MINUTES OF THE meeting
of the
ASSEMBLY sELECT Committee on Energy
Seventy-First Session
May 10, 2001
The Select Committee on Energy was called to order at 1:55 p.m., on Thursday, May 10, 2001. Chairman Douglas Bache presided in Room 4100 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
STAFF MEMBERS PRESENT:
Kevin C. Powers, Committee Counsel
David S. Ziegler, Committee Policy Analyst
Cheryl Meyers, Committee Secretary
OTHERS PRESENT:
Harvey Whittemore, Representative, Nevada Resort Association, Reno, Nevada
Donald Soderberg, Chairman, Public Utilities Commission (PUC), State of Nevada, Carson City, Nevada
Ernest Nielsen, Washoe County Senior Law Project, Washoe County Senior Services, Reno, Nevada
Ernest Adler, Representative, Nevada Housing Coalition, Reno, Nevada
Jon Sasser, Representative, Washoe County Senior Law Project, Washoe County Senior Services, Reno, Nevada
Fred Schmidt, Representative, South Nevada Water Authority, Las Vegas, Nevada
Assembly Bill 661: Revises and repeals various provisions concerning utilities and energy. (BDR 58-1128)
Chairman Bache asked Harvey Whittemore, Representative, Nevada Resort Association, to address the committee on the status of the “Repower Nevada” amendments.
Mr. Whittemore commented that at the direction of the Chairman and many members of the committee, he and others had been working to make the proposal known as “Repower Nevada” more in compliance with the wishes of the committee. He reported they had very fruitful discussions over the past few days and hoped to be able to present a modified version of the proposal soon. In light of the deadline that would be imposed on the committee and the possible waiver the committee would request, he asked the committee’s indulgence in waiting until next Tuesday for the final version of the proposal.
Chairman Bache concurred the committee would be asking for another week’s waiver because there would not be enough time to examine all of the amendments with committee members leaving to attend other meetings.
Chairman Bache stated the committee would do a work session on some of the bill at the current hearing and the remainder would be handled on the following Tuesday. Mr. Bache indicated the committee had received the amendment document to A.B. 661 prepared by the Legislative Counsel Bureau (LCB) (Exhibit C). The amendment document compiled suggested amendments that had been proposed up until the last Thursday and did not include any proposal past that date. He asked Legal Counsel to explain to the committee the changes proposed in the amendment document.
Kevin Powers, Committee Counsel, stated he would point out to the committee the sections in the bill that had not changed, and if there were any questions on the individual sections, he would be glad to entertain them on the part of the committee.
Section 1remained unchanged from the introduced bill and dealt with the election of the commissioners of the Public Utilities Commission (PUC). Sections 46 and 47 also dealt with the election of the PUC commissioners and remained unchanged.
Assemblyman Neighbors indicated he had a problem with the election of those positions. He would rather add a few new members to the board at large to represent seniors, but did have a problem with the election of commissioners.
Assemblyman Humke stated he did not think there was an appetite for a change in Section 1; however, if there was a need for change, he would be happy to try to create parity and would offer an amendment at the appropriate time to make the consumer advocate elected as well.
Assemblyman Hettrick stated if the commissioners were to be elected there might be some validity to that suggestion. He agreed with Assemblyman Neighbors and disagreed with elections for these positions. His question was whether the amendments would be discussed section-by-section and then voted on by committee.
Assemblywoman Tiffany stated she did not believe it was a good idea to have the commissioners elected. That was a very specific specialized area, and she thought it took certain qualifications to hold the office of commissioner and do a good job. She stated if there were elections anyone could run for office and be elected without the qualifications but with the most money.
Assemblywoman Von Tobel had to agree with the sentiments. She mentioned the case of judges having to be qualified by being an attorney and, in that case, there were no qualifications listed to be able to run for an election. The contributions that would be given to a campaign would always be in conflict. The only money they would raise for their campaign would be from the gaming, mining, and power industries.
Chairman Bache sensed there would be a great deal of opposition to that section, and he had an alternative suggestion. He proposed the state should return to a five-member PUC board with each member having staggered three-year terms instead of four-year terms. The current members would stay on the commission, and two new members would be added.
Ms. Von Tobel asked if Chairman Bache was proposing restoring what the Legislature had overturned in the Sixty-Ninth Legislative Session. As she recalled, at that time the PUC and the Transportation Authority were merged as one commission. There was a proposal then that the departments be separated, and that was how the PUC ended up having a three-member board. If there was a five-member board she wondered how much money it would cost the state and what benefit it would bring.
Chairman Bache stated he believed it would lessen the influence of any one commissioner and he added he thought the commission worked very well when it was a five-member board. He would not want to fold the Transportation Authority back into the commission. The cost was the commissioners’ salaries—$80,000 per year—plus any additional office space that would be needed. Having a five-member board would eliminate the problem that sometimes occurred as far as compliance with the open meeting law. When two commissioners were speaking together, they had to avoid any talk concerning business because it could be perceived as a violation. If the commission was expanded to five members, it would alleviate some of those concerns.
Assemblyman Neighbors asked for clarification if the Chairman was proposing a five-member appointed board. Mr. Bache stated that was correct. Mr. Humke asked if the Chairman could clarify why he felt it was necessary for a three-year term versus a four-year term. Mr. Bache stated there would be less time in between terms, and it could avoid problems with commissioners that were not acceptable to the rest of the members. He was looking for a staggered commission where two could be appointed, leaving three older members. As such, there would always be a group of more knowledgeable commissioners. A Governor would then have a chance to appoint the board members during his term. Mr. Humke stated a three-year term seemed an oddity. He indicated there was an obvious learning curve. The state expected the members to come equipped with knowledge on the first day; however, there was a period of time to adjust and learn. He believed the members should be allowed to benefit from that learning curve by a four-year term. He could possibly accept the five-member board as long as there were four-year terms.
Ms. Von Tobel questioned if the Ways and Means Committee had closed the budget for that item. The budget would have to be adjusted if the change was made, and there would have to be available funds.
Mr. Bache stated he knew the PUC was not a General Fund agency, and he asked Speaker Emeritus Dini if there would be a problem. Speaker Emeritus Dini stated if the bill passed both houses and was signed by the Governor there was plenty of time to adjust the budget. Speaker Emeritus Dini also noted the mil tax paid for the PUC. He was not sure with the amount of funding available from the Legislature that there would be enough money left in the mil tax fund, however.
ASSEMBLYMAN DINI MOVED TO AMEND SECTION 1 OF A.B. 661 WITH A FIVE-MEMBER APPOINTED COMMISSION WITH FOUR-YEAR TERMS.
ASSEMBLYWOMAN TIFFANY SECONDED THE MOTION.
Assemblyman Hettrick asked if that would include restoring the language stricken in the amendment to Section 1 in regard to some of the qualifications. Chairman Bache stated that would be correct, since the committee would want to return the qualifications.
Assemblywoman Tiffany asked what would happen if the positions could not be funded. Chairman Bache asked Mr. Soderberg to address the committee on the amount of money it would take to fund the two extra board commissioners. Speaker Emeritus Dini noted there was a line in the section, “no more than two commissioners may be” that needed to be changed to “no more than three commissioners may be of the same political party.” Mr. Bache asked Mr. Powers if he was taking note of all of the changes, and, if necessary, he could review the CD.
Donald Soderberg, Chairman, Public Utilities Commission (PUC), indicated if their body was expanded to five members, he estimated they would incur the costs of the salaries. An administrative attorney served as a law clerk, and, although there were no secretaries specifically assigned to each commissioner, there would have to be at least one secretarial position added. They would need to determine if they would need an additional policy advisor. He would have to check with Neil Dimmick, in charge of operations, to assess the operations of five commissioners’ scheduling cases. There could be more cases concurrently. He assumed there would be one more commissioner in southern Nevada, and they could not accommodate the office space at this time. Mr. Soderberg addressed Speaker Emeritus Dini’s comments in regard to the mil tax and stated at the moment; there was a surplus that was larger than it should be. He did not see a problem at the moment; however, in the long-term he wondered if the maximum mil assessment would be adequate at all times. He indicated the budget had closed out of committee and he would assume any changes to the structure of the commission would have to be dealt in the summer or early fall.
Chairman Bache stated when the state expanded the Supreme Court they were able to work on panels and took care of a backlog of cases. He asked if Mr. Soderberg thought this would enable the PUC to deal with dockets in a more expeditious manner. Mr. Soderberg stated at the present he could not identify a backlog of cases that was attributable to a lack of commissioners. Some issues just took time to be resolved, and, in the previous setup at the Public Service Commission, they did not deal with cases in a panel. Their operation was set up to have a presiding officer hold various proceedings, develop a record and bring forth a recommendation. Typically every two weeks the whole board met to vote and discuss the proceedings. Mr. Bache stated he had not referenced the Supreme Court as a comparison, not because he felt the commission should start having panels. He felt having two additional commissioners would alleviate some of the workload on the three current members. Mr. Soderberg stated he believed that was correct, and that was why he mentioned he would have to confer with Mr. Dimmick. If they were handling more cases simultaneously there could be a need in some of the divisions to add more personnel to cover more hearings.
Speaker Emeritus Dini indicated when the bill was drafted in the final version, he believed it would proceed to the Ways and Means Committee to adjust the budget. The fiscal staff could take care of the details and work with the PUC on the arrangements.
Assemblywoman Leslie questioned if the committee was adding the language of experience levels back into Section 1 and also the language that stated not more than two members could be from the same field of experience. She asked what was the field of experiences of the current members of the commission. Mr. Soderberg stated he was an attorney who had specialized in government work when he was appointed; Commissioner McIntyre was an economist with a Ph.D., and had spent his adult career in utility regulations; Commissioner Escobar Chanos was an attorney and had served on the Taxicab Authority. She would fit into the same category that he initially fit into. Ms. Leslie asked where Mr. Soderberg fit in now. Mr. Soderberg stated all of the above. Ms. Leslie stated depending on where they place Mr. Soderberg, they would need a professional engineer and either a business administration person or an accounting individual to fill the positions. Mr. Soderberg stated, under the current law, only administrative law professionals would be excluded because two of the current commissioners came from that general category.
Assemblywoman Buckley asked if there was any way one of the positions could be a consumer advocate. She stated it seemed to be a category that was missing. Mr. Bache asked if there was an amendment proposed or was it just a suggestion. Ms. Buckley stated it was up to the will of the committee, but she believed it to be a good idea.
Chairman Bache asked for a vote on the proposed amendment to Section 1.
MOTION CARRIED UNANIMOUSLY TO AMEND SECTION 1 OF A.B. 661.
Assemblyman Neighbors felt that Ms. Buckley brought up a good point, and Chairman Bache stated he concurred. Assemblyman Neighbors wanted to add an additional qualification to the list of candidates for the commission.
ASSEMBLYMAN NEIGHBORS MOVED TO AMEND A.B. 661 BY ADDING AN ADDITIONAL QUALIFICATION TO THE LIST OF CANDIDATES FOR THE COMMISSION.
MS. BUCKLEY SECONDED THE MOTION.
Ms. Buckley stated she was not thinking of the position being filled by someone who had previously held the consumer advocate’s job. What she referred to was someone who had experience in analyzing large issues such as those and advocating on behalf of consumers in general. For example, the American Association of Retired Persons (AARP) was a large consumer group. The National Consumer Law Center was a large consumer group. The advocates analyzed complex public policy issues and advocated for consumers, the average people affected by a business.
Assemblywoman Tiffany did not think that was a good idea. She viewed the PUC as commissioners without a vested interest in the outcome of the rate cases. She indicated the utility should be added if there was going to be a consumer advocate. The commission was a third party with no vested interest, and she did not feel it was appropriate. Consumers could go through the consumer advocate who represented the consumers through the Attorney General’s Office.
Ms. Buckley stated anyone that took the position of a commissioner had to be neutral and independent which was his or her role. They needed to judge a variety of factors that were presented to them and they were not to take the role of the utility, a casino, a mine or the consumer advocate. In theory they should weigh the various interests and vote what was in the public interest according to the statutes that the Legislature enacted. Some of her disappointment in the last two years had been related to the PUC neglecting to consider the public’s interest and the interest of consumers. Her suggestion was intended to try and put public interest back into the system. She did not want a bias on the part of the commissioner because by law they had to be independent. She wanted someone whose background gave the ability to wade through information and be fair and independent. She gave an example of someone like a Ralph Nader to use an extreme. She thought the suggestion might bring more rounded discussion and decision making back to the PUC.
Ms. Von Tobel suggested each member of the committee had been advocating for their constituents as long as they had been in office and they would be well-positioned as a consumer advocate; however, each member had to admit they would present a certain slant and opinion to the board. The member had to be objective. She would apply as a consumer advocate because she had been advocating for the rural constituents in her area since her election. She did not believe it was the purpose of the PUC.
Chairman Bache stated there was a motion to add a letter (F) to the list of qualifications to add experience in consumer advocacy. Speaker Emeritus Dini asked why there could not be a committee member from the general public instead of the consumer advocate qualification because there would be a conflict. Mr. Bache asked if Mr. Neighbors and Ms. Buckley wanted to withdraw their motion and change it to a member of the public. Ms. Buckley stated that was a good point. She believed she and Mr. Neighbors wanted someone that was working for the average person. If the general public could represent that interest without implying they wanted a former consumer advocate it would be a good change. Mr. Neighbors agreed. The maker and the second concurred there should be a change to the words in letter (F) to add “a member of the general public.”
Kevin Powers, Committee Counsel, asked for a point of clarification. Was it the intent of the motion that there always be one member of the committee from the general public or was the committee amending subsection 2 and it would not be necessary to have a field of experience to be a member of the general public. Mr. Bache asked what Mr. Neighbors and Ms. Buckley’s intent was. Mr. Neighbors stated one of the members of the committee would always be from the general public.
Assemblywoman Smith needed a clarification on how there would be differentiation between a person that had an accounting background and a member of the general public. There needed to be more clarification she felt. Mr. Bache stated there was one position guaranteed to be from the general public that would not have to be under any one of the other five classifications. It was possible that a person could be appointed to the general public position and also meet one of the five classifications. Ms. Buckley thought Assemblywoman Smith raised a good point and of course all of the members of the commission would already be members of the general public. Perhaps legal counsel could draft language and options for the committee in the final draft. The intent was a member of the general public should be appointed that represented the public. Certainly they could submit their resumes to show what they had done to show public interest commitment or advocacy as well as other talents. Smith stated that was her point, to make sure the intention was clear.
The Chairman called for the vote.
MOTION CARRIED UNANIMOUSLY.
Chairman Bache asked Mr. Powers to continue explaining the sections of the amendment.
Sections 2, 3 and 4worked in conjunction and dealt with the issues raised by the Chairman concerning employment and operational internal management within the PUC. Section 2 deleted the sentence “the chairman shall serve as the executive officer of the commission.” Section 3 clarified some existing language and added the commission acted through the majority of the commissioners except for the circumstance where there were vacancies on the commission. Given the past vote on changing to five commissioners just passed, this section would change once again. The first component of Section 4 dealt with employees of the commission. Page 3, line 4, of the amendment provided that full-time employees of the commission that were in the unclassified service of the state and who had an aggregate length of service of one year or more should be deemed permanent classified employees under Chapter 284 of the Nevada Revised Statutes (NRS) exclusively for the purposes of discipline, demotion, suspension and dismissal. The section also provided this did not apply to a commissioner, a deputy commissioner or a hearing officer or legal counsel for the commission.
Chairman Bache stated he had specifically requested this part of the amendment and in Section 2 the change returned it to the pre-1997 language where anytime the commission took a personnel action they would have to vote in total as opposed to just the chairman of the commission. After the testimony of Ms. Thomas in describing the actions of the commission in regard to personnel over the last two years he felt those specific areas should be classified employees. He had continuously advocated for “just cause” instead of “at will” firing; however, the private sector had stated it should be dealt with where it was a problem. He believed the commission was where the problem existed. The language clarified that for purposes of discipline, demotion, suspension and dismissal employees were considered classified employees and would have some rights. This language took care of Mr. Bache’s concerns.
Assemblyman Humke indicated he recalled only one witness and asked if there was more than one witness. Mr. Bache stated there was not. Ms. Thomas was the only one that came forward because she was leaving the state and not continuing in the industry. Mr. Humke understood the Chairman’s strong feelings on the issue; however, he did not feel it was best to make a statute on the feelings of one person. It had been his experience that if employees in state and local government had a problem they were not hesitant to call legislators to complain. He felt there was a need for independence of a commission that had to act in a quasi-judicial fashion and he believed they needed a duty of loyalty from their employees.
Chairman Bache stated his problem was with the change in the chairman of the commission there were three employees terminated for no reason almost immediately. He had a great problem with that type of management. If there had been a situation where the chairman had indicated a direction the commission was going and asked the employees if they could follow the direction and they did not, that would be justification. He did not believe that had happened at all. There had also been other situations with the commission’s dealing with personnel that had been of great concern to him. He attributed these problems to be directly related to what he considered a high turnover of personnel in the commission.
Mr. Humke stated perhaps an outlet for those employees should be the Ways and Means Committee. The personnel had complained in the past to the committees without reluctance. Chairman Bache stated if they were terminated there was no opportunity for them to go the “money” committees for complaints.
Assemblywoman Tiffany had found, as a manager herself they had adopted guidelines and statutes they abided by; but there were always some bad managers or commissioners. There was always a turnover of personnel and perhaps there were a few times when not every employee was treated equally. She felt, however, this was a people issue, a manager issue and to handle a single incident such as this by enacting a statute was inappropriate. This was not the place to handle a problem that most would consider to be a poor manager problem. There was a process that employees could go through and there were alternatives. She recalled the chairman of the PUC stating there was not a large turnover, but rather a very average turnover for their type of agency.
Assemblywoman Buckley stated with administrative changes people had different philosophies and changes needed to happen. She thought that Assemblywoman Tiffany was correct concerning different management styles and how some people make mistakes. She did not believe the state should change laws based on mistakes. However, in listening to testimony, she was very swayed. People believed the independence of the regulatory staff was paramount. The staff needed to be free from bias so they could make recommendations in the public interest. If they did not have the assurance that their job was not at risk because they were going to advocate one way or the other they might not be the best staff in terms of guarding the public interest. For that reason she felt the suggestion would be helpful changes in the state’s statutory scheme.
Speaker Emeritus Dini denoted lines 15 and 16, on page 2 of the amendment. He clarified “if two commissioners were disqualified” should read, “if three commissioners were disqualified.” Mr. Bache asked Mr. Powers if he would make all of the necessary changes in language suggested. Mr. Powers stated he would adjust the changes based on the change in numbers.
ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND WITH THE PROPOSED AMENDMENTS ON SECTIONS 2, 3 AND 4 OF A.B. 661.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
THE MOTION CARRIED WITH ASSEMBLYMEN HUMKE AND HETTRICK AND ASSEMBLYWOMEN VON TOBEL AND TIFFANY VOTING NO.
Kevin Powers continued following the amendment and indicated the next two major components would be ratemaking. The introduced bill contained provisions in Sections 7 through 25 that established a new ratemaking procedure for electric utilities. In the proposed amendment those sections were removed from the bill and instead changes were made to the existing statutes dealing with hearings and ratemaking for all public utilities. He stated the commission made the request the provisions of the statute that had rate changes becoming effective in 30 days, unless suspended by the commission, be removed. The new procedure would be for each change in any schedule of rates the public utility had to make an application and the commission had 180 days to approve or disapprove that application. At the same time the additional changes applied when an electric utility filed a general rate application or an application to clear its deferred accounts and the commission would not have the authority to dispense with the hearing. There must be a public hearing on a general rate application or an application to clear its deferred accounts filed by an electric utility. Those changes were contained in subsection 6 of Section 4.
Mr. Powers stated Section 6 contained provisions dealing with any hearing. Section 7 made technical changes based on the new procedure eliminating the “effective in 30 days unless suspended” provision. Sections 17, 18, 19 and 21 created new definitions for the ratemaking sections that dealt with the new procedure. Sections 25, 26, 27 and 28 made the changes altering the procedure because in the current procedure an application became effective in 30 days unless suspended and the new procedure was the application did not become effective unless the utility filed the proposed changes with the commission and the commission approved those proposed changes which it must do within 180 days.
Chairman Bache summarized the various sections and stated the commission must take affirmative action and they could not let something become approved by inaction. Mr. Powers stated that was correct and the specific language was found on page 22, of Exhibit C, beginning on line 13. Mr. Powers read from the exhibit the language effecting the changes.
Ms. Tiffany remembered when the PUC chairman testified on this issue and he had stated he felt the 180 days was appropriate. She wondered if the new five-person board would make any difference on the length of time to get to discovery and agreement. She felt when committees were large there was a tendency to spend more time in deliberation on issues.
Ms. Buckley stated the 180-day schedule had always been the standard when there was a five-member board at the PUC. Mr. Bache stated he believed that was true.
Donald Soderberg, Chairman, PUC, came to the witness table to clarify the issue. Mr. Soderberg stated since he had been associated with the PUC the statutory effective date had always been 180 days. He did not believe that would be affected with the larger commission. Most of the time was used by the consumer advocate and his staff in doing the detailed work before it came to the hearing. He did not believe it affected it one way or the other. Chairman Bache stated Mr. Soderberg was first on the commission when it was a five-member board and it was 180 days at that time. Mr. Soderberg stated that was correct and he did not know when it was first implemented however since 1995 it had been 180 days.
ASSEMBLYWOMAN BUCKLEY MOVED TO ACCEPT THE AMENDMENTS TO SECTIONS 6, 7, 17, 18, 19, 21, 25, 26, 27 AND 28 OF A.B. 661.
THE MOTION WAS SECONDED BY ASSEMBLYWOMAN LESLIE.
THE MOTION CARRIED UNANIMOUSLY.
Kevin Powers stated he wanted to make sure he covered every section. Some of the sections were technical drafting revisions to clean up some of the existing language in NRS Chapter 703 and 704, some of which had not been amended since they were introduced into law in 1919. Section 8 fell into that category and was technical clean up language done by the LCB. Sections 10 and 11 would be new definitions for the Chapters including “biomass,” used in the definition of renewable energy and “consumer advocate.”
Section 13 was the next main change for the committee’s consideration. Mr. Powers stated this section was not in the introduced bill. That was a combination of proposals from two public interests organizations, Washoe Legal Services and another public organization. That section required the commission to adopt regulations that prohibited a public utility from terminating gas, water or electricity service to residential customers because of nonpayment under certain circumstances. If, on the date of termination, the area the residents were located in was experiencing a climatic extreme and the utility service to be terminated was necessary to control the temperature of the residence, then the utility was prohibited from terminating service on that date until the period of climatic extreme ended. Also, the utility was prohibited from terminating gas, water or electricity service if that termination was likely to threaten the health of an occupant of the residence of the residential customer. Mr. Powers stated this was the essence of subsection 1, of Section 13. Subsection 2 took those same protections and extended them to customers who received their utility service through a landlord. If the landlord failed to pay, the utility could not terminate the utility service to the building unless the tenants received reasonable and adequate notice. There were provisions in the section for the resumption of utility service that gave the building priority after termination. The two conditions that were in subsection 1, also applied to subsection 2.
Assemblyman Hettrick stated if he read Section 13, starting at line 15, he clarified the utility could not terminate service for nonpayment if, on the date of termination, the residence was located in an area experiencing a climatic extreme. He asked what would happen if everyone in Las Vegas decided to not pay their bill on April 1 and on June 1, 10,000 residents had not paid their bill and it was hot. Nothing in the language, he indicated, prohibited a whole group of people from just deciding not to pay their bill. Nothing in the language, he continued, stopped any landlord from deciding not to pay their bills. They could just say the utility could not terminate them because it was hot. He wondered what prohibited that kind of action.
Chairman Bache stated Mr. Nielsen was one of the people that proposed the amendment and perhaps he could answer the question.
Ernest Nielsen, Washoe County Senior Law Project, Washoe County Senior Services, stated the intent was to authorize the commission to develop those regulations, make those kinds of considerations, and debate those issues to fine-tune how the process would be done. There was a process that had been started at the commission to review the consumer bill of rights. He had hoped those concepts would have been authorized giving the commission authorization to debate how these provisions would be enacted including avoiding the situation Mr. Hettrick had brought forward.
Mr. Hettrick stated he appreciated that; however, line 15 stated the commission “shall adopt” regulations “which prohibit.” He stressed this was not authorization but rather mandate. The language did not state anything in regard to any group of customers or what would happen if a large group of customers went out. He understood the intent and it was a good intent; however, what they would write into law was that the utility could not shut off anyone’s utilities based on the listed circumstances. The language stated “prohibit” and did not say ameliorate or pick some group of citizens.
Ms. Buckley apologized because she had probably missed the hearing where this amendment was discussed. She asked how many other states had this protection and how would the utility make sure the person was truly low-income and the situation was not just a “utility strike” to address Mr. Hettrick’s concerns.
Mr. Nielsen could not answer the question about how many other states had the protection in statutory language. He did know that currently there were a lot of commissions that were adopting rules relating to no turn-offs during extreme weather conditions or for health and safety reasons. He was intending to make sure the commission had authority to operate within that context. He would be happy with simply the authorization, as opposed to the mandate. Ms. Buckley stated that maybe the committee could ask the same question of Mr. Soderberg.
Mr. Humke stated perhaps the committee could regulate by employing some kind of a means test or change the one word in the amendment from “shall” to “may” and the commission would be able to follow the committee’s desire. This would not restrict the commission in how they designed the regulations. Mr. Bache restated that Mr. Humke’s suggestion was to change the beginning of Section 13 where the language read, “the commission shall” to “the commission may.” Mr. Humke said that would be a possibility. Chairman Bache asked Ms. Buckley to restate her question for Mr. Soderberg. Ms. Buckley stated the committee was discussing the issue of utility shutoffs for nonpayment during times when the health of someone would be threatened due to the climate and the ability of the PUC to adopt regulations concerning this issue. There was concern about the phrase “the commission shall adopt regulations” which would prohibit the shutoffs; however, it did not say if the person was low-income or used some sort of testing to make sure the customer was needy. She wanted to know how many other states had those kinds of regulations and she wondered how he thought the regulations would work.
Mr. Soderberg was not aware of the statistics that indicated how other states had handled such situations. If that was something the Legislature desired the commission do in the future, he asked that the committee give them the parameters of consideration. The way the language was drafted it appeared to require the commission adopt a regulation saying exactly what the statute said, “prohibit the shutoffs.” Mr. Soderberg stated he agreed with the comments in that there needed to be some level of balance with some qualifications. Typically if someone did not pay their bills they would be shut off. If the intent was to create a mechanism by which some people were exempted from that because of a special circumstance, he believed the commission would do a better job in crafting the regulations if they had the concerns the committee wanted to be included. Right now the language was open-ended and stated the utility would not shut them off. He had always advocated statutes that had more definition in them because it allowed them to do a better job if they did not have to guess what the Legislature was thinking. If this was something the committee wanted to do, he asked they give the commission the parameters in which they wanted the commission to do it. He pointed out the rulemaking process was a long process and it would not be something available this summer. He realized this summer was a concern to people because of what appeared to be a hotter than normal summer with higher utility bills.
Ms. Buckley wanted to make sure the committee reviewed what she thought were important issues in paragraph (c) and (d), on page 9. She had seen some circumstances where a tenant paid a utility service to the landlord and then the landlord did not pay the bill and the power would get shutoff. The tenant had made the payment and had the receipts but never received a notice it would be turned off because the landlord received the notice. Some of the tenants would band together to collect the money to get the power turned back on; however, they were told they could not because the power was not in their name. She wanted the PUC to look at establishing procedures to provide relief in that area.
Ms. Von Tobel had dealt with some of these issues in her district and in the Committee on Government Affairs. She had a co-op in her district, Overton Power, that had lien powers. If the committee was going to start to tell the utility they had to keep power on and when they were not getting paid, then the utility should have the power to lien the property. It was not fair to expect all ratepayers to pay for the cost of that power the utility was required to keep on. Co-ops had the power to lien a property and if the state was going to start protecting low-income people, then, on the other hand, the state had to give lien powers to the utility. The state had to give some power to the utility to eventually get the payment.
Assemblywoman Smith preferred the committee leave in the “shall adopt” regulation in the amendment; however, she wondered why the committee could not provide the clarification they wanted the regulations to be based on.
Assemblywoman Tiffany shared Ms. Von Tobel’s concern. She did not believe the cost shifting from one person to all ratepayers was necessarily fair. However, if the committee did vote in favor and gave the power to the commission, she asked what sanctions they had for noncompliance. If the commission was to adopt a standard and they found there was a problem, what recourse was there as a sanction?
Ms. Buckley suggested the committee could “empower” the commission and ask that they “shall adopt” regulations, hold public hearings and perhaps there would be parameters that the intent was to develop ways to prevent utility shutoffs in severe times to people that could not afford the bills and examine mechanisms to insure that it was fair to everyone. There needed to be an effective balance of some kind.
Mr. Humke stated this particular provision had a certain amount of detail and he respected Chairman Soderberg’s concern in regard to the fact he would normally prefer to have the detail in the statute rather than in regulation. This was Mr. Humke’s philosophy as well. It was, however, late in the session and there was quite a bit of detail that he did not feel this Legislature would be able or willing to deal with at this late hour. If the committee gave the commission the broad parameters and left it as a “may” with the understanding they would establish regulations, he felt that would be appropriate. One area that was available for ratepayers that had a problem with paying their bills was a ratepayer assistance program. The utility should be able to direct the customer to that program when they were confronted with a customer having trouble.
Assemblyman Hettrick understood the direction everyone was taking, but he wanted to point out that the regulations could not be based only on the poverty level of an individual. A landlord might not be in a poverty situation at all so the regulations could not be written that way and he believed Ms. Von Tobel’s suggestion made sense. He felt the utility should have lien power to get their money back so every ratepayer did not get injured by higher bills. If a low-income person had a home and did not pay the bill so as to make the state pay, that situation would not be acceptable. The utility had to have the lien power so they could ultimately collect the money owned. This program would be broad based and could not be applied simply on the basis of a means test.
Ernest Adler, Representative, Nevada Housing Coalition, believed Idaho did have a provision for extreme cold weather. He felt it was unrealistic to assume everyone was not going to pay their power bill because the first thing a utility did was put the account into a credit report and that meant the person could not purchase an automobile, house or other major purchases in the future. Mr. Adler stated the utility did have lien power currently because they could take a customer to small claims court, get a judgment, and file a lien against any real estate they might have. The amendment did not excuse the payment of the debt it just stated the utility could not turn power off in the extreme circumstances mentioned. It did not prevent the utility from attaching a bank account or any nonexempt assets. He did not see that represented in the bill. There was a penalty out there already in the form of poor credit reports and possible liens. This bill covered an extreme case when a person could freeze to death because of power turnoff.
Mr. Hettrick agreed with Mr. Adler in most cases, but pointed out he had researched the property tax payments in Nevada. He noted there were people who did not pay their property tax for two years in a row on purpose, received a citation, had their record noted, incurred the interest charges and penalties and purposely waited two years and six months and the day before it went to the courthouse they paid. Then the process began again immediately. He felt there needed to be lien power in the landlord section especially.
Assemblywoman Buckley made a motion to cover the following sample language for Section 13: “The commission shall adopt regulations governing the issue of utility terminations with the intent of the Legislature stating the commission should find ways to ensure people in financial crisis shall not have their utilities terminated in extreme climatic conditions; however, the commission would have to ensure people were not taking advantage of the program. Also the commission was to ensure all appropriate remedies such as liens and repayment plans and create something that was equitable for everyone.”
ASSEMBLYWOMAN BUCKLEY MOTIONED TO AMEND SECTION 13 OF A.B. 661 WITH LANGUAGE STATED PREVIOUSLY.
ASSEMBLYWOMEN SMITH AND VON TOBEL SECONDED THE MOTION.
Assemblywoman Tiffany wanted to amend the motion and add a condition of what would happen if the utility company did not follow through. The committee had only examined what would happen if the customers did not follow through. The bill was giving the commission the ability to adopt regulations; however, they were not being given sanctions. She would like to add to the amendment some sanctions available to the commission when adopting regulations. If the utility company shut off the power and did not notify the people or make the proper notifications, etc., and appeared before the PUC, what power did the PUC have to take against the companies? Chairman Bache stated the commission had no authority over the rural co-ops but rather only over public utilities. Assemblywoman Tiffany stated she had welfare-to-work individuals that were constantly trying to raise money for their utilities before they were shut off. If the utility cutoff power in an extreme climatic situation and continued to do so, the complaint could be filed before the PUC; however, they had no legal ramifications to curtail the actions on the part of the utility company.
Assemblywoman Buckley stated Mr. Soderberg might be able to handle this concern and she thought there might be a department in his office that would handle this type of situation.
Mr. Soderberg stated when the issue was examined there were often three parties involved. There was a division within their regulatory operation staff known as the consumer complaint division and when individual consumers felt they had a problem with the regulated utility, they could call. A majority of these problems were handled informally after the utility called and had issues checked out. There were some areas of problems that raised to the formal complaint level and were processed by the consumer complaint division and brought before the commission in a litigated case.
With respect to a regulated utility, his office had the full array of regulatory mechanisms to compel certain actions including fines, motions to show cause on whether their certificate should remain in effect, and typically there was no problem. The issues where there had been problems were when there was an unregulated middleman, the apartment complex owner, the mobile home park owner, etc. Technically there were aggregators now and they were called landlords. They paid the utility and then charged their residents. There were many instances when the residents gave their money to the landlord and the money did not make it to the utility. The utility would have an obligation to compel payment because those costs were born by the rest of the ratepayers; however, the actual injured parties were the residents themselves. These unregulated aggregators did cause a problem.
He thought the amendment suggested by Assemblywoman Buckley asked them to look at what mechanisms they would have in order to compel the unregulated middleman to live up to their obligations. He questioned if there was any jurisdictional power on the part of the commission to prosecute those people. With respect to particular concerns, if the Legislature wanted the commission to impose a special penalty in these types of cases then the committee should articulate that language. If not, the commission would fall back on their general administrative fine provisions or the ability to compel the utility to show cause why their certificate should not be revoked. In his experience the fine provisions had made regulated utilities very good at compliance.
Assemblywoman Tiffany withdrew her suggestion for the amendment motion because she believed it was covered under what Mr. Soderberg explained. Mr. Bache thanked the commissioner for pointing out the gap pertaining to the unregulated middleman.
Assemblywoman Buckley stated included in her motion was (c) and (d) of the proposed amendment to Section 13 as already discussed and if the legal counsel for the committee or the legal counsel for the PUC felt there needed to be any additional language that stated the commission had the jurisdiction to examine the issues and the regulations, that should be done.
Mr. Bache asked Mr. Powers if he was clear on the contents of Ms. Buckley’s motion. Mr. Powers stated he was, but for further clarification he added what the committee wanted to do was give the PUC jurisdiction over landlords they did not currently have.
Jon Sasser, Representative, Washoe County Senior Law Project, stated part of the committee’s confusion was caused by the bill drafters, who took two separate suggested amendments and put them together in a way that was not clear. Mr. Sasser stated it was incorrect to state the PUC should have jurisdiction over landlords. They had offered an amendment separate from the one on climatic conditions that stated simply to give the PUC the authority to adopt regulations in three areas that would extend rights to consumers that were not customers. One suggestion required the utility to notify the tenants prior to termination and that governed the conduct of the utility and not the landlord. Second was the restriction of termination of the utility for an elderly or handicapped tenant who might be threatened with health and safety issues and that was already in the law currently if they were customers. Thirdly, he had suggested an establishment of procedures to govern the utility for the resumption of service once the bill was paid. They were definitely not moving into the area of governing the conduct of landlords.
Mr. Powers understood the request. As it was in the current bill, however, it did not apply to landlords but rather only to a public utility. The question before the committee was Ms. Buckley’s motion that seemed to imply there was a desire to extend this notion to the “unregulated middleman.” Mr. Bache asked Ms. Buckley to clarify that area of her motion.
Ms. Buckley indicated it was clear that the committee wanted to address the utility’s conduct when an unregulated middleman’s behavior hurt the tenants with regard to utilities. The committee also wanted to be clear they did not want to broaden the PUC’s jurisdiction but rather give them the authority in these areas to craft regulations that would assist.
Mr. Hettrick stated in reading the amendment further he had a question about Section 13, line 15 through 19. It had been established the PUC would adopt some regulations, but as the rest of the amendment was read, line 19 of Section 13 stated “a public utility” and did not say a regulated utility and he wondered if that would apply to Southern Nevada Water Authority or the Colorado River Commission.
Mr. Powers stated the term “public utility” as used in the amendment was part of NRS Chapter 704 and it was defined in that Chapter. There were entities that provided gas, electric or water service that fell outside of the parameters of Chapter 704 that would not be subject to these regulations. The committee would have to decide if it wanted to extend the jurisdiction of the PUC to cover a broader range of providers of gas, electricity and water service.
Mr. Hettrick questioned if it was appropriate for the water authority in Las Vegas to be given the same parameters. If it applied to public utilities why would it not apply to them and to the co-ops that supplied power? If it was appropriate in one place it should be appropriate in all places. Mr. Bache stated he did not believe the commission had the authority to regulate those entities.
Fred Schmidt, Representative, Southern Nevada Water Authority (SNWA), answered Mr. Hettrick’s question and responded the statute did not apply to either the Colorado River Commission (CRC) or the SNWA. The way the amendment was drafted it would not apply to them. With regard to electric sales, neither of those entities sold electricity to residential customers. Neither entity sold water to any residential customer directly. There were entities to whom the SNWA or the CRC sold wholesale power or water and they did serve residential customers. He did not know if those entities had policies that would apply to this issue or the committee could add them into the policies being made. The CRC did sell to rural electric co-ops such as Overton Power District and Valley Electric. The statute would have to be expanded in order to include these companies, general improvement districts, co-ops, and others that sold residential power and water. Each of them, he was sure, had their own policies regarding termination of service.
Mr. Bache asked if there was further discussion on the motion. Ms. Buckley stated her motion was to adopt Section 13 changing the first portion of the section to require the commission “shall adopt regulations governing the subject of terminations of utility services” using the various factors the committee had discussed. Also, she wanted to keep the second paragraph that allowed the PUC to establish procedures and ways to provide more notice to tenants where landlords did not pay the bills.
The Chairman called for the vote.
MOTION CARRIED UNANIMOUSLY.
Mr. Neighbors asked if there would be further meetings on this bill as he had an amendment he would like to present on aggregation. Chairman Bache stated there would be more meetings and he could present next week.
Sections 14 and 15of the proposed amendment, Mr. Powers stated, were taken from the introduced bill with some minor structural language changes. The essence of each section went to the policy of the Legislature when it came to the purchase of power through multiple contracts by public utilities, in Section 14. There was a public policy statement those public utilities would insure the duration of their contracts were varied to protect the customers of the utility from fluctuation in the price of electricity. Section 15 directed the commission to consider whether any new generation unit or increased capacity from an existing generator unit would increase the quantity of electricity that was available for purchase in this state. It did not require the commission to act but required it to take the issue under consideration.
ASSEMBLYMAN HETTRICK MOVED TO AMEND SECTIONS 14 AND 15 OF A.B. 661.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
MOTION CARRIED UNANIMOUSLY.
Section 16, Mr. Powers stated, was also taken from the introduced bill with minor revisions in the amendment for clarification purposes. The revision achieved the purpose expressed by the committee to insure each new generating unit that went on-line was subject to a one-time assessment. This assessment was based on the maximum generating capacity of the new electric generating unit as determined by the commission and expressed in megawatts multiplied by $1000 and the money was deposited in the trust fund for renewable energy and energy conservation. Part of the duties of the proposed energy task force was to administer the fund and use it for the purposes mentioned in sections of the bill pertaining to renewable energy and energy conservation.
Assemblywoman Tiffany stated she understood they were going to assess fossil fuel and the money assessed was to be deposited in a trust fund that would be used for the development of renewables. She considered renewables would actually be in competition with fossil fuels in this case. She did not think it made sense to take money from one and give to another company that would be in competition.
Assemblywoman Buckley understood for years there had been research and development budgets for fossil fuels. There had also been subsidies received from the federal level for fossil fuels and nuclear power. Many in the renewable resource market had stated that if a tenth of the resources that had been supplied to fossil fuels and nuclear power had been put into harnessing natural power such as wind, solar and geothermal, the state of energy today would be substantially different. She believed the intent was to harness Nevada’s natural attributes, those that made some call Nevada the Saudi Arabia of the United States, in a way that assured the state would not go through another crisis situation. These would be some of the arguments against the theory that this was a cross-subsidization for no public benefit.
Mr. Humke was persuaded by Ms. Tiffany’s argument. This section appeared to set up a subsidy whereby the fossil fuel generators of electricity were compelled to subsidize the renewables. That seemed to be, in addition to a policy that this committee and the Assembly had established with the portfolio standard, setting up a subsidy upon a subsidy. Mr. Humke stated if fossil fuel energy sources were promoted and supported by the government of the United States that was an issue for the state to discuss with the federal government. He did not feel it was good policy to compel the PUC to assess the utilities that in turn would charge all citizens to support renewable resources.
Chairman Bache stated the committee would have to continue the discussion on Section 16 at another time because there were only a few minutes left in the meeting. Mr. Bache asked Mr. Powers if there were any other sections that would be short before the committee adjourned.
Section 29, Mr. Powers stated, was the section that related to mergers, acquisitions and other changes in control. This section contained the amendments proposed by the representatives from Nevada Bell and Sprint. Those companies wanted to insure that the PUC did not have regulation over a public utility or a public utility holding company if less than 10 percent of that company’s gross operating revenue was derived from interstate services provided to retail customers in this state.
ASSEMBLYWOMAN BUCKLEY MOTIONED TO AMEND SECTION 29 OF A.B. 661.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
MOTION CARRIED UNANIMOUSLY.
Chairman Bache asked if there were any other sections the committee could vote on in a short period of time. Mr. Powers stated there was one other significant and substantial section to deal with in the proposed amendment. The rest of the sections dealt with the conflict amendment and one technical amendment. Chairman Bache asked what the significant section was. Mr. Powers stated it was the group of sections dealing with the Task Force for Renewable Energy and Energy Conservation. The sections included were 86, 87 and 88. The main changes in 87 and 88 were to indicate the task force focus was not just renewable energy, but also conservation. The largest change was in Section 86 and concerned the composition of the task force—who they were, who would appoint them, and who they represented. Chairman Bache stated he believed the discussions on these sections would take the committee beyond the time remaining in the current hearing.
Mr. Powers stated the rest of the changes were technical revisions or conflict amendments.
Chairman Bache closed the work session on A.B. 661 and stated it would resume on Tuesday. Seeing no further business to come before the committee the Chairman adjourned the meeting at 3:36 p.m.
___________________________
Cheryl Meyers
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: