governor, after

7-18 consultation with the commission , determines that a different date is

7-19 necessary to protect the public interest. [If the commission determines that

7-20 a different date is necessary, the commission shall provide a report to the

7-21 director of the legislative counsel bureau for transmittal to the legislature by

7-22 February 1, 1999, which:

7-23 (a) Explains the reason that the commission has not granted such an

7-24 authorization; and

7-25 (b) States whether the commission will grant such an authorization by

7-26 December 31, 1999.]

7-27 2. The commission may:

7-28 (a) Establish different dates for the provision of different services by

7-29 alternative sellers in different geographic areas; and

7-30 (b) Authorize, in gradual phases, the right of customers to buy from

7-31 alternative sellers.

7-32 3. The commission shall determine that an electric service is a

7-33 potentially competitive service if provision of the service by alternative

7-34 sellers:

7-35 (a) Will not harm any class of customers;

7-36 (b) Will decrease the cost of providing the service to customers in this

7-37 state or increase the quality or innovation of the service to customers in this

7-38 state;

7-39 (c) Is a service for which effective competition in the market is likely to

7-40 develop;

7-41 (d) Will advance the competitive position of this state relative to

7-42 surrounding states; and

8-1 (e) Will not otherwise jeopardize the safety and reliability of the electric

8-2 service in this state.

8-3 4. If the commission determines that a market for a potentially

8-4 competitive service does not have effective competition, the commission

8-5 shall, by regulation, establish the method for determining prices for the

8-6 service and the terms and conditions for providing the service. The

8-7 regulations must ensure that the pricing method, terms and conditions are

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

8-9 include pricing alternatives which authorize the seller to reduce prices

8-10 below maximum pricing levels specified by the commission or any other

8-11 form of alternative pricing which the commission determines to be

8-12 consistent with the provisions of this subsection. In determining whether a

8-13 market for an electric service has effective competition, the commission

8-14 shall:

8-15 (a) Identify the relevant market;

8-16 (b) Identify, where feasible, the alternative sellers that participate and

8-17 are reasonably expected to participate in the relevant market; and

8-18 (c) Calculate, where feasible, the market share of each participant in the

8-19 market and evaluate the significance of each share.

8-20 5. On [or before October 1, 2000, the commission shall submit to the

8-21 director of the legislative counsel bureau for transmittal to the appropriate

8-22 legislative committee a report which:

8-23 (a) Evaluates the effectiveness of competition in the market for each

8-24 service which customers have the right to purchase from alternative sellers;

8-25 and

8-26 (b) Recommends actions which the legislature should take to increase

8-27 the effectiveness of competition in the markets for all potentially

8-28 competitive services.

8-29 6. On] or before October 1, 2001, an electric service that has been

8-30 found on or before that date to be potentially competitive shall be deemed

8-31 to be competitive.

8-32 [7.] 6. The commission may reconsider any determination made

8-33 pursuant to this section upon its own motion or upon a showing of good

8-34 cause by a party requesting a reconsideration. Upon a finding by the

8-35 commission that the market for a service previously found not to have

8-36 effective competition has become effectively competitive, the commission

8-37 shall repeal the regulations which established the pricing methods and the

8-38 terms and conditions for providing that service. The commission shall

8-39 conduct any proceedings for the reconsideration of any such determination

8-40 as expeditiously as practicable considering the current work load of the

8-41 commission and the need to protect the public interest.

8-42 [8.] 7. A vertically integrated electric utility shall not provide a

8-43 potentially competitive service except through an affiliate [:

9-1 (a) On or after December 31, 1999; or

9-2 (b) The date on which the commission determines that the service is

9-3 potentially competitive,

9-4 whichever is later.] on or after March 1, 2000, or such other date that is

9-5 determined to be in the public interest by the governor pursuant to

9-6 subsection 1.

9-7 Sec. 13. NRS 704.977 is hereby amended to read as follows:

9-8 704.977 1. It is unlawful for an alternative seller to sell any electric

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

9-10 obtained a license from the commission to do so.

9-11 2. [Not later than January 1, 1999, or any different date as determined

9-12 by the commission pursuant to NRS 704.976, as appropriate, the] The

9-13 commission shall by regulation set forth the procedures and conditions that

9-14 alternative sellers must satisfy to obtain a license to sell any electric

9-15 services to a customer in this state, including, but not limited to, procedures

9-16 and conditions relating to:

9-17 (a) Safety and reliability of service;

9-18 (b) Financial and operational fitness; and

9-19 (c) Billing practices and customer service, including the initiation and

9-20 termination of service.

9-21 3. If, after reviewing the application of an alternative seller for a

9-22 license, the commission finds that the applicant is qualified to be an

9-23 alternative seller, the commission shall issue a license to the applicant.

9-24 4. The commission may deny the application of an applicant for a

9-25 license to operate as an alternative seller and may limit, suspend or revoke

9-26 a license issued to an alternative seller if the action is necessary to protect

9-27 the interests of the public or to enforce the provisions of NRS 704.965 to

9-28 704.990, inclusive, and sections 3 to 6, inclusive, of this act, or a

9-29 regulation of the commission.

9-30 5. In determining whether an applicant is qualified for a license,

9-31 whether to deny an application for a license to operate as an alternative

9-32 seller or whether to limit, suspend or revoke a license issued to an

9-33 alternative seller, the commission may consider whether the applicant for or

9-34 holder of the license, or any affiliate thereof, has engaged in any activities

9-35 which are inconsistent with effective competition.

9-36 6. A city, county or other local governmental entity or a public utility,

9-37 or any affiliate thereof, which is authorized to provide electric service

9-38 within the State of Nevada and which has an annual operating revenue of

9-39 less than $250,000,000, [is] becomes subject to the provisions of NRS

9-40 704.965 to 704.990, inclusive, and sections 3 to 6, inclusive, of this act,

9-41 and any regulations adopted [by the commission that are in effect]

9-42 pursuant thereto, on the date on which the city, county or other local

9-43 governmental entity or a public utility, or an affiliate thereof:

10-1 (a) Applies to obtain a license as an alternative seller; or

10-2 (b) Directly or indirectly attempts to provide, or act on behalf of an

10-3 alternative seller in the provision of, electric service in the territory served

10-4 by another city, county or other local governmental entity or public utility,

10-5 or an affiliate thereof, unless the city, county or other local governmental

10-6 entity or public utility, or an affiliate thereof, is otherwise required or

10-7 permitted by specific statute to provide such service.

10-8 7. Notwithstanding the provisions of subsection 6, a city, county or

10-9 other local governmental entity or a public utility, or any affiliate thereof,

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

10-11 inclusive, and sections 3 to 6, inclusive, of this act, or any regulations

10-12 adopted pursuant thereto, solely because the city, county or other local

10-13 governmental entity or a public utility, or any affiliate thereof, provides

10-14 transmission or distribution services to an alternative seller pursuant to a

10-15 contract, tariff or requirement of any state or federal law, except that the

10-16 city, county or other local governmental entity or public utility, or an

10-17 affiliate thereof, shall provide such transmission and distribution services

10-18 on an open and nondiscriminatory basis to alternative sellers in accordance

10-19 with such standards as the commission may establish by regulation for the

10-20 provision of transmission and distribution services in accordance with this

10-21 subsection.

10-22 8. Regulations adopted pursuant to subsection 2:

10-23 (a) Must not be unduly burdensome;

10-24 (b) Must not unnecessarily delay or inhibit the initiation and

10-25 development of competition for any service in any market; and

10-26 (c) May establish different requirements for licensing alternative sellers

10-27 of:

10-28 (1) Different services; or

10-29 (2) Similar services to different classes of customers,

10-30 whenever such different requirements are appropriate to carry out the

10-31 provisions of NRS 704.965 to 704.990, inclusive [.] , and sections 3 to 6,

10-32 inclusive, of this act.

10-33 9. An alternative seller may combine two or more customers or any

10-34 group of customers to provide aggregation service. The commission may

10-35 not limit the ability of:

10-36 (a) An alternative seller to combine customers to provide aggregation

10-37 service; or

10-38 (b) Customers to form groups to obtain aggregation service from

10-39 alternative sellers.

10-40 Sec. 14. NRS 704.978 is hereby amended to read as follows:

10-41 704.978 1. The commission shall prohibit a provider of a

10-42 noncompetitive service from providing a potentially competitive service,

10-43 except through an affiliate of the provider.

11-1 2. The commission shall require each provider of a noncompetitive

11-2 service that is necessary to the provision of a potentially competitive

11-3 service to make its facilities or services available to all alternative sellers on

11-4 equal and nondiscriminatory terms and conditions.

11-5 3. In providing a potentially competitive service, an affiliate of a

11-6 provider of a noncompetitive service may use the name or logo, or both,

11-7 of the provider of noncompetitive service.

11-8 Sec. 15. NRS 704.981 is hereby amended to read as follows:

11-9 704.981 1. An electric distribution utility shall provide all

11-10 noncompetitive services within its territory unless the commission

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

11-12 2. A noncompetitive service is subject to NRS 704.001 to 704.655,

11-13 inclusive, 704.701 to 704.751, inclusive, and 704.800 to 704.900,

11-14 inclusive.

11-15 3. The component rates for noncompetitive services established by

11-16 the commission pursuant to NRS 704.986 must be used by customers

11-17 who elect to receive competitive or potentially competitive services from

11-18 alternative sellers or from the Colorado River Commission pursuant to

11-19 NRS 704.987.

11-20 4. The commission shall adopt regulations for noncompetitive services

11-21 that allow innovative pricing methods for noncompetitive services upon a

11-22 finding that the innovative pricing, when compared to pricing of services

11-23 provided pursuant to subsections 1 and 2, improves the performance of the

11-24 service or lowers the cost of the service to the customer, or both. The

11-25 regulations for innovative pricing must specify:

11-26 (a) The provisions that must be included in a plan of innovative pricing;

11-27 (b) The procedures for submitting an innovative plan for pricing to the

11-28 commission for approval and implementation; and

11-29 (c) Which provisions of this chapter do not apply to pricing changes that

11-30 are made during the period in which the innovative pricing plan is in effect.

11-31 [4.] 5. The commission shall adopt regulations which ensure that a

11-32 person who owns a transmission or distribution facility, or both, or a

11-33 facility that provides access to a competitive service shall make the

11-34 facilities available on equal and nondiscriminatory terms and conditions to

11-35 all alternative sellers or to the customers of the alternative sellers, or both,

11-36 as the commission may determine.

11-37 Sec. 16. NRS 704.982 is hereby amended to read as follows:

11-38 704.982 1. The commission shall designate a vertically integrated

11-43 the customers. Electric service provided by the utility pursuant to this

12-1 section shall be deemed to be a noncompetitive service for which the utility

12-2 may recover its costs pursuant to NRS 704.001 to 704.655, inclusive,

12-3 704.701 to 704.751, inclusive, and 704.800 to 704.900, inclusive.

12-4 2. The rate that the designated provider of electric service must

12-5 charge a customer for the provision of electric service pursuant to

12-6 subsection 1 is the total rate established for that class of customer by the

12-7 commission pursuant to section 4 of this act.

12-8 3. Upon a finding by the commission that the public interest will be

12-9 promoted, the commission may prescribe alternate methods for providing

12-10 electric service to those customers described in subsection 1. The alternate

12-11 methods may include, but are not limited to, the direct assignment of

12-12 customers to alternative sellers or electric distribution utilities or a process

12-13 of competitive bidding for the right to provide electric service to the

12-14 designated customers [.

12-15 3.] , including, without limitation, an auction conducted pursuant to

12-16 section 6 of this act. Any alternate methods prescribed by the commission

12-17 pursuant to this subsection may not go into effect before July 1, 2001.

12-18 4. A customer who has obtained generation, aggregation or any

12-19 other potentially competitive service for at least 30 continuous days from

12-20 an alternative seller after March 1, 2000, or such other date that is

12-21 determined to be in the public interest by the governor pursuant to NRS

12-22 704.976, may reacquire service from the designated provider of electric

12-23 service pursuant to tariffs approved by the commission. The commission

12-24 shall establish minimum terms and conditions under which electric service

12-25 must be provided pursuant to this section, including a minimum period

12-26 during which a customer must be obligated to pay for the electric service

12-27 from the assigned provider. The price charged for electric service for a

12-28 particular group of customers must reflect the incremental cost of serving

12-29 the group.

12-30 [4.] 5. If the designated provider of the electric service pursuant to

12-31 subsection 1 is a vertically integrated electric utility, the utility shall

12-32 provide the electric service on or after July 1, 2001, only through an

12-33 affiliate whose sole business activity is the provision of electric service.

12-34 [5. Except as otherwise provided in this subsection and subsection 6,

12-35 the rate charged for residential service provided pursuant to subsection 1

12-36 must not exceed the rate charged for that service on July 1, 1997. The

12-37 limitation set forth in this subsection is effective until 2 years after the date

12-38 upon which, in accordance with NRS 704.976, the commission repeals the

12-39 regulations which established the pricing method for that service and the

12-40 terms and conditions for providing that service.

12-41 6. The commission may, in accordance with NRS 704.110, 704.120

12-42 and 704.130, approve an increase in the rate charged for residential service

12-43 provided pursuant to subsection 1 in an amount that does not exceed the

13-1 increase necessitated, if any, to ensure the recovery by the vertically

13-2 integrated electric utility of its just and reasonable costs. The provisions of

13-3 this section do not limit or prohibit in any manner the operation of any

13-4 order issued by the commission before July 1, 1997.]

13-5 6. Except upon the application of the designated provider to reduce

13-6 the total rate for any class of customers pursuant to section 4 of this act,

13-7 the commission shall not initiate or conduct any proceedings to adjust

13-8 the rates, earnings, rate base or rate of return of the designated provider

13-9 of electric service during the period in which the provider is providing

13-10 that service to customers pursuant to this section.

13-11 Sec. 17. NRS 704.982 is hereby amended to read as follows:

13-12 704.982 1. The commission shall designate [a vertically integrated

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

13-14 electric service to customers who are unable to obtain electric service from

13-15 an alternative seller or who fail to select an alternative seller. The provider

13-16 so designated by the commission is obligated to provide electric service to

13-17 the customers. Electric service provided by the utility pursuant to this

13-18 section shall be deemed to be a noncompetitive service for which the utility

13-19 may recover its costs pursuant to NRS 704.001 to 704.655, inclusive,

13-20 704.701 to 704.751, inclusive, and 704.800 to 704.900, inclusive.

13-21 2. [The rate that the designated provider of electric service must charge

13-22 a customer for the provision of electric service pursuant to subsection 1 is

13-23 the total rate established for that class of customer by the commission

13-24 pursuant to section 4 of this act.

13-25 3.] Upon a finding by the commission that the public interest will be

13-26 promoted, the commission may prescribe alternate methods for providing

13-27 electric service to those customers described in subsection 1. The alternate

13-28 methods may include, but are not limited to, the direct assignment of

13-29 customers to alternative sellers or other electric distribution utilities or a

13-30 process of competitive bidding for the right to provide electric service to

13-31 the designated customers, including, without limitation, an auction

13-32 conducted pursuant to section 6 of this act. [Any alternate methods

13-33 prescribed by the commission pursuant to this subsection may not go into

13-34 effect before July 1, 2001.

13-35 4.] 3. A customer who has obtained generation, aggregation or any

13-36 other potentially competitive service for at least 30 continuous days from

13-37 an alternative seller [after March 1, 2000, or such other date that is

13-38 determined to be in the public interest by the governor pursuant to NRS

13-39 704.976,] may reacquire service from the designated provider of electric

13-40 service pursuant to tariffs approved by the commission. The commission

13-41 shall establish minimum terms and conditions under which electric service

13-42 must be provided pursuant to this section, including a minimum period

13-43 during which a customer must be obligated to pay for the electric service

14-1 from the assigned provider. The price charged for electric service for a

14-2 particular group of customers must reflect the incremental cost of serving

14-3 the group.

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

14-5 subsection 1 is [a vertically integrated] an electric distribution utility, the

14-6 utility shall provide the electric service [on or after July 1, 2001,] only

14-7 through an affiliate whose sole business activity is the provision of electric

14-8 service.

14-9 [6. Except upon the application of the designated provider to reduce

14-10 the total rate for any class of customers pursuant to section 4 of this act, the

14-11 commission shall not initiate or conduct any proceedings to adjust the rates,

14-12 earnings, rate base or rate of return of the designated provider of electric

14-13 service during the period in which the provider is providing that service to

14-14 customers pursuant to this section.]

14-15 Sec. 18. NRS 704.983 is hereby amended to read as follows:

14-16 704.983 1. The commission shall determine the recoverable costs

14-17 associated with assets and obligations that are documented in the

14-18 accounting records of a vertically integrated electric utility and its

14-19 successor electric distribution utility and that are properly allocable to a

14-20 particular potentially competitive service as of the date on which alternative

14-21 sellers of similar potentially competitive services begin providing such

14-22 service to customers in this state. Shareholders of the vertically integrated

14-23 electric utility must be compensated fully for all such costs determined by

14-24 the commission. [In] Except as otherwise provided in section 3 of this act,

14-25 in determining the recoverable costs, the commission shall take into

14-26 account:

14-27 (a) The extent to which the utility was legally required to incur the costs

14-28 of the assets and obligations . [;]

14-29 (b) The extent to which the market value of the assets and obligations of

14-30 the utility, relating to the provision of potentially competitive services,

14-31 exceeds the costs of the assets and obligations . [;]

14-32 (c) [The] Except as otherwise provided in this paragraph, the

14-33 effectiveness of the efforts of the utility to increase the market value and

14-34 realize the market value of any assets, and to decrease the costs of any

14-35 obligations, associated with the provision of potentially competitive

14-36 services . [;] If a utility purchases generation services pursuant to the

14-37 approval of the appropriate governmental agencies to meet its obligations

14-38 to provide electric service pursuant to NRS 704.982 from a generation

14-39 unit that the utility has divested, the commission shall not impute a value

14-40 to the generation unit other than the sales price of the unit.

14-41 (d) The extent to which the rates previously established by the

14-42 commission have compensated shareholders for the risk of not recovering

14-43 the costs of the assets and obligations . [;]

15-1 (e) The effects of the difference between the market value and the cost,

15-2 including, without limitation, tax considerations, for the assets and

15-3 obligations . [; and]

15-4 (f) If the utility had the discretion to determine whether to incur or

15-5 mitigate the costs, the conduct of the utility with respect to the costs of the

15-6 assets and obligations when compared to other utilities with similar

15-7 obligations to serve the public.

15-8 2. [For the purposes of this section,] If the commission [may impose a

15-9 procedure] determines that costs are recoverable pursuant to subsection

15-10 1, the commission shall, for the purposes of this section and section 3 of

15-11 this act, adopt by regulation procedures to provide for the direct and

15-12 unavoidable recovery from ratepayers of the portion of the past costs which

15-13 are determined by the commission to be owed by the ratepayers. The

15-14 [procedure] procedures must include a determination of the period over

15-15 which the recovery may occur and include the authority for the commission

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

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

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

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

15-20 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

16-1 exemption may be made only upon a determination by the commission,

16-2 after notice and an opportunity for a hearing, that the service is competitive,

16-3 discretionary or potentially competitive.

16-4 2. The commission shall adopt regulations necessary to establish an

16-5 alternative plan of regulation of a public utility that supplies natural gas and

16-6 that is otherwise subject to regulation pursuant to the provisions of this

16-7 chapter. The alternative plan may include, but is not limited to, provisions

16-8 that:

16-9 (a) Allow adjustment of the rates charged by the public utility during the

16-10 period in which the utility elects the alternative plan of regulation.

16-11 (b) Specify the provisions of this chapter that do not apply to a public

16-12 utility which elects to be regulated under the alternative plan.

16-13 (c) Provide for flexibility of pricing for services that are discretionary,

16-14 competitive or potentially competitive.

16-15 3. A public utility that elects to be regulated under the alternative plan

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

16-17 provisions of this chapter to the extent specified pursuant to this section.

16-18 4. In providing a potentially competitive service, an affiliate of a

16-19 provider of a noncompetitive service may use the name or logo, or both,

16-20 of the provider of noncompetitive service.

16-21 5. It is unlawful for an alternative seller to sell any service relating to

16-22 the supply of natural gas to a customer for his consumption within this state

16-23 without first having obtained a license from the commission to do so.

16-24 Sec. 21. On or before March 1, 2000, or such other date that is

16-25 determined to be in the public interest by the governor pursuant to NRS

16-26 704.976, the commission shall, for the purposes of NRS 704.986, establish

16-27 for each class of customers of electric service in this state the rate for each

16-28 component and a total rate for electric services for customers based on the

16-29 cost to provide electric service to each class of customers in this state. The

16-30 total rate established for each class of customers pursuant to this section

16-31 must be the same as the total rate for each class of customers that is in

16-32 effect on June 1, 1999.

16-33 Sec. 22. On or before March 1, 2000, or such other date that is

16-34 determined to be in the public interest by the governor pursuant to NRS

16-35 704.976, an alternative seller and a vertically integrated electric utility may

16-36 negotiate and enter into a contract with a customer for the provision of

16-37 electric service, but no such contract is effective before March 1, 2000, or

16-38 such other date that is determined to be in the public interest by the

16-39 governor pursuant to NRS 704.976.

16-40 Sec. 23. This act must not be construed to impair any existing rights

16-41 under contracts with customers in effect on June 1, 1999.

17-1 Sec. 24. This act must not be construed to impair any existing rights

17-2 under any labor agreement to which a vertically integrated electric utility or

17-3 its successor electric distribution utility or an affiliate thereof is a party on

17-4 July 1, 1999.

17-5 Sec. 25. 1. This section and sections 1 to 6, inclusive, 9 to 16,

17-6 inclusive, 18 to 22, inclusive, and 26 of this act become effective on July 1,

17-7 1999.

17-8 2. Sections 23 and 24 become effective upon passage and approval.

17-9 3. Sections 7 and 8 of this act become effective on October 1, 1999.

17-10 4. Sections 4 and 16 expire by limitation on March 1, 2003.

17-11 5. Section 5 expires by limitation on September 1, 2003.

17-12 6. Section 17 becomes effective on March 1, 2003.

17-13 Sec. 26. If the pending merger between Sierra Pacific Resources and

17-14 Nevada Power Company, referred to in the records of the Public Utilities

17-15 Commission of Nevada as Docket No. 98-7023, is terminated for any

17-16 reason before the completion of the merger, this act expires by limitation on

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