MINUTES OF THE meeting
of the
ASSEMBLY sELECT Committee on Energy
Seventy-First Session
April 16, 2001
The Select Committee on Energy was called to order at 12:21 p.m., on Monday, April 16, 2001. Chairman Douglas Bache presided in Room 1214 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Douglas Bache, Chairman
Ms. Barbara Buckley, Vice Chairman
Mr. Joseph Dini, Jr.
Ms. Sheila Leslie
Mr. Roy Neighbors
Mr. David Parks
Mrs. Debbie Smith
Ms. Kathy Von Tobel
Mr. Lynn Hettrick
Mr. David Humke
Ms. Sandra Tiffany
GUEST LEGISLATORS PRESENT:
Assemblywoman Marcia de Braga, District 35
STAFF MEMBERS PRESENT:
Kevin C. Powers, Committee Counsel
David S. Ziegler, Committee Policy Analyst
Cheryl Meyers, Committee Secretary
Assembly Bill 418: Revises provisions concerning conservation of energy and use of renewable energy. (BDR 58-1198)
Chairman Bache asked Assemblywoman Marcia de Braga to please explain the proposed amendments to the committee.
Mrs. de Braga stated she could understand there was confusion; however, if the committee could look at the colored documents, she would explain to the committee the changes (Exhibit C). In Section 2, she stated, the proposal was to remove natural gas and propane and add hydrogen to the list of uses as the primary sources of fuel. Section 3, where it discussed net-metering, the language should be left as it was with an explanation. She stated her list of changes was in case the committee wanted to consider changes if other amendments were proposed that had caps on the capacity at not more than ten kilowatts. She added a suggestion that if the committee decided to cap she did not think the cap should be lower than one megawatt.
Mrs. de Braga turned to Section 4 and suggested domestic energy be deleted because it could be interpreted as meaning energy consumed in the state in houses, or energy produced within the state and would have a little broader meaning. In Section 4, subsection 1(a), she stated she wanted the percentages to remain the same. There were other percentages proposed and the committee had two other suggested pages with fallback positions; however, she believed the Senate passed a similar bill that morning with the same percentages. She wanted those percentages to remain as they were. There was no change to Section 4, subsection 1(d) with the percentage at 10 percent, the same as the Senate. Subsection 1(e) added new language that required the utilities to set up processes of renewable portfolio standards (RPS). Perhaps, she stated, there should be an assurance added that would guarantee the RPS was distributed as widely as possible. Subsection 1(f) allowed the utility to be exempt from the portfolio standard if there was an inadequate supply of renewables. The bill could also be changed to state the Public Utility Commission (PUC) could waive the fees if there was not sufficient renewable energy developed and available for the utility to meet the requirement of the portfolio standards. Whatever wording was used it should indicate there could be a waiver of the fine if there were not sufficient renewables available for the utilities to purchase.
In Section 4, subsection 2, she indicated the addition would state, “be based on renewable energy credits, if applicable.” If the committee agreed that utilization of energy credits would be allowed, the language would be appropriate to this section. Section 4, subsection 8’s discussion of credit should remain deleted. There were arguments in favor of reinstating the credits. The section would keep the discussion on the smaller alternative sellers that discussed not having to manage individual renewal contracts.
Mrs. de Braga stated there were four provisions that related to the use of credits. If there was agreement on credits, the following language needed reinstatement with changes delineated. The bill would add language to the reporting to the effect that “at the end of each calendar year, each vertically integrated electric utility and alternative seller shall submit a report to the commission (PUC) in a format approved by the commission of the quantity of the renewable energy credits, if applicable, that the utility or alternative seller generated, purchased, sold and traded to meet the standard of the portfolio.” Section 4, line 2-48.3 would then state, “in establishing the portfolio pursuant to this section, the commission may establish a system of credits pursuant to which an electric utility and alternative seller may comply with the provisions of this section.” The rest would be deleted. Everything below that part would be taken out. The recommendation was credits should be allowed and the PUC could establish the system of credits.
Section 6 needed to be clarified as to the intent that before renovating any state building there must be an analysis as to the long-term benefit of incorporating alternative sources of energy in the construction and renovation. Mrs. de Braga stated when the bill was first drafted, there was some confusion as to what needed to happen there. There should be an analysis that should not prescribe an estimated life of the renewable energy source at eight years. That language should be removed. It could be argued that an eight-year payback requirement without any provisions regarding agency budgets and finance abilities could result in an otherwise necessary renovation being postponed or delayed. If other cost-effective efficiency improvements were delayed it could result in a higher cost. The language needed clarification so that everyone understood those issues had to be considered when determining whether new construction was going to include those types of alternative sources of energy.
Assemblyman Dini stated this idea applied to a much broader area than just a state. The bill implied any subdivision, districts, schools and all types of industries would be affected.
Assemblywoman de Braga indicated that was already in statute, meaning any public building. The statute said buildings that were larger than 20,000 feet and the bill changed that to 6,000 square foot buildings. Mr. Dini indicated they would be putting a pretty good unfunded mandate on the local governments. Mrs. de Braga stated that was correct and she did not have a preference there, but she believed the intention of the bill was they consider it, and look at alternative energy to see if it would be cost effective. The language was confusing to everyone, and needed clarification that they were only required to consider the options to see if it was cost effective to use alternative energy construction. They were also asked to consider the life of that kind of a generating system.
Mr. Dini asked for clarification in the other section that mentioned the size of the generator. He asked if it was ten megawatts. Mrs. de Braga asked if he meant for net-metering. Mr. Dini replied yes, and Mrs. de Braga stated it was not to fall below one megawatt. Mr. Dini indicated that could pose a problem. There were two generators at Wabuska that were either at .5 or .6 and combined they were 1.2 megawatts. He asked where they would fit in the scheme.
Mrs. de Braga stated currently the statute stated a facility that had a capacity of not more than ten kilowatts and the suggestion was for the language to read not more than one megawatt. In Section 6, subsection 5, the suggestion was the co-generation tradeoff should be to allow the cycle payback period of solar and the life cycle payback period of solar and other renewable energy. The change would allow the state to capture the full life cycle benefits of renewable energy. For example, an up-front, one time investment in solar energy provided clean electricity for 25 to 40 years. Geothermal varied; however, it was considerably longer than eight years and was something the committee could consider. Section 7, subsection 2, added language that prevented the imposition of property tax credits that would adversely affect the local governments without their approval. The Department of Taxation could not grant an exemption pursuant to Section 7, subsection 2, without the approval of the affected local government entity. The argument was obvious. If the local government tax base was severely affected by the requirement of a property tax credit there needed to be approvals. Section 7, subsection 5(b), was a very important section. Wherever the bill discussed a facility for the production of electricity from alternative sources of energy the meaning was a facility that used alternative energy. The change was to strike as “its primary” fuel capturing only a renewable energy as a primary fuel. Not changing the language could limit the benefits of the renewable energy used when it was other than the primary fuel source. For example, a homeowner or business may have solar systems that generate less than half of the unit’s energy needs. The renewable portfolio standard should still capture this. It should simply say “uses a fuel in the production of electricity” and then define the sources, and in that definition hydrogen should be included. In the next to the last sentence, solar should be removed and alternative sources of energy should be added.
Assemblywoman Von Tobel asked if Mrs. de Braga was aware of other businesses in the state that were given an exemption for personal and real property. Mrs. de Braga stated she did not know; however, there were exemptions in the law for uses of alternative sources of energy. Ms. Von Tobel stated then the language was not new and the practice was already done. Mrs. de Braga stated that was correct. She was not sure of the statute; however, there were some exemptions for homeowners and small businesses for uses of alternative sources of energy.
Ms. Von Tobel asked if she was aware of what the fiscal impact would be if a county chose to give the exemption. The language would now give them the choice to give the exemption or not. Mrs. de Braga stated that was correct. Ms. Von Tobel asked if the entire idea was to put an alternative energy source into a personal property location. Mrs. de Braga stated she believed that currently there was a 50 percent credit available. The option to get a credit on the homeowner or business owner’s utility bill for what they generated was also available. In other words, if a home had solar panels, the owner would get a credit on the energy bill for what they generated. Ms. Von Tobel asked again if she was aware of the fiscal impact on a large business that would use perhaps a wind energy resource. Mrs. de Braga stated it would depend on what was agreed to by whatever was the local or state government or if it were on other privately owned land. Ms. Von Tobel stated for clarification the language was just to enable them to choose either option and Mrs. de Braga stated that yes, there was the ability to choose.
Kevin Powers stated his office believed allowing the counties to determine whether or not to grant a tax exemption would create a nonuniform system of tax assessment that would violate the Nevada State Constitution, Article 10, Section 1. There would be a piece-meal system where some counties assessed the taxes, and some counties did not, thereby creating a nonuniform system of assessment in taxation.
Mr. Dini stated the economic development laws allowed those exemptions and they were now allowed with the approval of the county and the Economic Development Commission approving the tax exemptions. There had not been any objection to the procedure up to this point and the laws had been in effect for at least four years.
Mr. Powers stated he would have to investigate further the specific tax involved in the statute Mr. Dini was referring to in regard to property taxation and how the system was set up. As far as this exemption went, he indicated it would be based on the local governments making the determination, and he believed it would create the nonuniform system of assessment and taxation that would violate the Nevada State Constitution. Mr. Powers stated another issue mentioned in the specific system was the removal of the words “it’s primary fuel” that could have unintended consequences the committee might not like. If any production facility that produced electricity used any amount of a renewable energy system, then the entire facility would be exempt. Therefore, if there was a large natural gas plant that put up one wind generation device then that could be sufficient to invoke the exemption.
Mrs. de Braga referred back to the requirement the counties would have some say in the decision of whether to give a tax exemption. She agreed with Mr. Dini that was done on a regular basis. Either taxes were postponed or waived and in the case of geothermal developments, there was no property tax assessed but rather net proceeds were examined and the taxes were waived until the company produced the product. Mining was exactly the same as geothermal and net proceed taxes were waived until the company was solvent and starting to make a profit.
Mr. Powers indicated the Legislative Counsel Bureau (LCB) would look into the issue further, but the idea was not the fact that there was an exemption, it was the fact the exemption would not apply uniformly throughout state. That issue raised the possibility of the constitutional problem.
The Chairman asked Mr. Powers to check to see if the language was turned around so the state granted the exemption upon the request of the county would that change the problem with uniformity.
Assemblyman Hettrick believed Mr. Powers was correct. He was in the middle of a bill that tried to alleviate some taxes in the Lake Tahoe basin. Because of the costs involved and because of the issues involved he had received two or three legal opinions from LCB stating if the county made the decision it would violate the Nevada State Constitution because it called for a uniform and fair means of assessment. As soon as the state allowed one county to do it differently, it was not uniform. They could possibly exempt other taxes, but not the property taxes, and that would be the issue. Mr. Powers was going to check on it and there could be some other things they could alleviate, but probably not the property tax according to the opinions he had received.
Mr. Powers fully concurred with Mr. Hettrick. Mrs. de Braga stated the counties requested to not be forced to reduce their property taxes if there was no agreement.
Chairman Bache asked if there were any further discussions on the amendment proposed and asked for questions from committee members.
Ms. Smith stated she was looking at the old Section 4 on the second page, subsection 1, in regard to a portfolio standard. It referred to the total electricity sold in Nevada. On the next page, in subsection 2, it referred to “and any customer who self-generates or otherwise self-procures.” She wondered if there was some conflict there and related there had been a lot of discussion about whether those customers that generated their own electricity should be included in the portfolio standard. These two items seemed like they conflicted with each other.
Mrs. de Braga stated she was not sure. The bill stated they should comply with the portfolio standard as well. She did not know if that would ever be a problem but stated it was a possibility with a small business. Bill drafters had used the language and she did not think it conflicted; however, it was something the state needed to know because it stated they should all comply with the portfolio standard established by the PUC.
Assemblywoman Smith stated on one hand the bill was talking about the customer that self-generated being involved in the portfolio standard, but in the other section the bill only referred to electricity sold. She wanted to make sure the issue was clarified.
Mr. Dini stated the matters in the bill were very complicated and he wondered if there was time to get the bill out of the committee, have it reprinted and put on the Assembly floor or have another hearing with the reprints.
Chairman Bache stated he thought Speaker Dini had a good suggestion and that might be what the committee should do. The net-metering part of the bill, as an example, was dealt with in A.B. 661 as well. He stated possibly there needed to be a two-tier structure set up with the low level net-metering of 10 kilowatts or 20 kilowatts as it was in A.B. 661. That type of net-metering would deal with residential or small businesses that had 1200 square feet in the business base. Above that there could be a tier for up to the one megawatt user that was a different type of customer and perhaps needed to have a different system. It was something the committee was dealing with in A.B. 661. Mr. Bache did not believe the utilities were too concerned about the low-level customers; however, when there was a facility with 10 megawatts or above, that would be a different group and would need to be treated differently.
Mrs. de Braga stated currently, as the amendments suggested, the red portions of the bill (Exhibit C) were deleted, and the blue was the new language. The only changes were what she had presented as an amended bill. The only change she was proposing was deleting the language on the energy credits, and allowing the commission to establish how that program would be set up.
Chairman Bache stated the committee was waiting for Ms. Buckley to return, as the committee was at the point where there would be a motion. He asked for any other questions from members of the committee. He believed Mr. Dini’s suggestion to amend and then place it on the desk so there could be a hearing would be appropriate. If there needed to be another amendment afterwards it would be appropriate.
Mr. Neighbors agreed with Mr. Dini in this regard. The other issue he had wanted discussed was why the committee was not exempt in deadlines because of the importance of the issues.
Mr. Bache stated he believed it was more of a question of the 120-day session. There were various deadlines and only one bill, A.B. 661, had a one-week waiver but he thought that was the limit. The other house had to have time to process bills also. Mr. Neighbors stated there were many bills in the Ways and Means Committee and some of those were not as important as this issue. Mr. Neighbors wanted to stress how important the issues were and how he believed they needed careful consideration.
Mr. Hettrick asked if on the list of net-metering system sources, because natural gas and propane were eliminated and hydrogen was added, would the committee consider adding hydroelectric. Mrs. de Braga stated that it would be appropriate to add hydroelectric; however, she did not know how it would affect a small home or a small business.
Mr. Hettrick stated his father had bought a place in Elko County with a stream running through it with a huge amount of drop. He could probably run hydroelectric. For the record, he stated, it could be done, not by him, but it could be done. Mr. Hettrick determined it was just obvious to add hydroelectric because the amendments had added all of the other things.
Mr. Hettrick stated in Section 4 Mrs. de Braga had added the language in regard to the utility using the renewable sources if available. He was concerned with the language. The section stated “the low-serving energy will not be required to fulfill the requirements of the portfolio standard if there is an inadequate supply of renewable energy systems, as determined by the responses to such requests for proposals.” It appeared to him that would leave two possible problems. One, that there were not enough resources to provide the energy and the other would be that the utility could write the request for proposal for renewables to ask a renewable resource if they could provide the utility with a renewable source that was as cheap as traditionalgeneration. No one could satisfy the request. He thought the language needed to be tightened. He would personally tighten the language and remove some of the percentages, because he thought some of the percentages were beyond reasonable attainment. In fact, he hated to put them in there and then have to come back to the Legislature because no one could perform. Section 6, subsection 3, presented the analysis identifying measured concentration of energy co-generation. He indicated again the language needed to be tightened because it stated “uses of types of energy that were alternatives, including without limitation.” Then in Section 5, subsection 14, the bill stated, “which canbe included in the building in its construction or renovation.” The old language stated it was mandatory to include it, but the word “can” was not clear as to whether it was to be included or whether it could be included. It appeared to him “can” would imply they were going to use it. He stated that language needed clarification. Finally in Section 6, beginning with line 5-22, “Consider the results of the analysis required by this section in deciding upon the type ofconstruction and the components and systems which will be included in the building; and”and then everything behind it is eliminated. He presumed the end should include “will beincluded in bill.” He thought the issue was back to whether or not it was mandatory construction and it could need some clarification.
Mrs. de Braga stated she agreed with him and did not know if they had fixed the problem with the language. The only thing that was mandated in the bill was that it be considered. In regard to the other issue, she indicated the bill had to be very cautious and have some insistence there be a portfolio standard. That language had to be included or there would be no incentive to develop the alternative sources of energy. If the language was not correct the state would be back to the age-old problem of what comes first. If the state did not require alternative sources of energy then it would not be produced because the market would not be there and the purpose would be defeated.
Mr. Hettrick remarked to Mrs. de Braga that she was not able to attend the hearing the other day and he had made a suggestion regarding the language at this point. His suggestion was to state the power company must buy all available renewable energy at sources that were equal to or cheaper than traditionally generated power. Then, in his opinion, the state and the consumers would get the best of both worlds, because if it was wind or geothermal that was cheaper, it saved the ratepayer. If the alternative sources were not cheaper at the time, then as technology improved, the source could come on line and they would use it. There would be no limit. It would not be 5 percent plus 2 percent to 15 percent; the rule would be to buy all they could at a cheaper rate. The companies would want to pass the savings on so it appeared to him that the policy would cause renewables to grow faster and not limit the growth of renewables, but enhance it. Mr. Hettrick thought they were trying to get the same end result, he was just not sure that the state wanted to set an artificial standard and then give the utilities a way to state they issued a renewable portfolio and no one satisfied it.
Mrs. de Braga stated the only problem with that theory was that over a period of time one type of generation could be higher and another lower and then could fluctuate. If the state had a percentage requirement in the bill she felt it would be more effective in obtaining an overall balance. She indicated under ordinary circumstances geothermal was more expensive; however, with the increase in natural gas costs the situation had changed a little. Mandating a percentage would be the catalyst for developing alternative sources and the percentage had to be high enough that there was the incentive for the development and production.
Assemblywoman Tiffany stated she would have to agree with Mr. Hettrick. The main concern she had was the mandate of 15 percent over a period of time. Whether the mandate was high, low, or medium the utilities were mandated to purchase. She stated the utility companies could be in jeopardy if they were mandated to purchase energy that could be higher than necessary. She also understood the reason the percentage was put in the bill was because the renewables needed long-term contracts to start to build plants. And now, she said, the state had provided these individuals with state bonding as well so they could build now. Allowing the state bonding took away the necessity to mandate a percentage in the bill. She thought it should be up to the utility to purchase the mixture of fuels and what types of long-term contracts they wanted in long-term portfolios. The mandate was of concern to her.
Mrs. de Braga stated there was a problem without a mandate because in order to get funding to do these kinds of developments there had to be assurances of sales. Again, the problem was back to which came first. If there was no requirement and no guarantee the purchase would be made, there was no reason to come and develop. She argued there was a need for a percentage of renewables to balance out portfolios long-term so that when the cost of one was higher one time and lower the next the utilities would be working with balance and leveling off prices. Because they had not been required traditionally, the alternatives had been more expensive and she believed that would change over time. The utility was not asked to purchase that large of a percentage.
Assemblywoman Tiffany stated if there were rolling blackouts this summer and if she was at a constituent’s door she would feel very uncomfortable telling them their bill was higher and the blackouts were going on because renewables were mandated. She thought it should be up to the utility company to purchase fuel from whatever source was reasonable at the time instead of mandating the 15 percent that could end up being a higher cost. Mrs. de Braga asked what incentive would there be to produce renewables. She indicated there would be no incentive.
Assemblywoman Von Tobel indicated although she believed renewables could be a wonderful business for the state, she felt the state should not mandate any other business to purchase the power they produced. She felt strongly if the utilities went to the open market they would dictate what was favorable by the price. She believed the state would be subsidizing businesses to come into the state and did not think the state did that with, for example, homebuilders. Homebuilders would build a home and hope that they could sell it. They could pre-sell; however, there was no guarantee. She did not think the Legislature had given any business in the state the guarantee “if you come, you will be successful.” She was wondering why the state was willing to do so much for these types of businesses. In fact the state was considering requiring one of the state’s ongoing businesses to purchase that product without having a price established. The state was not requiring any of the renewable companies to provide anything to the state. The bill had no guarantee they would serve the state, unless she was missing something in the amendment. The companies could set up businesses and still sell the product to the highest bidder for the energy. For this reason she saw the mandate as a subsidy.
Ms. Tiffany queried if the current utilities, Nevada Power and Sierra Pacific (“the company”), received a savings on real and property taxes. She asked if “the company” paid those taxes, because if they did why would the state give renewables a break on those taxes when the current utility had to pay. She questioned why there were two different standards.
Mrs. de Braga responded she was not sure she could answer that particular question. She did state the reason for providing some kind of incentive was that Nevada had a tremendous amount of geothermal resources and could be an exporter. It would be a good industry for the state, especially for the rural areas. In the long-term it could be very beneficial. As an example, the geothermal developments in Churchill County had been a tremendous source of income for the county. Those were the kinds of development she thought could help diversify the economy of the rural areas of the state. The resources were there; however, if there were no guarantees those resources had to be purchased there was no way to get the funding to develop them and that was the whole point. She knew there was a fear Nevada would not be served and she did not know how to guarantee Nevada was served first when the price in California was so much higher; however, she was sure that was something somebody would want to address in a law.
Ms. Von Tobel stated currently “the company” did not have any choice but rather had to serve. They had to go before the Public Utility Commission and have every step of their serving scrutinized. To allow these companies to come in to the state and not have to serve under the same scrutiny, to receive an exemption from real and property tax, and then to require the other utility in the state to purchase the product did not make sense to her. She believed it was a subsidy and although she supported renewable companies building and starting up she did not understand why the state would give them so much more than the state had ever given.
Mrs. de Braga indicated it was because of the energy crisis and that otherwise there would be no discussions. It was an expensive development that would not happen without some kind of encouragement, and Ms. Von Tobel was correct in one respect; geothermal was the only regulated renewable because it was covered under mining. It was not regulated by Public Utility Commission and she believed that was not necessarily right; however, that was the way it was currently.
Kevin Powers, Committee Counsel stated it was a good time for him to mention to the committee the current renewable energy statute NRS 704.989 in its definition of renewable energy resources and renewable energy systems specifically stated they had to be in the state. He opined the requirement was unconstitutional under the Dormant Commerce Clause and the committee should remove that requirement from the statute in any amendment.
Mrs. de Braga stated that was an excellent point. For example, 100 percent of the energy generated in Dixie Valley went to the Bishop, California, area and none was used in Nevada.
Mr. Powers stated he believed the drafted language of the proposed amendment had not been prepared by the Legislative Council Bureau Legal Division (LCB). If the committee would look at XX7, three pages in (Exhibit C), that could be the money issue the committee mentioned earlier. It provided a customer-sited rebate program administered by the state shall be developed with renewable energy systems deployed pursuant to the program and the funds should be created to provide for these rebates. Mr. Powers stated there was no source for the funding, the amount of the money collected was not indicated, nor was the state agency to administer the fund indicated. In the raw development of language he did not believe LCB could put together an amendment including this component.
Assemblywoman Tiffany wanted to return to the 15 percent over the 10-year period escalating from the .02 percent mandated now to the 15 percent. She wondered where the 15 percent came from and why that magic number, because it was not just a mega increase it was a giga-watt increase.
Mrs. de Braga stated they had wanted a higher portfolio standard and there were many variations; however, she had adopted exactly the language the Senate used in their bill.
Ms. Tiffany stated from the point of view of the Assembly she wondered what justified that type of leap. Mrs. de Braga stated the current law was 2 percent per year. Ms. Tiffany asked Mrs. de Braga if she did not think it was a leap because it was 2 percent per year. If she were to increase the legislative retirement 300 percent, that would only be $2.00 per month; however, it was the 300 percent that made it seem tremendous. The same situation pertained here, she explained. She thought there had to be a quantifiable justification and not the answer that it was only 2 percent. She wanted a number as a reason for the increase.
Mrs. de Braga stated there was no number to justify the percentage; however, unless the state allowed or promoted the generation of these kinds of power, there would be none produced.
Ms. Tiffany stated she would still like to have a quantifiable reason for the percentage instead of a subjective reason. Mrs. de Braga stated if the bill removed the number the developers would develop the product elsewhere and sell it elsewhere. She indicated she would like to set a standard and it could be varied; however, if there was not a substantial amount that was required to be purchased, it would not be produced. Ms. Tiffany stated her concern was with the substantial part and how they had reached that number. Mrs. de Braga reiterated the number was used to be uniform with the Senate bill and she realized it was an arguable point.
Assemblywoman Leslie stated the Union of Concerned Scientists were calling for a minimum standard in RPS to be 10 percent by 2010. She had noted the percentage from previous testimony and believed there was some argument to be made. The number might not be 15 percent but it could be 10 percent. One of the reasons the state wanted this program was to protect consumers from the rate shock of fuel prices with non-renewable resources. She could understand the rationale was to help to develop the renewables, especially in the state. As Jon Wellinghoff, the representative for Green Energy Business Council of Nevada, had stated in previous testimony, the state of Nevada was the Saudi Arabia of geothermal and was not taking advantage of the potential. The idea was to help build the industry to reduce the state’s reliance on fossil fuel thereby driving that price down. This was a long-term view, not a short-term next election kind-of-view; it was more long-term over the next decade.
Mrs. de Braga stated that was correct and reminded the committee, in partial answer to Assemblywoman Tiffany’s question, if the renewable resources were not available, they did not have to be purchased. There was a protection in the bill for utilities, but hopefully there were sufficient incentives and enough purchase to make them worthwhile to develop.
Mr. Hettrick stated he did not disagree with Mrs. de Braga on the last point. The only thing he would do was go back to the RFP proposal, and if it were based on sure numbers, then the utility would be forced to purchase, and if the percentage was based on language the way it was now, the RFP could be written that could not be satisfied. He thought there was a lot to be done. He did not believe anyone opposed renewables. Everyone agreed and agreed there needed to be a desire to build them. It was very difficult to state to the ratepayer right now they were going to pay more because the state needed to mandate the use of something that would cost more money and the prices were going up. That was the problem. Mrs. de Braga stated what if it costs less. Mr. Hettrick stated if it costs less then his proposal was to buy all they could get. However, the language mandated the purchase regardless of price and that was where there was concern.
Mrs. de Braga reiterated if one was to look at the overall picture as to what was higher at one given moment it may all level out over time. When the Legislature tried to put in a standard before, the argument was it was a lot more costly; however, the people that were proponents had stated if more of it were produced the price would be better. Whether that was true or not, that was the testimony at the time.
Chairman Bache stated he would accept a motion as outlined by Speaker Dini and perhaps, amend without recommendation. He proposed he would put the bill on the Chief Clerk’s desk so that the Assembly could discuss this further because it was such a complicated amendment.
ASSEMBLYMAN NEIGHBORS MOTIONED TO AMEND WITHOUT RECOMMENDATION.
ASSEMBLYMAN DINI SECONDED THE MOTION.
Mr. Bache stated the committee would amend with the document and would add hydroelectric in Section 3 as a component along with hydrogen, wind and solar. Mr. Bache asked also if the amendment would delete XX7 (Exhibit C), the sentence with the customer rebate and Mr. Neighbors and Mr. Dini responded that was correct. The Chairman asked if there was anything else.
Assemblywoman Von Tobel stated the committee should probably either delete or fix the section that had to do with property taxes since it sounded as if it would be unconstitutional to allow each county to decide. If the provision was not in the bill she wondered if the renewable companies would be treated like any other business that came to the state. There were some exemptions that they could apply for, but she felt it was not appropriate to write these exemptions into the bill.
Chairman Bache asked where that was in the bill. Ms. Von Tobel stated in the amended version (Exhibit C) it was Section XX11 that mentioned the Department of Taxation. She indicated she assumed since all businesses could apply for different exemptions she did not think it needed to be included in the bill. They would be a business starting up in Nevada and they could probably apply for any exemptions that were allowed for all other businesses.
Chairman Bache asked if the maker and second wished to have that as part of the amendment. Mr. Dini stated as long as the language was the same as what the state had in Economic Development.
Chairman Bache asked Mr. Powers if that was okay and Mr. Powers stated he was not entirely clear where the committee stood.
Chairman Bache stated there would be deletion of Section XX11, subsection 2, where it stated the Department of Taxation could not grant an exemption pursuant to Section 7 without the approval of the affected local governmental entity.
Mr. Powers indicated if Section XX11 was deleted then the original Section 7 of the bill would apply which was constitutional because it provided the exemption, statewide, to all facilities that produced renewable energy resources.
The current exemption in the statute only applied to facilities that produced electricity through solar energy. The section in the bill expanded it to the other renewables, such as biomass, geothermal, wind and hydrogen.
Chairman Bache thought Ms. Von Tobel was talking specifically about subsection 2, the Department of Taxation language, not the rest of the proposed changes.
Ms. Von Tobel stated that was correct with the understanding that the bill would go back to the original language, Section 7 in A.B. 418, that assumed any of these businesses would be able to take advantage of any tax breaks that any other business normally would.
Chairman Bache asked both Mr. Neighbors and Mr. Dini if that was acceptable.
Mr. Powers stated for clarification Section 7 remained unamended. The existing Section 7 in the bill related to the property tax exemption would continue in the amendment as it was in Mrs. de Braga’s introduced bill, and then the committee would carry on further discussions.
Chairman Bache asked for further discussion. Mrs. de Braga asked if the property tax exemption would include electricity from alternative sources of energy or return to just extending the property exemption for solar. Mr. Powers stated he believed in the reprint Section 7 from the introduced bill would be identically the same, in both reprint and introduced bill.
Chairman Bache stated the motion was to amend without recommendation on A.B. 418 because there were a number of concerns. The committee was going to put it on the desk after the amendment and then have a hearing; however, if the committee did not take action it would be dead. The proposed amendment with a few changes—adding hydro-electric, deleting a section that the Legal Department believed to be unconstitutional and deletion of one other change with the Department of Taxation returning Section 7 to how it originally was—would be put on the floor of the Assembly. The Chairman asked for any further discussion and asked for a vote on the motion.
MOTION CARRIED UNANIMOUSLY.
Chairman Bache stated after the amendment was completed he would place the bill on the desk and then there would be more hearings to work out other items before final passage. Seeing no other business before the committee the Chairman adjourned the meeting at 1:21 p.m.
RESPECTFULLY SUBMITTED:
Cheryl Meyers
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: