MINUTES OF THE meeting

of the

ASSEMBLY sELECT Committee on Energy

 

Seventy-First Session

May 17, 2001 and May 21, 2001

 

 

The Select Committee on Energy was called to order at 1:58 p.m., on Thursday, May 17, 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 Chairwoman

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:

 

Marcia de Braga, Assembly District 35

Dina Titus, Senate District 7

 

STAFF MEMBERS PRESENT:

 

Kevin C. Powers, Committee Counsel

David S. Ziegler, Committee Policy Analyst

Cheryl Meyers, Committee Secretary

 

OTHERS PRESENT:

 

Jon Wellinghoff, Attorney at Law, Representative, Sierra Concepts, Inc., Las Vegas, Nevada

Janet Gilbert, Representative, Progressive Leadership Alliance of Nevada, Reno, Nevada

Judy Stokey, Government Affairs Executive II, Nevada Power and Sierra Pacific Power, Las Vegas, Nevada

Kathleen M. Drakulich, Associate General Counsel, Sierra Pacific Power and Nevada Power Company, Reno, Nevada

Michael Smart, Vice President, Resource Management, Sierra Pacific Power and Nevada Power Company, Reno, Nevada

Alfredo T. Alonso, Government Affairs Coordinator, BP Energy, Reno, Nevada

Joe Johnson, President, Toiyabe Chapter of the Sierra Club, Reno, Nevada

Dr. Michael Baughman, Representative, Lincoln County, Eureka County, Lander County, and City of Caliente

Tim Carlson, Representative, Nevada Test Site (NTS) Development Corporation, Las Vegas, Nevada

Joyce Newman, President, Utility Shareholders Association of Nevada, Inc., Carson City, Nevada

Michael Brown, Vice President, Barrick Gold Corporation, Washington, D.C.

John Owens, Project Engineer, Sierra Pacific Power and Nevada Power, Reno, Nevada

R. Michael Turnipseed, Director, Department of Conservation and Natural Resources, State of Nevada, Carson City, Nevada

Hugh Ricci, State Engineer, State Environmental Commission, State of Nevada, Carson City, Nevada

Donald Soderberg, Chairman, Public Utilities Commission (PUC), State of Nevada, Carson City, Nevada

Allen Biaggi, Administrator, State Department of Conservation and Natural Resources, Division of Environmental Protection, Carson City, Nevada

Debra Jacobson, Director, Government and State Regulatory Affairs, Southwest Gas Corporation, Las Vegas, Nevada

Julie Wilcox, Representative, Southern Nevada Water Authority and Las Vegas Valley Water District, Las Vegas, Nevada

George Caan, Director, Colorado River Commission, Las Vegas, Nevada

 

 

Senate Bill 372:  Revises provisions concerning conservation of energy and use of renewable energy. (BDR 58-287)

 

Marcia de Braga, Assembly District 35, disclosed she was a recipient of royalties from a geothermal power plant.  She had checked with the legal division of the Legislative Counsel Bureau (LCB) for an opinion.  This bill would not affect her in any way and it was permissible for her to speak on the issues and vote. 

 

Mrs. de Braga stated S.B. 372 was a close replica of A.B. 418, which she had sponsored.  She introduced Jon Wellinghoff, Representative, Sierra Concepts, Inc., who would present the amendments that were made to A.B. 418 in the Senate.  She hoped to incorporate the amendments into S.B. 372 so the bills would end up in identical form.  She indicated this was a very good bipartisan effort and the sponsors were in favor of the amendments. 

 

Mr. Wellinghoff stated the members of the committee should have a copy of “Proposed Conforming Amendments:  S.B. 372/A.B. 418” (Exhibit C) before them.  The amendments were mirrors to the amendments presented to the Senate Commerce and Labor Committee on the previous Tuesday.  The proposed amendments attempted to make the bills consistent and ensured the best provisions of both bills, which would assist renewables in a maximum way, were incorporated into each bill. 

 

Mr. Wellinghoff pointed out the proposed amendments were in larger print to show how the two bills were merged.  He suggested the committee examine page 5 of the exhibit to see the very large print was actually from A.B. 418 and now placed in S.B. 372.  The example gave a provider certain actions allowed in regard to soliciting contracts and determined the actions must be taken before the Public Utilities Commission (PUC) to determine if there was sufficient supply.  This provision of the bill was the “escape clause” that allowed the utility to not be penalized if in any particular year there were not adequate renewable resources for the utility to meet the portfolio requirement.  They had cleaned up the language defining renewable energies on page 7 of the amendment and made the definition consistent throughout the bill.  Page 9 was an addition to the bill that included the provision on economic development, which was in A.B. 418 and not present in S.B. 372.  The provision gave authority of dissemination of information to certain counties in regard to future proposed generating plants.  There was a discussion before the Senate Commerce and Labor Committee and there was concern the particular provision would restrict the economic division to only give information to the smaller counties.  Mr. Wellinghoff had made it clear to the Senate committee it did not limit the economic development division from giving the same information to the large counties, it just ensured the information would be accumulated and disseminated to the small counties.

 

Assemblyman de Braga stated the intent was to make sure the smaller counties would not be left out of the dissemination of information.  Mr. Wellinghoff stated he had not meant to leave the larger counties out of the amendment but rather wanted to make sure the smaller counties were covered. 

 

Mr. Wellinghoff indicated Section 18 (Exhibit C) was a provision that was also in A.B. 418 with respect to consideration of both cogeneration and renewable energy systems in the construction of new state facilities.  Section 19 was an amendment, also from A.B. 418, that instituted the real and personal property tax exemption provisions.  Another issue that was not in the exhibit presented but was present in the amendment to A.B. 418 in the Senate was Senator Townsend’s incorporation of S.B. 273, which was the provision passed by the Senate implementing sales tax exemption for renewables.  Senator Townsend had thought it would be important to have all of the renewable assistance provisions under one bill. 

 

Assemblywoman Leslie questioned Mr. Wellinghoff about page 5 and asked about the purpose of the paragraph that had been added.  Mr. Wellinghoff stated the paragraph was in A.B. 418 and was not in S.B. 372.  It was agreed by the two sponsors to include the paragraph. 

 

Assemblywoman Tiffany wondered why hydropower was not listed in Section 7, subsection 1.  Mr. Wellinghoff stated it was taken out and was not listed in the original S.B. 372.  It had become a compromise discussion with respect to the number of items listed.  They did not want Hoover Dam in the bill.  Ms. Tiffany indicated hydropower could help the renewable industries reach the 15 percent of renewables in the portfolio that would be required.  Mr. Wellinghoff stated they believed they could reach the 15 percent without it.  The discussion had yielded some concerns about the environmental impact in regard to hydropower.  Hydropower, he indicated, did not make sense in the state of Nevada where water was very precious and the state needed every drop for domestic purposes and drinking water.  Ms. Tiffany asked who agreed to take it out of the bill.  Mr. Wellinghoff stated it was agreed to by both sponsors, Senator Townsend and Assemblyman de Braga.  Mr. Wellinghoff stated the committee could certainly put hydropower back on the list if they chose.  It was not in the original bill as passed by the Senate on an 18 to 3 vote and was not in the amendment that would be put into A.B. 418.

 

Ms. Tiffany asked if anyone had spoken to Assemblyman Hettrick about removing hydropower from the bill since he had originally proposed the idea.  Mrs. de Braga stated she had not spoken to Mr. Hettrick.  Ms. Tiffany addressed the Chairman and asked if the committee was considering passing the bill that day because she felt Mr. Hettrick would have a good reason for including it in the bill.  Chairman Bache stated he was waiting for a full committee to vote on the bills heard previously and the ones to be heard that day.  The Chairman indicated if there was not a full committee he would recess until the following Monday to process the bills.

 

Assemblywoman Von Tobel asked Mr. Wellinghoff about the verifiable facts portion of Exhibit C.  She had noted that Section 1, subsection (c), mentioned the cost of wind power at 5 cents per kilowatt-hour due to the Federal production tax credit.  She had just read that the new administration in Washington D.C. would not endorse giving geothermal and other renewable industries the special tax credit they sought (Exhibit D).  The production tax credit would end this year, she stated.  She asked Mr. Wellinghoff if that news would change his formula.  Mr. Wellinghoff stated the quote was for wind and not geothermal.  Ms. Von Tobel replied she had been under the assumption that wind was a renewable and the article stated all renewables.  She had the impression the tax credits would be removed for all renewables.  Mr. Wellinghoff said there was a tax credit and Ms. Von Tobel stated it ended this year.  Mr. Wellinghoff stated that was correct although there were bipartisan bills to extend the tax credit for wind.  She asked Mr. Wellinghoff whether his projections would change if that tax was not approved in the future.  Mr. Wellinghoff stated it might not because he had seen wind prices as low as 3 cents per kilowatt-hour.  Even without the tax credit the number he had quoted would be valid.  Ms. Von Tobel asked if the price was guaranteed only with a ten-year contract.  Mr. Wellinghoff stated that was correct. 

 

Assemblywoman Tiffany wondered about the kilowatt-hour price projections.  She asked if the cost was before or after the inclusion of capitalization.  If a wind or geothermal plant had to be built there would be a substantial start-up cost plus the capitalization and she wondered if those costs were included.  Mr. Wellinghoff stated the projections were total levelized costs and those she had mentioned were included.  Ms. Tiffany commented he was talking about building it, having the contracts, and delivering the power on day one for the price he quoted.  Mr. Wellinghoff stated that was correct for day one and at the end of ten years. 

 

Assemblywoman Von Tobel was perplexed at the reluctance to support this type of power if the price was so affordable.  The committee had supported the fact that rates could be 10 percent higher than other power and had suggested, in addition to the 15 percent minimum for the portfolio, if the price was within 10 percent “the company” should purchase as much as they could.  She wondered why there was no cap on the power and the reluctance to allow it as part of the legislation if the prices were as he had suggested.

 

Mr. Wellinghoff stated the cap issue was not a new issue.  Under the “avoided costs” methodologies that set the rates the utilities could buy renewable power as well as cogeneration and there were many contentious hearings over what were “avoided costs.”  He indicated it sounded easy to set the cap at 10 percent over what other contracts would be; however, the problem was comparing those contracts, what the comparison was and how would a hearing set that comparison.  He had been in many “avoided costs” proceedings that had taken months.  The Public Utilities Commission (PUC) had the authority under the current statutes to monitor rates in the public interest if developers tried to charge prices that were excessive at the last increment of renewables required by the law.  He addressed the other concern that the state might need a cap because of insufficient competition in renewables.  He believed there was recent evidence there was significant competition.  As an example, there was a Request for Proposal (RFP) issued by Bonneville Power Administration, one of the largest power authorities in the United States, for the purchase of 1000 megawatts of wind power for the northwest.  The response within the last month showed there were companies that could guarantee a supply of 2600 megawatts.  He felt there would be more than adequate competition when the same portfolio was issued in Nevada.  When Nevada created a renewable market he believed there would be an ample supply of developers coming into the market. 

 

Mr. Wellinghoff stated there were no price caps on natural gas and if the committee wanted any price caps they should apply one to natural gas because that was where the state was experiencing the highest prices.  There would be a $500 million rate increase next year in March because there were no caps on natural gas prices.  Ms. Von Tobel stated the committee could certainly consider that option.

 

Assemblywoman Leslie stated there were some members of the committee that were against supporting the renewables because they would be subsidizing the renewable industry.  She did not have a problem with the subsidizing because it was good for the environment and a great economic development opportunity for rural Nevada.  She asked if the natural gas industry was subsidized in any way.  Mr. Wellinghoff stated that industry was extensively subsidized with gas depletion allowances that were, in essence, a federal tax subsidy the natural gas industry and oil industry had been enjoying for a number of years.  There were extensive federal subsidies and he did not think this was a subsidy for renewables, they were only asking for a competitive market.  The market needed to be open for competition with respect to renewables—geothermal, solar, wind, and biomass.  He responded to Ms. Leslie’s comment in regard to the economic development aspects for the rural areas.  He had read some numbers from Sierra Pacific Power Company in relation to the cost of renewable resources that indicated in 2003 it would cost $57 million if the state went forward with the bill.  He disputed that number and the information he had passed out indicated renewables might actually save $4.7 million for the state.  He had stated that gas ten-year contracts were at 6.9 cents per kilowatt-hour and Sierra Pacific Power was stating they were at 5 cents per kilowatt-hour.  He posed they could split the difference and state the ten-year contracts were at 6 cents per kilowatt-hour.  If there was an assumption that a solar energy component was 12 cents per kilowatt-hour, gas was 6 cents per kilowatt-hour, and, if you used his calculations, the net cost to consumers was approximately $5 million for 2003.  Compare that with the $500 million increase that would be experienced in the spring and the $300 million of new investment in this state with renewables entering the market; he indicated for $5 million spent it was a good investment. 

 

Assemblyman de Braga wanted to comment on Ms. Leslie’s question.  The portion that dealt with property tax credits in the bill was expendable.  It applied only to the facility and she wanted the committee to keep that issue in mind.  The property tax credits went through the economic development commission so there would be ample opportunity for a local government to have their input in the process.  With or without that tax credit there was an abundance of incentives that were actual trading of dollars.  She stated the main incentive was to create a market.  The other benefits were small and in addition to the main benefits.  If the state did not have the incentives there would be no way to ensure the exploration or the development.

 

Assemblywoman Leslie asked if there had been any discussion in the Senate in regard to the rebate program for the average homeowner.  She stated it would be a very good way to create a market.  Mr. Wellinghoff reflected the rebate program was not specifically brought up; however, in essence, this bill could functionally create a rebate program.  There were trading credits provided for in the bill and those credits could be used as payments that could be made to the homeowners as a “rebate” for people who installed solar systems and sold those credits to the utility so the utility could make up the provision for the portfolio.  He said the word “rebate” was not in the bill; however, the type of system he described could be set up. 

 

Assemblyman Hettrick asked what the rationale was for removing hydropower from the renewable list.  Hydropower was some of the cheapest power the state could get.  Mr. Wellinghoff responded and stated the proposed conforming amendments to S.B. 372 with A.B. 418 were companion amendments that were not voted on by anyone but were agreed to by the respective sponsors.  Part of the agreement was a compromise among certain areas and as a consequence hydropower was removed from the list.  The thinking was the hydropower was not seen as a significant resource in Nevada and, with respect to hydropower and its use for electric generation, it was in a conflicting situation in Nevada because if the state used hydropower for electric generation there would be a waste of water.  There was a situation of a public policy decision that would make the hydropower at conflicting and competing uses.  The highest and probably the best use in Nevada was to use the water for domestic purposes as well as agricultural uses rather than for power production.  The other issue was whether pumped storage was hydropower or not.  There were a lot of gray areas that could cause conflicts and problems.  It was ultimately decided that hydropower would not be in the amendments proposed to the committee for consideration and it was the committee’s prerogative to include it again.  Hydropower was never part of S.B. 372 and was not voted on by the Senate as part of their 18 to 3 vote. 

 

Mr. Hettrick stated the hydropower he was thinking about was a Pelton Wheel type of hydropower that was put up a creek without a dam, increased storage, or evaporation.  It was the same water running down the creek and a pipe would be placed in the creek.  When the water went down the creek the water went through a nozzle, spun a Pelton Wheel and drove a generator to create power.  It was the most economical form of generation a person could have.  He believed that hydropower should be put back on the list for that purpose alone.  Ms. Leslie had mentioned rural Nevada and the benefit to them for developing some of the renewables and he indicated there were thousands of little streams flowing out of the Ruby Mountains that could run a Pelton Wheel and generate electricity.  If the state was truly trying to encourage renewables and create a benefit for the state then every possible renewable source should be included in the bill.  He did not believe a dam was an issue because someone could not get a permit to build one in this state anyway. 

 

Mr. Hettrick commented on the cost per kilowatt-hour and stated if Sierra Pacific Power was correct and the cost was 5 cents per kilowatt-hour on a long-term contract, it would cost $10 million and not $5 million.  However, when the $5 million was cited the other figure would be on top of that and added to that cost, not in place of or as a savings, it was in addition to.  The ratepayer would have to pay that cost and when he read the exhibit that was presented he was sure it was factual; however, it was interesting that the geothermal energy was listed as being in the $.069 range while the contract would be fixed on traditional generation.  He asked Mr. Wellinghoff if he would like the committee to cap the price at $.069 and state it could only go lower because the price was in a range that was not the same as a fixed-price contract.  In subsection (c) the amendment stated “electricity could be delivered” and Mr. Hettrick commented that statement presumed there would be transmission lines in the places where they could generate wind power.  Mr. Hettrick did not believe there were transmission lines in many of those places currently because no one lived where Mr. Wellinghoff could put a wind field and therefore there were no transmission lines.  If that was the case, could there be a ten-year contract guaranteeing the price would be at $.018 less than traditional? 

 

As far as solar was concerned Mr. Hettrick felt the problem was the investment cost and it was limited to 10 percent.  He commented on subsection (e) and believed there would be competition early because, obviously, developers would see the market and the marketplace and the demand was great; however, he wondered if at 15 percent of market the prices were going to be competitive.  He wondered if that would be the case while the state had a mandate to buy 15 percent of market.  He was concerned with the mandate, but between now and 2013 the Legislature could keep up the discussions and correct things as necessary. 

 

Mr. Hettrick asked if the state of Nevada subsidized the natural gas industry or was it just the federal government.  Mr. Wellinghoff stated there probably were subsidies of some kind for the natural gas industry in the state.  He was referring to the depletion allowance in his previous answer to Ms. Leslie.  There was one simple answer.  In the state of Nevada the gas industry did not pay anything at all; it was paid for by the ratepayers to the gas companies. 

 

Mr. Wellinghoff wanted to comment on Mr. Hettrick’s suggestions in regard to hydropower.  There could be an amendment in the bill that would state low-head hydropower was included at a certain level and pick a kilowatt level of approximately 30 or 50.  He was not aware of what the Federal Energy Regulatory Commission (FERC) licensing issues were for that type of project; however, he did believe it could be very expensive.  The problem was Mr. Hettrick might find out it would not be as inexpensive as he thought.  The Pelton Wheel could be purchased and placed in the stream; however, there might be problems with transmission.  The biggest problem, he believed, would be the FERC licensing and the cost of sending someone to Washington D.C. to put the license through.  There were very few small generation plants on the grid because of the problems associated with the licensing.  There was some generation off the grid that could be used in rural areas and the bill did not restrict that in any way.

 

Mr. Hettrick stated the comment made about the state paying for the full price of natural gas was correct but the ratepayers or the state did not subsidize the cost of generating the gas in addition to paying for the gas.  With the bill the state would be paying for the cost of the power and paying a subsidy as well.  Mrs. de Braga asked how the state would be subsidizing.  Mr. Hettrick commented the state was going to charge any traditional generator a fee and then offer that to people that installed renewables.  The state would be subsidizing the installation of renewables and at the price the state was paying.  There were tax credits in other bills and the $500,000 charge to a traditional generator the state was offering back as a renewable bonus or incentive.  In that situation the state would be subsidizing the installation and then paying full price for the power, even if it was higher than the cost of traditional.  Mrs. De Braga stated that was not in the bill.  Mr. Hettrick stated that was true; however, the provisions for those bills were passing out of the Assembly. 

 

Assemblywoman Tiffany stated in reading the bill in Section 17 it asked the commission on economic development to investigate and study conditions, conduct and encourage research, serve as a center for public information, prepare and publish pamphlets, plan and develop an effective service for business information, and serve as a center for information.  The budget had not been closed with those requirements listed.  She wondered if anyone had thought about sending the bill to the Committee on Ways and Means because it would have a budget impact.  Assemblyman de Braga stated those conditions were in A.B. 418 and the committee had passed it out.  They were adding the economic development requirements to S.B. 372 so the two could conform.  Ms. Tiffany stated even if the bill had passed perhaps no one had caught the impact on the budget.  She stated it would have an impact on the budget of economic development and even though it had passed the committee it should be referred to Ways and Means.  Ms. de Braga stated there was no testimony from the people in the economic development commission as to the impact.  She could assume that unless something was brought up in the future the tasks were in the scope of their abilities to accomplish.  Ms. Tiffany stated many of the bills were referred by other Assemblymen or errors were caught by staff.  Very rarely did an agency appear and testify they could not perform. 

 

Kevin Powers, Committee Counsel, stated that the bill as drafted with the introductory clause contained a limit on the duties imposed on the commission on economic development to only those activities they could practically undertake which could be based on funding as well as any other logistics involved. 

 

Assemblyman Humke asked about page 9, subsection 6, and stated he was trying to understand the testimony at the beginning in relation to the dissemination of information in counties of less than 40,000 population.  He asked if that was a type of priority to handle those small counties first.  There was also testimony that the information was not limiting and would be available to all parts of the state.  He asked if that was the intent, to make the small counties a priority.  Mrs. de Braga stated no, it was just to ensure all counties, regardless of population, would receive the information.  If the statement was not clear she indicated they would gladly redraft the language.  Mr. Humke stated the language seemed awkward and counties were huge in Nevada with large rural areas.    

 

Janet Gilbert, Representative, Progressive Leadership Alliance of Nevada, wanted to go on record in support of S.B. 372 and A.B. 418.  Her group had targeted the issues in the bills as one of their major areas of concern and they would support the renewable energy portfolio.  They also supported the amendments and hoped the committee would pass the legislation to encourage the production of renewable energy.

 

Judy Stokey, Government Affairs Executive II, Nevada Power and Sierra Pacific Power (“the company”), Las Vegas, wanted to state “the company” supported the building of additional generation in the state, renewable or otherwise.  They had continually supported research and development of renewables.  However, at such a time of uncertainty with rates increasing they found it difficult to support a mandate to increase the portfolio standard to a level that would increase customer costs. 

 

Kathleen M. Drakulich, Associate General Counsel, Sierra Pacific Power and Nevada Power Company, Reno, reiterated the utilities were proponents of renewable energy.  Nine percent of Sierra Pacific Power Company’s total load was renewable energy.  That type of percentage for a utility’s portfolio was aggressive.  They did support renewables; however, they were in support of the language the committee passed out in A.B. 369, Section 28, which revised the existing law in NRS 704.989.  The revisions that occurred through A.B. 369 left the previous portfolio requirements intact.  They had spent hundreds of hearing and workshop hours developing regulations for that law as it existed and those regulations were presently before the PUC.  Their support was for the portfolio standard as it appeared in A.B. 369.  “The company” felt they needed to comment on the proposed S.B. 372.  If their preference for NRS 704.989 in A.B. 369 was not what the Legislature decided to do, “the company” needed to comment on S.B. 372 so that it would contain amendments the utility felt would be manageable and would not present onerous requirements for their customers.  She directed the committee’s attention to the proposed amendment they had submitted to be added to S.B. 372 (Exhibit E).  Anything lined through was proposed for deletion and anything underlined was for inclusion.  The references on the proposed amendment were from the March 16, 2001, first reprint of the bill.  Section 6, subsection 2(a), proposed deletion of the language “this state or an agency or instrumentality of this state.”  Presently those agencies or instrumentalities were not capable of selling renewable power or power to other parties with the exception of Southern Nevada Water Authority for their member agencies with the Colorado River Commission.  However, in the event that changed in the future, the utility’s position was that a policy for renewable energy should apply to state agencies or instrumentalities of the state. 

 

In Section 7 they proposed adding hydroelectric power for a number of the reasons given by Assemblyman Hettrick and Assemblywoman Tiffany.  They supported hydroelectric as one of the cheapest powers and thought it was very valuable and a great resource to be encouraged for the state.

 

Ms. Drakulich indicated in Section 8 of S.B. 372 they proposed to delete both references that appeared in Section 8, subsection 1(b) and subsection 2, in regard to “was installed and commenced operation after January 1, 1997.”  The first reference in Section 8, subsection 1, applied to the description of a renewable energy facility and the section reference was to the solar energy system.  This was a very critical item for the utilities to have the language removed.  It should also be important to the legislators in rural counties where the renewables might be developed.  The reason, she stated, was Sierra Pacific Power Company presently had 9 percent of their load in geothermal energy.  All of those facilities were constructed and installed prior to 1997.  Not only would those no longer qualify, and it was the intent of the last legislative session to give the utility company credit for being so aggressive with renewables by having those facilities qualify, but after the contracts for those expired those units would no longer qualify under S.B. 372 to fulfill portfolio requirements.  From this session they had learned that having the renewables competitive was very rare.  It only happened now because of the price of natural gas.  Ms. Drakulich stated without a requirement those facilities be included in the language, those facilities installed and commencing operation prior to 1997 would be defunct.  Unless the utilities were forced to purchase power from them and included them in the portfolio because they needed the portfolio standards, the utility would not normally purchase the power because it would be a bad economic decision.

 

Ms. Drakulich suggested in Section 9 amending the definition of “retail customer” to insert the words “end-use customer.”  This suggestion was in light of the passage of A.B. 661 by the committee.  If larger customers were allowed to purchase the commodity from energy providers it would be a wholesale transaction, however, if the definition of “retail customer” was changed to mean “end-use customer” then those large customers would be the end-use customer and even though it would be a wholesale transaction, those energy providers would have to include the percentage of renewables as mandated by the bill in the supply they provided. 

 

Prior to introducing the amendment to Section 10, Ms. Drakulich wanted to reemphasize they were not in support of the bill.  The two-tenths of 1 percent up to 1 percent of total load for renewables that was in A.B. 369 was what they supported.  However, with deferred energy in place, if the PUC deemed they had made a prudent investment, the cost of the renewables would fall on the customers.  For that reason they had proposed curbing the percentage requirements in S.B. 372 and actually arrived at the 10 percent maximum from a comment they had heard from Assemblywoman Leslie as to a national standard for renewables.  In Section 10, subsection 1(a), they had lowered it to 4 percent and then subsection (b) would be 6 percent, subsection (c) would be 8 percent, and subsection (d) would be 10 percent, and that would be the maximum amount that any utility would be required to put in their total load. 

 

Ms. Drakulich indicated a further proposed amendment to Section 10 was subsection 6.  This section discussed infeasibility and she had been in hearing rooms for years at the PUC in regard to renewable energy components of the portfolio.  Over the last year she had been involved in developing the regulations.  They had language in the regulations that capped the price to protect the customer.  They moved that idea into Section 10.  Infeasibility would not only be based on unavailability, but there would also be a cap.  The language stated if the commission determined the contract price would be greater than 5 percent above the price of a non-renewable contract of similar availability and terms then it would be deemed unavailable.  The comments had been made about short-term avoided costs and how difficult it was to have the 5 percent determination.  They had incorporated language necessary into the regulation before the commission to deal with the determination of when that 5 percent or when the price cap was met.  She believed it could be done by regulation and this bill in Section 12 provided for regulations to develop any of the provisions necessary.  Certainly, if the renewable was competitive as it was stated, 5 percent over a non-renewable contract under similar terms should not be a concern to the members of the industry.  There were a number of bills, including A.B. 661, with a renewable fund with tax-exempt financing and in this bill there was a 50 percent tax break in the amendments proposed by Mr. Wellinghoff.  There were significant tax breaks for the proponents and developers of the renewable facilities and they did not believe 5 percent above what they were going to pay for other resources would eliminate them from the market or from purchased power by the utility company.

 

Assemblyman Humke thanked Ms. Drakulich for proposing the amendment.  On the floor of the Assembly they had attempted to amend A.B. 418 and he did not have the benefit of her expertise in drafting an amendment at the time.  The amendment proposed appeared to be very concise language and obviously superior to the language he had proposed.  The 5 percent standard was also more reasonable and he felt the amendment would pass.

 

Assemblywoman Leslie stated she had never argued for a 10 percent renewable portfolio.  At the time there were others that did not want the portfolio to be changed at all and she had used the 10 percent as an example of a standard.  She asked if the amendments were presented to the Senate.  Ms. Drakulich stated they were planning on presenting the amendments to the Senate the next time A.B. 418 was on the docket.  She wanted to say in earnest they had included the 10 percent cap because they understood the comment to be the national standard.  Ms. Leslie clarified the amendments had not been presented to the Senate committee.  Ms. Drakulich stated that was correct and it was her understanding A.B. 418 might be on the agenda for the next day.

 

Ms. Leslie stated one thing that had caught her attention was when there was mention of the use of renewables being 9 percent for Sierra Pacific Power Company.  She asked if geothermal was the only renewable used in the northern part of the state. 

 

Michael Smart, Vice President, Resource Management, Nevada Power and Sierra Pacific Power, Reno, stated there were small amounts of hydropower that utilized Stampede Reservoir, Hooper Hydro in Elko, and they received hydropower from a Fallon source.  Ms. Leslie asked if he knew what percentage of the total it encompassed.  Mr. Smart stated total hydroelectric power was .4 percent and that added into the 10 percent.  Ms. Leslie commented then the state’s use of solar and wind was basically nothing.  Mr. Smart stated that was correct.

 

Ms. Leslie stated that was why the state needed the bill in order to encourage wind and solar developers.  She asked how confident he was about his price forecasting.  The committee had heard quite a few numbers from Mr. Wellinghoff and also from “the company.”  She had heard natural gas was going to decrease in cost and she was wondering about their resource forecasting and how confident he was.  Mr. Smart stated they had seen in the forward market the prices were coming down and that was very good news.  As the committee was aware, both of the utilities procured natural gas for their units as well as buying energy from the market.  The market was still pretty high for the remainder of this year; however, it would drop next year.  It would not start to approach reasonableness until 2003 and then it would keep dropping in 2004 and 2005.  He had called and received a broker sheet that showed energy marketers and brokers that were willing to transact at a future date and time for a product such as electricity.  They were quoting in future years a price of $50 per megawatt-hour.  The natural gas prices had some indication they were also flattening out, not only on commodity, but also on the basis that was the transportation that helped the gas from the wellhead or the commodity to the end point where it would be delivered.  He believed those changes were a result of announced expansions of natural gas pipelines to move it from the wellhead to the users.  However, he stated, the prices were not going back to what they were in 1987 and 1988 when the price was $2.30 a deca-therm.  The prices were flattening out but were still very expensive. 

 

Ms. Leslie stated she was a little disappointed at “the company” for being so resistant to the bill.  She was wondering if Mr. Smart had a better idea about how to start the renewable energy industry in Nevada and how to stop building fossil fuel plants that hurt the state’s environment and drove the cost up for everyone.  She asked what his alternative would be.  Mr. Smart stated he hoped “the company” was not coming across as being resistant.  He wanted to make sure the Legislature understood the renewables came at a premium.  He wanted the Legislature to have the best estimates and available information that his office could prepare looking at the forward markets as compared to alternative supplies.  Everything could change with the market up or down.  He did feel it was important the Legislature knew what the ramifications were of the decision.  “The company” was not against renewables and in fact they ran very reliably.  Ms. Leslie asked if they were prepared or were they doing anything else besides what the portfolio standards required to encourage the development of a renewable industry in the state.  Mr. Smart stated not to his knowledge.

 

Ms. Drakulich wanted to comment on the level of “the company’s” participation thus far.  In the effort to institute NRS 704.989, the standing statutory portfolio, the workshops that were ongoing had included members of the industries from solar, wind, geothermal, and biomass.  The utility was not resistant with respect to the regulation and its implementation.  She would be happy to share some e-mail she had received from members of the renewable industries stating the utilities were contributing to further advances than they thought would happen in the next ten years.  Whatever law the Legislature produced “the company” would move forward with the same intensity and the same effort to institute those laws.  Before a law was passed they had to balance the impact to the customers.  That was what they were trying to do by bringing the amendments to S.B. 372.  

 

Assemblywoman Von Tobel appreciated “the company” submitting the amendments.  She believed it to be a good step in protecting the ratepayers.  In the state of Washington they allowed environmentally-minded people to pay more for “green power” because the state had discovered it cost more to purchase the renewables.  When the timing was right for renewables to be on-line they would be on-line.  They should not be forced because they were not affordable right now and she was concerned that was what the proposed bills were trying to do.  When the renewables were affordable they would be purchased in a higher percentage than the portfolio was suggesting.  She did not feel the committee should try to force something because then they were forcing it on every ratepayer in the state.  She would support the amendments.  Ms. Von Tobel stated she had tried to put some kind of price cap into A.B. 418 and still could not understand the logic that if the prices would be comparable, then why not allow a price cap.  She felt the price of renewables was based on receiving the special tax credit that had a slim possibility of passing.  The prices would not be the same as what the committee had been told if the tax credit was removed. 

 

Alfredo Alonso, Representative, Government Affairs Coordinator, BP Energy, Reno, stated his company would be opposed to the amendments brought forward because if the logic presented today was used then the federal government would not be subsidizing natural gas today.  The only way a market could be created for renewables was to subsidize it to some degree.  Once the market was created prices would drop.  That was a theory of the market and sometimes it needed to be jump started.  They would support the renewable portfolio standard and were surprised there was opposition to it before the committee.  Mr. Alonso submitted Exhibit F for the committee’s review.

 

Joe Johnson, President, Toiyabe Chapter of the Sierra Club, Reno, had provided testimony on A.B. 418 in support of the portfolio standard.  There were comments that had been made in discussion of hydropower that he would like to correct.  A.B. 418 did not include hydropower when it was passed out of the Assembly.  In the first reprint there was an amendment that had included hydropower and there had been some discussion about the dual effect of removing the 1997 facilities date and including hydropower, which would include Bonneville Dam and Boulder Dam hydroelectric power in the portfolio standard.  That would indeed supply all the non-solar supply and it was perhaps an unintended consequence.  He expressed the opinion there were environmental problems with hydropower, in particular with the Pelton Wheel.  There would be minimum flow problems if the stream was diverted into a pipeline and the aquatic life would be deprived of water during a low flow.  The Sierra Club opposed either the inclusion of hydropower as a renewable or the facility date.  They were convinced there was some rationale for removing that facility date in reference to the existing geothermal plants in rural Nevada.  He stated over 90 percent of the fuel costs of the state were presently exported for foreign suppliers out of this state.  Renewable resources in the requirement of having in-state production would add and retain the dollars that were turned over in economic activity here in the state.  He believed the Economic Development Authority was actively participating in the development of the language in the tax credit provision and they were fully aware of the provisions of that statute.  Inclusion in this bill would not be necessary or require a fiscal note.  He reiterated the Sierra Club opposed the inclusion of hydropower in the bill. 

 

Dr. Michael Baughman, Representative, Lincoln County, City of Caliente, Eureka County and Lander County, had heard testimony and discussion about the bill benefiting rural areas of the state.  He specifically represented rural areas that did support this bill and several others that encouraged expanding the use of renewable energy resources in the energy mix.  He had provided an informational handout to the committee (Exhibit G) and he referred the committee to a map included.  The map showed the distribution of the pinion juniper woodlands around Nevada and some of the neighboring states.  The Bureau of Land Management (BLM) in eastern Nevada had been working to implement alternative means to manage four million acres of this woodland species.  They typically burned or chainsawed the pinion junipers.  If it could be burned it obviously had energy content and they were working with the federal government to turn the junipers into a biomass resource that could be made available for energy production and other industrial uses.  They believed S.B. 372 and some of the companion legislation that encouraged renewables would help bring the biomass energy projects to reality.  He stated they would be very small, two to three megawatt type modular power plants that could be moved around and would make good use of the technology. 

 

Dr. Baughman also suggested, in regard to the amendments, the idea of adding hydroelectric did have merit, in particular low head hydro.  They agreed that building dams in the state was unreasonable.  He also represented the Humboldt River Basin Water Authority and they were examining some rather large pipelines moving water from some of the rural counties to the southern part of the state.  He thought there could be some opportunity to produce power as that water moved and lost a significant amount of elevation.  Lincoln County and Vidler Water Company were cooperating on some rather large projects that could benefit in the production of low head hydropower.  He encouraged the committee to find a way to include hydroelectric under certain circumstances.

 

Assemblyman Humke asked Mr. Baughman about the juniper biomass project.  He had mentioned the generating plant would be movable.  Mr. Baughman stated that was correct.  Mr. Humke asked if that meant it could come on-line and begin generating electricity quickly.  He asked what the time frame was.  Mr. Baughman stated the technology existed and the generating plant was mounted on the back of a flatbed truck/trailer.  Once the biomass was available and the generating plant was approximate to the transmission system it was a matter of feeding it with biomass and distributing electricity.  Mr. Humke stated then the challenge would be to haul or deliver the wood to a place close to a transmission line.  Mr. Baughman stated they were working with the BLM to conceptually come up with a harvesting scheme where the modular power production unit would be located in the area where the harvest was being done and as the truck moved they could relocate the modular power production unit to the next area.  It was all tied in with the transmission system and they were talking about relatively small amounts of power.  Mr. Humke asked if this was from the Caliente area.  Mr. Baughman stated he believed it was.

 

Assemblyman Hettrick asked if any of the counties listed, Lincoln, Lander, and Eureka were at the property tax cap.  Mr. Baughman did not have the answer.  Mr. Hettrick stated he believed Lincoln was and he thought Lander might be close.  He was concerned Section 19 of S.B. 372 stated if a developer built a renewable tangible piece of property and they applied to the Economic Development Commission and the commission approved it, the county must give a 50 percent reduction in property tax on that facility for 10 years.  The state was already paying for schools in Lincoln County.  This would cut school funding and it would cut income for Lincoln County to operate.  The same would be true of Lander County.  Certainly the Legislature did not want the counties to think this bill was a great idea and then return only to state they were now broke and needed the state to give further funding for schools and other operations.  He was concerned because the bill was mandating a property tax break to the counties by the state.

 

Mr. Baughman stated that was an issue that had been brought up in every case of the counties he represented.  Clearly this was a matter of economic development and getting the investment in place first.  They would not lose any revenue because they were not getting any revenue from any facility currently.  This would not be tax revenue lost.  However, if the state did not jump start the renewables they could lose the potential for the investment in terms of new industry.  For example, in the case of Eureka County where they were looking at some significant increase in pumping costs, that distributed generation could be a way to stabilize those costs over time and preserve the agricultural industry.  The counties looked at the issue as an economic development issue.  The plants were not going to employ a lot of people and consequently there would not be service requirements; however, they would provide for new industry and perhaps power that could be used locally for industry.  The pinion juniper project positions itself to open up all kinds of new manufacturing industries using the biomass resource.  Power production was just the first step.  The counties had considered Mr. Hettrick’s concern; however, they did not see it as a tax loss, they saw it as an investment in economic development for the future.

 

Mr. Hettrick stated he understood the economic development quotient but they should remember that the provision would be for ten years and there would be some employees and the state had significant concerns about indigent hospital costs and other things already that would not be funded.  He stated there needed to be concern that those employees would be looking to the state of Nevada for some relief in the future.

 

Tim Carlson, Representative, Nevada Test Site (NTS) Development Corporation, Las Vegas, stated his company successfully located a 260-megawatt wind farm at the Nevada Test Site.  That project was probably the first renewable project in southern Nevada.  They were presently negotiating with Sierra Pacific Power and Nevada Power in regard to the purchase of that power.  This renewable portfolio standard bill would greatly enhance his company’s ability to encourage “the company” to look at the wind energy.  They agreed there should be an economic factor and companies that would be coming into Nevada should be able to pay their fair share.  There should not be tremendous tax breaks or issues in relation to encouraging their growth and development in the state.  However, he also understood the need to encourage those types of companies to come to Nevada.  There needed to be a message sent out to the nation that this state was renewable-friendly and was looking for those types of industries to come and generate their energy in Nevada to keep the state more stable.

 

Mr. Carlson was concerned about amendments proposed by “the company” in relation to the attempt to cut back the renewable portfolio rate.  He was not surprised because in negotiations with them he knew they were very tough.  He stated the renewable industry did need to have a little edge that would encourage “the company” to buy renewable energy.  This would not affect the ratepayers because it was a very small percentage.  It did encourage the utilities to take a serious look at alternative energy.  He believed alternative energy needed to be promoted by the state and there needed to be availability of those energies in the state.  There was a viable project in southern Nevada for the first time and the Nevada Test Site was in the process of obtaining a 100-megawatt site at Table Mountain.  They were also looking at three other sites throughout the state.  “The company” was encouraged by the attitudes of the Legislature, the Governor, and the business lenders.  Nevada was being looked at as a way for the nation to focus their particular programs.  Nevada was taking a leadership role.  Cutting back the portfolio and listening to the utility company was a very important issue because they were the partners in the energy distribution.  There needed to be some balance in the issue.  He had testified in the Senate that wind developers were offering Nevada power at 4.75 cents a kilowatt-hour.  They could receive 6 cents in California; however, the development corporation encouraged the idea that energy generated in Nevada stayed in Nevada.  If the state did not encourage those types of balances to happen and encourage the utility to purchase some of the wind power, even though it might be a quarter cent more than they were willing to pay, but they had to purchase it because the portfolio standards were the law, Nevada would lose a very large opportunity. 

 

Assemblywoman Von Tobel asked if his company was a public company.  Mr. Carlson stated NTS Development Corporation was a nonprofit corporation representing the southern Nevada community in regard to a downsizing effort of the Nevada Test Site.  Ms. Von Tobel questioned if he recognized when he spoke about “the company” they were a public company and had to answer to shareholders and ratepayers.  Mr. Carlson replied that was correct.  Ms. Von Tobel stated when they were trying to purchase power at the lowest possible cost and he suggested they should be willing to pay a little more it did not make sense.  Mr. Carlson replied the fluctuation and valuations of fuel costs should be taken into consideration on a continuing basis.  When a wind farm was put in the cost for fuel was nothing.  He was trying to encourage zero costs of fuel.  It was a very small part of the process but it needed to get started.  The air quality issues and the toxins associated with the traditional plants should be taken into consideration.  There was a cost associated with cleaning up the air.  The ratepayers paid that price through higher gas prices at the pump.  The issue needed to be balanced out.  Ms. Von Tobel applauded his efforts for coming forward before the state had enacted any legislation.  She felt he was very forward-thinking and she agreed there was a need for renewables in the state.  She did not know, however, if there should be as many tax breaks offered. 

 

Joyce Newman, President, Utility Shareholders Association of Nevada, Inc., Carson City, spoke in support of the development of renewable energy in the state.  The shareholders’ concerns were cost and she thought this bill essentially required customers, not “the company,” to buy higher priced energy.  “The company” purchased energy on behalf of its customers.  That was what the debate was about and, of course, the legislators would make the decision as to what the proper policy would be; however, on behalf of all the thousands of members in the state, the price of their stock had been cut in half, dividends were lost, and now those shareholders were also paying the higher electric bills.  She had many phone calls from shareholders that were in some financial crises because of the higher energy bills and the loss of their stock values.  She was sure that most shareholders did support the development of renewables.  She asked the committee to balance that with what were already record energy prices in the state. 

 

Michael Brown, Vice President, Barrick Gold Corporation, Washington, D.C., stated his company was the first company to engage in serious load shedding in Nevada a few weeks ago.  They put 35 megawatts of power back on the grid.  They used some solar at the site to run monitoring stations and monitoring of wells.  Mr. Brown stated they had converted all their large diesel trucks to electricity about six years ago because they produced fewer emissions and ultimately used less energy.  They supported the renewable standard in A.B. 366 of the Sixty-Ninth Legislative Session.  He believed they were the only company to step forward in support at that point.  Barrick had invested private money into hydrogen fuel cell research that was ongoing.  It was a concept of powering vehicles with hydrogen fuel cells.  They were the only gold company in the United States that had invested their private money in a coal sequestration project, which was a zero emission coal project.  In essence, if there was the right mineral deposit the chimneys were turned upside down and the releases were pumped into the deposit and the carbon was sequestered underground.  Mr. Brown stated his company had a track record in renewables.  He was not taking a position for or against S.B. 372; he had examined it and had an ever-growing concern about the potential cost of the bill.  Barrick had a concern about the level of portfolio standards that were being set and whether they would be achievable or undermine the economics of building new generation in Nevada.

 

In addition, Mr. Brown had checked with his tax counsel in Washington, D.C., and stated independent oil and gas producers benefited from the percentage depletion allowance.  The depletion allowance for big oil and gas was repealed in the 1970s.  The independent oil and gas producers, who were a “wildcat” type of group, stepped forward and were able to retain that percentage depletion allowance. 

 

Mr. Brown stated Barrick had concerns about the potential cost of renewables because ultimately it would be the ratepayer that would pay the price.  If the renewable technologies were on the verge of coming into mass production, why were they not seeing private sector venture capital in California and on Wall Street being mobilized in the midst of the energy crisis to push the technologies over the top.  He believed his company had a good record in the area and they had looked at trying to build wind power.  As the committee finished deliberations on this bill he asked they weigh some of the concerns brought forth by the utility.

 

Vice Chairwoman Buckley closed the hearing on S.B. 372, opened the hearing on S.B. 362 and turned the gavel back to Chairman Bache.

 

Senate Bill 362:  Consolidates and revises process for reviewing applications for permits, licenses and other approvals required to construct certain utility facilities. (BDR 58-689)

 

Senator Dina Titus, Clark County Senatorial District 7, wanted to make a few remarks and then let the experts go through the bill to explain it to the committee.  This bill took quite a few months of concerted effort with the utilities, American Associated Retired Persons (AARP), the Consumer Advocate, and the PUC to work out the details.  They had heard repeatedly that one of California’s main problems was the lack of generation and how market forces could not work to bring power prices down when there was limited supply.  Supply and demand did seem to be unbalanced throughout the western portion of the country.  No new major power plants had been constructed in California in the last ten years and no new power plant had been finished in the Pacific Northwest since 1993.  She believed the state could be helpful in solving the problem by expediting the licensing process for new generation plants and transmission lines.  This was the purpose of the bill before the committee. 

 

A recent article spoke of fast-track development strategies and the article emphasized how important such a policy could be.  She stated unexpected delays or unforeseen permitting difficulties were almost always costly and at the extreme could kill a project.  Stretching the permitting step of the process from several months to a year or more could increase the cost by a factor of several times.  The delay in bringing any new plant on-line meant additional months of foregone power sales.  She indicated the combined financial impact could change the economic feasibility of a project.  She believed, considering the economic increases that occurred when the process took a long time, the state needed to find ways to keep the permitting process on track, efficient, and timely.  She realized much of the permitting process occurred with the federal government but she did believe there were things that could be done at the state and local level to help streamline the process.  Basically the bill before the committee required that various application processes occurred simultaneously rather than serially.  Senator Titus stated the bill also provided better coordination among different levels of government allowing everyone to get involved earlier and be informed of what was happening at other levels.  It also covered generators, transmission lines, and water/sewer facilities that would be connected to the new generation plant. 

 

Senator Titus indicated what the bill did not do was just as important as what it would do.  It did not shorten the periods for notice or public comment.  They were not trying to exclude any type of public comment in the licensing and permitting process.  It also did not weaken environmental standards.  She stated she had a long record of being very supportive and protective of the environment and she would be the last person to put forth legislation that she believed would weaken those standards.  She wanted to bring the expert witnesses to the table to show the committee how the bill would work.

 

Judy Stokey, Government Affairs Executive II, Nevada Power Company and Sierra Pacific Power, Las Vegas; Kathleen Drakulich, Associate General Counsel, Sierra Pacific Power and Nevada Power, Reno; and John Owens, Project Engineer, Sierra Pacific Power and Nevada Power, Reno, stressed “the company” supported S.B. 362.  They had worked on the bill with many other people. 

 

Ms. Drakulich stated she would quickly go through the bill and address any questions from the committee.  As Senator Titus stated, the bill heightened the awareness among all the local, state, and federal agencies that would be involved in permitting a project as well as heightened the responsibility of the applicant for those permits.  The permitting process had been sequential in the past.  With the new bill, if there was a federal agency involved that agency would go first and all the local and state agencies would have the benefit of that document when it was completed.  Then they would proceed in a similar fashion but simultaneously through the different agencies.  When there was no federal agency involved they would still have to move the paperwork along simultaneously.  The bill did not eliminate the opportunity for public comment, environmental review, and consideration of the environmental issues associated with the project. 

 

Ms. Drakulich stated Sections 2, 3, and 4 of the bill provided definitions.  The definition that was significant was the one that read, “’Other permitting entity’ means any state or local entity . . . that is responsible for the enforcement of environmental laws and whose approval is required for the construction of a utility facility . . . or . . .whose approval is required for granting any variance, special use permit, conditional use permit or other special exception under NRS 278 . . . ”  Section 5 stated those provisions would control, with respect to the issuance of a permit, terms of the timing.  As the Senator stated, they had received input from many state and local agencies to ensure they could comply with the time lines that were contained in the bill.  Section 6 stated if a public utility filed for a permit for a utility facility that was subject to electric resource planning, the determination of need for that facility was up to the PUC.  They did not want to subject independent power producers or other permit applicants to a determination of need by the PUC when that really only applied to the public utility. 

 

Section 7 stated if an environmental report for the project had been completed this section required the commission and the other entities to incorporate this report into their review.  The bill also required the PUC and other permitting entities to cooperate with each other and with the federal agencies to avoid duplication of hearings.  In Section 8 there was a 150-day time line that applied when there was no federal involvement.  The PUC and the other permitting entities had to issue their decision within 180 days provided the applicant met all of the filing requirements to make proper notice.  In subsection (b) of that section there was a 120-day requirement.  This time line was 30 days shorter because there would be a benefit of a 12- to 24-month federal process that would precede the 120 days.  Thirty days was removed because there was so much time that preceded it.  In Section 8, subsection 2, the PUC or the other permitting entity could attach whatever terms and conditions to the construction of the facility within their jurisdiction.  An example might be requiring vegetation around a substation of a utility.  Ms. Drakulich stated Section 9 of the bill was clean up, essentially, to include the new section references to NRS Chapter 704.830.  In Section 10 there was a description of the facilities to which the act applied.  As Senator Titus had mentioned, it would be generating plants and their facilities unless those facilities would be located within the boundaries of Washoe and Clark Counties.  The bill also applied to electric transmission lines and substations operating at 200 kilowatt-hours or more, gas transmission lines or storage plants, water storage transmission, and treatment facilities and sewer facilities.

 

Ms. Drakulich stated Section 11 set forth the requirements of an amended application.  The applicant would have to file an initial application with all the agencies, local and state, when a federal agency was involved.  When the federal agency issued their final document the applicant must return to all the other permitting agencies and the commission and submit a revised application that was more complete and met the filing requirements set forth in the bill.  That would include a copy of the federal document, the environmental impact statement, or the environmental assessment.  This had to occur not later than 30 days after the federal agency issued their final decision.  Section 12 changed the intervention period for all interested parties from 30 to 15 days and this would be in compliance with other intervention periods for proceedings that presently took place before the PUC.  Section 13 had a deletion and it deleted the language that required 150 days for the filing of the application.  The reason it was deleted was because the bill changed this part to Section 8, subsection (a).  The renumbered Section 13, subsection 1, added criteria for the commission to consider when deciding whether or not to have the utility facility built.  There were only three new criteria:  first, the extent to which the facility ensured reliability to Nevada customers; second, balancing the need for the project with adverse environmental effects; and third, requiring the applicant to have obtained all other state and local permits.  In Section 13, subsection 2, there was a practice that actually already took place in front of the PUC but had never been codified.  They had decided it would be appropriate to put it in S.B. 362.  It allowed the commission to issue their permit conditioned upon obtaining permits that were outstanding.  If there was a federal permit the PUC could issue the developer the utility Environmental Protection Act permit conditioned upon the issuance of a special use permit from the city where the utility would be located.  Once the permit was obtained the utility would get the signed permit to commence construction of the plant.

 

Ms. Drakulich indicated Section 14 contained criteria that applied to an applicant that was not a public utility company.  Section 15 was modified to show the rehearing provisions applied to the PUC only as other agencies had their own proceedings.  Section 16 was modified clean up.  Section 17 related to NRS Chapter 459.  This was included by bill drafters and was not part of the negotiations.  It stated the requirement regarding the local government with respect to treatment storage and disposal of hazardous waste did not apply to an application for a permit to construct.  She was uncertain who the proponent of that specific provision was. 

 

Ms. Drakulich introduced John Owens, Project Engineer, Sierra Pacific Power and Nevada Power, Reno, who had knowledge of the permitting process and wanted to explain how the bill would shorten the process.  Mr. Owens had charts to show the committee (Exhibit H) and said he would attempt to describe a very complex process into a few bars on a graph.  One of the things that drove the process of a transmission project was the geography in which the project would be located.  The basic task was if a federal grant of right-of-way was necessary for a transmission project that would trigger a federal environmental review for that project to enable that agency to grant the right-of-way the utility needed to construct the facility.  If there was no federal land involved, and the facility was totally located on private property, the review of the project would be the responsibility of local and state agencies.  The exhibit showed the time line and process when a federal approval was required and when it was not required. 

 

Mr. Owens stated that under the current process if there was no federal land involved the utility would undertake a siting study in cooperation with local agencies that would culminate in a range of alternatives and a recommended preferred alternative, which would be filed with the PUC as well as the local agencies.  The current process could be a very sequential process.  What the bill did was enable the concurrent processing by all the same entities.  That would enable six months to be shaved off the current processing time without reducing the involvement of anyone in the process.  He wanted to acknowledge the PUC and commend them for their sensitivity to the capacity needs they had been experiencing in the last few years.  Quite recently the PUC processed an application for an extension for a plant in Tracy very expeditiously. 

 

Mr. Owens indicated the process changed substantially when federal approval was required.  The chart showed the main change was a 12- to 18-month federal review that would take place prior to any of the local or state agencies reviewing the project.  Under the revised process an important feature was the applicant was required to file a notice with both the PUC and any affected local agency that a project was coming forward so they could participate in the review of the project at the same time the federal agencies were reviewing it.  At that time they could provide input and comments and do their formal review for the benefit of the final environmental assessment or environmental impact statement the federal agency prepared. 

 

Ms. Drakulich added that Sierra Pacific and Nevada Power Companies had been contacted by the state water engineer.  Everyone living in Nevada appreciated how precious water was to the state and they certainly did not want to hamper the decision-making process with respect to the state’s water resources.  She indicated Sierra Pacific Power and Nevada Power Company had proposed some language that would address their concerns in the form of an amendment (Exhibit I) that the committee could review.  In the March 15 first reprint of the bill, page 3, Section 8(a), subsection 2, they suggested adding “except the state engineer” to the bill.  There was another change on page 4, Section 11, subsection 2, shown on Exhibit I.  She indicated they had spoken to the state water engineer’s office and had determined in a situation where there was not a federal permitting process in advance being applicable to most of the provisions of the bill, there was a 150-day period for the total processing of the application.  They were sympathetic to the state water engineer and he had carefully gone through what their requirements would be in that situation and under Section 8 they would not be able to meet the 150-day deadline.  Ms. Drakulich indicated they did not want to undermine the process of the state engineer.  Assemblywoman Smith asked if there should be a correction to “state water engineer” instead of the current amendment stating “state engineer.”  Ms. Drakulich stated she believed Ms. Smith was correct; the phrase was vague.  Mr. Bache added that state engineer was the appropriate title for the state water engineer. 

 

R. Michael Turnipseed, P.E., Director, State Department of Conservation and Natural Resources, Carson City, stated prior to August of last year he had been the state engineer for over ten years.  He stated they agreed with Ms. Drakulich’s amendment; however, they were not sure it took care of all their concerns.  He had expressed his concerns to the Senate previously.  Senator Townsend had invited him to come to the Assembly if his concerns had not been addressed. 

 

Mr. Turnipseed stated they had their own amendment to propose (Exhibit J) that would remove the state engineer from the definition of other permitting entities.  The Department of Conservation and Natural Resources was included in the definition of permitting entities in Section 4; however, the only two agencies that would normally be involved in permitting a power plant were the division of environmental protection and the state engineer.  The first version of the bill limited other permitting entities by stating the PUC had the exclusive jurisdiction to determine need and all other permitting entities should limit their review to location and environmental issues with no regard for water mentioned.  As the bill read currently the state engineer would be compelled to complete his review in 150 days if there was no federal involvement and he believed all power plants did require a FERC involvement.  If there was federal involvement then they would have 120 days for review.  Those time lines were nearly impossible for the state engineer to meet.  There were statutory requirements to return an application if not complete and the applicant had 60 days to return it with a map and that would almost cut the 150 days in half.  There was a statutory advertising period of 30 days, a protest period for 30 days, and in the event the application was protested there was a statutory 30-day notice for hearings and, of course, there was time involved for transcripts to be billed and returned to the state engineer and time for the state engineer to write a ruling.

 

Mr. Turnipseed informed the committee there was also a statutory requirement that if the state engineer required hydrologic studies or environmental studies he could postpone the processing for beyond one year.  There was a statutory requirement he must act on an application within a year but that was extended if he required hydrologic studies.  He was not sure if the environmental impact statement or the environmental analysis would examine the appropriation of water for any new facility—if it would dry up a spring, if the basin was over appropriated, or if the facility was close enough to a source of water to have an effect.  If, in fact, only the amendments offered by Sierra Pacific Power and Nevada Power were adopted he wanted to ask some questions that were not clear to him. 

 

Mr. Turnipseed asked for clarification on line 44 of Section 6 and stated the review mentioned in the section might not include how the appropriation of water from a well was going to dry up a spring, etc.  Subsection 2 of Section 6 mentioned a hearing process and he stated the state engineer’s hearing process was completely different than the agencies mentioned.  The other agencies appeared before a board or a commission and their hearings were conducted solely before the state engineer and he had rules on receiving evidence and sworn testimony.  They did not mind sharing the information with other agencies; however, it would be limiting if they were expected to hold concurrent or simultaneous hearings.  Subsection 2 of Section 8 stated the commission or other permitting entities should make determination upon the record.  The state engineer acted as a single decision-maker and did not sit as part of a commission or make his case before a commission or a board.  His decisions were rulings and, of course, public record but the only time he would produce that record was if the decision was appealed to the district court.

 

Mr. Turnipseed stated the PUC had, under S.B. 362 exclusive jurisdiction to determine need.  Other permitting entities by definition would concern themselves with other things.  The Las Vegas Valley Water District had just been issued two permits and the basis of the approval was primarily based on need.  They had determined that need through communications with the PUC.  The decision had been appealed and was now before the district court in Las Vegas.  If S.B. 362 was in effect the judge could throw out the approval because the state engineer did not have the jurisdiction to determine need.  Section 10 concerned Mr. Turnipseed because if the water mentioned in the section was a dam or any diversion of water it would be purely the state engineer’s review and no one else, not even the federal government, would be involved.  Mr. Turnipseed asked the committee to adopt their amendment to exempt the state engineer out of the definition of other permitting entities in the bill. 

 

Hugh Ricci, P.E., State Engineer, State Environmental Commission, Carson City, wanted to make the committee aware of some concerns he had with Section 10.  Presently there were twelve applications before him that dealt with one form or another of a power plant producing electricity whether as a utility itself or for some other entity.  Of those particular twelve, six were located either in Clark County or Washoe County.  The places where the most pressure was felt were the power plants that wanted to locate in Clark County. 

 

Mr. Ricci said there were certain instances that had occurred that would be affected with the passage of the bill.  As an example, they had set the time and date for a hearing on an application that involved a power plant.  They received a phone call from the opposition’s counsel that they could not attend the hearing.  They checked with the applicants and they submitted a date three months later.  If the state engineer was included in the bill and those types of things happened, the state engineer would not know what to do.

 

Mr. Ricci stated the other item he was concerned about was the bill placed the state engineer under NRS Chapter 704 where it had never been before.  That was one of the reasons he had a hard time trying to understand what the bill was trying to do.  He could not think of any particular instance over the last 21 years he had been involved with water resources where there had been an application for a power plant where in the end the power plant did not locate in Nevada because of an inaction on their agency’s part.  In the siting criteria for a power plant, as part of the environmental impact process, there were a number of factors involved.  One of the siting criteria was water.  Along with the air quality review, water could be the most limiting factor associated with the location of that particular plant.

 

Mr. Ricci stated there seemed to be no reason for his agency to be involved in the process discussed in the bill.  They could handle their process that had been in place for many years and he suggested leaving the agency out of NRS 704.

 

Donald Soderberg, Chairman, Public Utilities Commission (PUC), State of Nevada, commented Senator Titus had asked his agency early in the process to take a review of their process to see where items could be streamlined without cutting corners on due process in their review.  They were clearly one of the agencies that had set up a system that wanted to be last, like other agencies.  They had attempted to turn that system around internally and had been successful.  They believed the provisions of the bill allowed them to do what they had been doing for the last year by statute as well as making sure their process was not abused by competitive merchant developers.  He stated they had made various little changes into the process they felt would streamline their office and allow them to get megawatts on-line quickly without cutting any corners.

 

Joe Johnson, President, Toiyabe Chapter of the Sierra Club, Reno, had some concerns the overlapping of agencies reviewing the applications would make it more difficult or more complicated for a citizen to become aware and be able to respond.  They would not oppose the bill but did have a concern in regard to Section 12, page 5, where the 30-day response time was shortened to 15 days.  He felt that was undue shortening.  It would be extremely difficult for a volunteer organization to become informed of an application or a public notice and then be able to file a formal application and notice of opposition in the 15-day period.  They would like to see the retention of the 30-day response time. 

 

Mr. Johnson stated his group had another concern in Section 3, page 1.  “Environmental review” was defined as including “without limitation, an environmental assessment and environmental impact statement.”  However, in Section 7, subsection 1(b), there was a statement that there could not be any duplicate environmental reviews.  By definition in Section 3 the bill defined the first environmental review as precluding any additional environmental review.  He did not believe that to be the intent and perhaps the legislative history could have a statement to the effect that the language was not meant to imply the first environmental overview would be the final one.

 

Allen Biaggi, Administrator, State Department of Conservation and Natural Resources, Division of Environmental Protection, Carson City, commented the division was extremely supportive of the efforts to streamline the permitting of electrical generation facilities and infrastructure and the intent of S.B. 362.  He stated permitting in those programs often could be protracted, especially in instances of significant public interest or concern.  He recognized and appreciated the language of S.B. 362 at Section 8, subsection 1, addressing the permitting concerns.  He did request a clarification of what they believed was the intent of the language.  The language was to exempt those federally delegated permitting programs from the criteria outlined in the bill. 

 

Kathleen Drakulich responded to the request from Mr. Biaggi for the clarification in Section 8.  The purpose of putting “except as otherwise required to comply with federal law” was exactly for the purpose he was concerned about.  If there were state sponsored programs or state sponsored agencies that complied with federal law, such as air quality permitting, they were very sensitive to federal preemption and the Supremacy Clause arguments that would otherwise arise.  It was not the intent of the language of this bill to in any way override, sidestep, or try to obliterate federal law requirements that were used by state agencies. 

 

Assemblywoman Leslie stated she believed Mr. Johnson raised a good point on Section 12 in regard to decreasing the number of days for nonprofit review from 30 to 15.  She asked Ms. Drakulich what the rationale was for that language or was it just to speed up the process.  Ms. Drakulich stated it was not anything more specific other than to move the process along.  With respect to the PUC intervention periods and other filing deadline periods, in which someone could intervene in a docket, etc., most were 15 days.  They had worked with representatives from the staff of the PUC to craft the language.

 

Chairman Bache, seeing no other witness for the hearing on S.B. 362, closed the hearing on the bill.  The Chairman recessed the meeting until 7:00 a.m., May 21, 2001.  He hoped at that time to process the remaining bills. 

 

 

Chairman Bache called the meeting back to order at 7:17 a.m. on May 21, 2002, and mentioned the work session document (Exhibit K) the committee would be using.  He opened the hearing on S.B. 210. 

 

Senate Bill 210:  Makes various changes concerning regulation of utilities. (BDR 58-540)

 

David Ziegler, Committee Policy Analyst, reviewed S.B. 210 for the committee.  He stated S.B. 210 was proposed by the PUC and would apply, in effect, the mill assessment to all electric and natural gas suppliers.  It would exempt commercial radio service providers from the mill assessment and required a $200 annual licensing fee.  It would also require certain accident reports filed with the PUC to be open to public inspection.  On page 2 of Exhibit K there was a short summary of the bill and on page 3 there was an amendment that was proposed by Mr. Soderberg at the hearing last week. 

 

Chairman Bache stated there were amendments offered from Southwest Gas, Joe Johnson, and then Mr. Soderberg’s amendment.  The Chairman invited the three witnesses to the table to discuss if they had reached an agreement on the amendments.

 

Mr. Soderberg stated it was rare, however, every amendment offered on the bill worked for their office.  It accomplished their goal of being able to communicate the reports to the office of pipeline safety and that was their primary goal for the bill.  They felt the level of public disclosure on the reports was a matter of public policy and they were comfortable with any way the Legislature handled the amendments.

 

Debra Jacobson, Director, Government and State Regulatory Affairs, Southwest Gas Corporation, Las Vegas, stated her concern was not with accident reports in the investigation of a fatal accident being made public, it was with their use in court.  Accident reports were not for use in court at the federal level at the office of pipeline safety and were primarily just used for safety.  The reports were not to be used to prepare for litigation.  This was the issue that was voted on in the Senate.  Mr. Johnson had requested that in the event of a fatal accident the report be made public.  The subject of whether they could be used in court was never brought up in the Senate.  Ms. Jacobson stated she had spoken to Mr. Johnson and he had no problem with restricting the use to the courts.  She also supported the commission’s amendment; however, she understood the issue of a fatal accident report request from Mr. Johnson.  She had submitted her amendment (Exhibit L) to underscore the documents could not be used to prepare for litigation.

 

Mr. Johnson proposed a strikeout of the word “fatal.”  He felt his addition clarified the language and changed the process from “secret and privileged” to making it public.  They had identified fatal accidents as his principle concern.  The Sierra Club opposed secrecy and that was the concern with this issue.  Mr. Johnson indicated anyone going through discovery would most likely be able to find the information anyway.  He had proposed Exhibit M for the committee’s consideration.

 

Chairman Bache asked how Mr. Johnson and Ms. Jacobson’s amendment worked together or conflicted.  Ms. Jacobson stated if the word “fatal” was added in her amendment that would accomplish the fact they would be open to public inspection and as long as they could not be used in a court of law it would be acceptable.

 

Assemblywoman Buckley stated that generally reports were allowed to be used in court and perhaps there was an exception in the federal law; however, in general, in state law proceedings the other party had a right to cross-examine.  A blanket prohibition to the use of any material that could be necessary for one party gave her concern in regard to the state law consequences.  She asked if any other state had this law.  Ms. Jacobson stated in Arizona they were not allowed to be used.  They were not allowed to be used in damage actions even with the National Transportation Safety Bureau (NTSB) that included reports on highway, railroad, pipeline, and maritime accidents.  All of the NTSB’s reports were inadmissible in damage actions.  There were other ways a party could get the report, but current law did not allow them to be admitted as a piece of evidence in those damage actions.  She was not asking the committee to change state law because that was the law currently. 

 

Assemblywoman Buckley asked then why there needed to be a change in the law.  Ms. Jacobson indicated currently the law read no one could get the report.  The PUC usually performed an investigative report and the reports were not admitted for evidence or used for any purpose in an action for damages.  She did not have any problem with that part of the law, but the commission wanted to be able to give the report to the office of pipeline safety.  Currently the report could not be given to anyone, including the utility.  The PUC wanted to be able to give the utility and the office of pipeline safety a copy of the report.

 

Chairman Bache asked Mr. Powers if he had examined the amendments presented.  Mr. Powers stated the issue for the committee was to distinguish between the non-fatal and fatal accident reports.  The parties were proposing for non-fatal accident reports they would be open to public inspection but would not be admissible in any action for damages.  For fatal accidents reports there would be the same requirements.  There was one component the parties had not discussed and that was NRS 703.190.  It currently provided that any record of the commission that was open to public inspection could be sealed if it contained commercial, confidential information.  The question was whether the third component also applied to non-fatal and fatal accident reports.

 

Chairman Bache asked Mr. Soderberg if the committee used the amendments offered by Ms. Jacobson and Mr. Johnson, was his amendment still valid.  Mr. Soderberg stated there would be no need for his amendment.  The two remaining amendments had become harmonized in the discussion and now there was just one amendment necessary.

 

ASSEMBLYWOMAN TIFFANY MOVED TO AMEND AND DO PASS S.B. 210 WITH THE AMENDMENTS FROM JOE JOHNSON AND SOUTHWEST GAS COMPANY.   

 

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

Mr. Powers clarified the amendment was for non-fatal accident reports and for fatal accident reports.  The reports would be open to public inspection; however, they could not be admissible in any action for damages and could be closed if they contained confidential, commercial information.

 

MOTION PASSED UNANIMOUSLY.

 

Senate Bill 211:  Revises provisions governing sale of electricity and provision of transmission and distribution services by Colorado River commission and requires certain public utilities to make their electric distribution facilities and services available to Colorado River commission under certain circumstances. (BDR 58-633)

 

Chairman Bache asked Mr. Ziegler to briefly summarize S.B. 211 for the committee.  Mr. Ziegler stated S.B. 211 was a request from the Southern Nevada Water Authority (SNWA) and the Colorado River Commission (CRC) to revise the authority of the CRC to provide electric services.  Page 4 of the exhibit contained a current summary of the bill as reprinted.  He called the attention of the committee to the discussion concerning the background information.  S.B. 211 could be seen as achieving two purposes.  The CRC was limited to providing electric services only to the specified customers without being subject to the regulation of the PUC and had access to distribution facilities to serve those specific customers as guaranteed through the tariff structure.  There were no amendments proposed the day of the hearing.

 

Chairman Bache asked Julie Wilcox, Representative, Southern Nevada Water Authority and Las Vegas Valley Water District, Las Vegas, to come to the witness table.  He asked Ms. Wilcox about an article in the Las Vegas Review Journal.  The article stated some power costs would affect some sewer and water bills.  The article gave specific information that water bills in Las Vegas and unincorporated Clark County would not be affected by higher power costs this year because the Las Vegas Valley Water District had socked millions of dollars into a fund it would use to absorb some price hikes.  Mr. Bache was curious and asked if she could enlighten the committee as to the status of the millions of dollars.

 

Ms. Wilcox indicated she believed that statement was a very colorful way of saying that the Las Vegas Valley Water District had been very successful in managing its business to ensure long-term rate stability for the benefit of its customers.  She stated there had not been a rate increase in 5 years and of the top 50 western cities, Las Vegas was number 10 from the bottom as far as where the rates were in comparison to others.  This had been a great benefit to the residential ratepayers and they had been able to manage their business very effectively.  They did have a very strong program of process improvements.  In the first couple of years of a rate increase an agency would bring in more funds and could deficit spend in some years and in others could not.  They did not expect to have a rate increase for several years; however, with the power situation they would be examining rates annually and analyze whether there needed to be a general rate increase.  Ms. Wilcox stated they were forming a citizens’ committee to examine rates for conservation purposes and they could have a revenue neutral rate increase for the purposes of conservation.  The 5 years without a rate increase was the longest in the 30-year history of the water district.

 

Assemblywoman Tiffany asked Ms. Wilcox if they would now be distributing and selling electricity to some of the other utilities they were already serving and what would happen if there was a windfall of profit.  Currently she knew the PUC was the overseer to monitor if there were price hikes or rate changes due to some profit.  Ms. Wilcox stated if her agency had fewer expenses the profit would come back to the benefit of the ratepayer through not having a rate increase.  The SNWA and the Las Vegas Water District did not sell power; the CRC was the one that sold that power.  Her board reviewed the financials and the need and determined if there was a reason to have a rate increase. 

 

George Caan, Executive Director, Colorado River Commission (CRC), Las Vegas, stated the power they currently distributed to the SNWA and what was proposed in the bill to provide electricity that they would purchase for the member agencies was all accomplished on a pass-through basis.  They were a nonprofit entity and all agreements with their customers were done through contracts.  The CRC would then buy the electricity and sell it to the member agencies at a nonprofit rate with an administrative rate to cover their costs.  They never had the ability to over or under collect because everything they did was based on actual costs. 

 

ASSEMBLYMAN DINI MOVED TO DO PASS S.B. 211.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

MOTION CARRIED UNANIMOUSLY.

 

Chairman Bache asked Mr. Ziegler to review S.B. 362 for the committee.  Mr. Ziegler stated this bill, proposed by Senator Titus, consolidated and revised the process for reviewing applications for permits, licenses, and other approvals required to construct certain utility facilities.  There was a summary of the bill on pages 6, 7, and 8 of Exhibit K.  There had been amendments offered by Sierra Pacific Power and by the Department of Conservation and Natural Resources.  He had discussions with both parties and thought the options would appear to include the preference of the Department of Conservation and Natural Resources to exempt the state engineer out of the definition of “other permitting entity” and that would take place in Section 4 of the bill.  The preference of Sierra Pacific Power Company would be to exempt the state engineer out of the 150-day and 120-day time line and that would be accomplished by amending Section 8 of the bill.  “The company” also wanted to change Section 11 to state all applications had to be filed simultaneously, including the state engineer.

 

Chairman Bache stated Senator Titus was not present; however, she had indicated to him personally she did not have a problem with the Sierra Pacific Power Company amendment but she did have a problem with totally exempting out the state engineer.  Mr. Ziegler added that the Department of Conservation and Natural Resources had also proposed some language to clarify legislative intent.  

 

Mr. Turnipseed stated if the committee adopted the amendments proposed by Sierra Pacific Power Company they had no problem with a utility facility filing an application for water coincident with filing an application with the PUC in Section 11.  However, if the bill only exempted the state engineer out of Section 8 on the 150-day and 120-day time line the situation would not be corrected.  Section 8 also stated “the permitting entity shall make its determination upon the record.”  That statement would have no meaning to the state engineer because he did not make a decision before a board or a commission but rather as a sole decision-maker.  “Records” in the state engineer’s office meant an appeal that went directly to the district court.  Section 5 of the bill basically deleted the water law when it came to a utility facility.  They would prefer the state engineer be exempted out of Section 4.  It was nearly impossible to meet a 150-day time line.  The statutes did not allow an applicant for water to wait until 30 days after the environmental impact statement was completed to file an amended application with the state engineer.  He had to file it within 60 days of the original application.  Even if the state engineer was exempted for the 150- and 120-day timelines there were more places in the bill that spoke of “other permitting entities.”  He testified previously that Hugh Ricci had just issued two permits for power plants in southern Nevada largely based on need.  This bill stated the determination of need was under the exclusive jurisdiction of the PUC.  The state engineer had been working under a water law that was nearly 100 years old and they were comfortable working under that law.  They had prevailed in hundreds of lawsuits.  In his ten years as the state engineer he was only overturned twice and as long as they stuck to the water law they felt they would prevail.  He could not understand why they would want to be under a new chapter of NRS.

 

Assemblyman Humke asked Mr. Turnipseed if he wished to exempt the Environmental Commission or the Department of Conservation and Natural Resources as well or just the state engineer.  Mr. Turnipseed stated that Allen Biaggi, from the Division of Environmental Protection, had testified that his department would be covered under the environmental review portion of the bill and, in fact, they had been included in the whole process for many years.  In existing law when an applicant filed an application with the PUC they also had to file a similar application with Mr. Biaggi’s division.  He stated, for the water quality permits and other permitting, it could be accomplished within the 120- to 150-day time line and it was only the air permitting that was a delegated authority from the Environmental Protection Agency (EPA) that took sometimes up to a year. 

 

Assemblyman Dini asked if the committee used the proposed amendment from Mr. Turnipseed that removed the state engineer from the definition of “other permitting entities” in Section 4 would that solve the problem.  Mr. Turnipseed stated that would cure all of their problems. 

 

ASSEMBLYMAN DINI MOVED TO ADOPT THE AMENDMENT SUGGESTED BY MR. TURNIPSEED REMOVING THE STATE ENGINEER FROM THE DEFINITION OF “OTHER PERMITTING ENTITY” IN SECTION 4 OF THE BILL.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

MOTION CARRIED UNANIMOUSLY.

 

Assemblyman Dini asked for further discussion on the proposed amendment from Sierra Pacific Power.  Ms. Drakulich stated her prepared comments were geared toward the comments from Mr. Turnipseed.  Since the committee had now passed the amendment exempting the state engineer and moving the exemption up to the definition in Section 4 there was no need to discuss the first half of their proposal that was to put the exemption in Section 8.  However, there was a second half of their proposed amendment and it was to have the words “other permitting entity” inserted twice in Section 11.  The benefit of adding that was when an applicant filed their application for a project that would require federal environmental impact statements or a federal environmental assessment, the applicant would be required to then file the initial application with all state and local entities.  There would be a benefit associated with all the agencies having an additional 12 to 24 months to commence their processes.  This would be an added burden for the utility company or the applicant but administratively it was a good benefit because it would put the state and local agencies on notice at the earliest possible time that the project was coming their way.  When the 120-day time line became effective at the time the federal studies were completed, those agencies would not really be dealing with 120 days but rather they would have been notified 12 months previously. 

 

ASSEMBLYMAN DINI MOVED TO ADOPT THE SECOND PART OF THE SIERRA PACIFIC POWER COMPANY AMENDMENT TO AMEND SECTION 11, SUBSECTION 2, LINE 30, AND ADD THE WORDS “OTHER PERMITTING ENTITIES.”

 

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

 

MOTION CARRIED UNANIMOUSLY.

 

ASSEMBLYMAN DINI MOVED TO DO PASS AS AMENDED S.B. 362.

 

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

 

Joe Johnson mentioned in his previous testimony he had concern with the 30-day period of time for intervention being reduced to 15 days.  He had prepared suggested changes in an amendment (Exhibit N) to operate under the present law and not reduce the time to 15 days.

 

Assemblywoman Leslie stated in his amendment he mentioned the decrease in time from 30 to 15 days would not expedite the permit process.  She believed that was the reason for the proposed change in the law.  Mr. Johnson stated this issue was the time allowed to file a notice of intervention that gave the person filing legal standing.  It would functionally serve to restrict individuals and organizations if the time were reduced.  By the time someone received the notice and went through any kind of review process there would not be enough time with a 15-day time line.  This did not interfere with the 120- to 150-day time lines. 

 

Assemblywoman Leslie stated she believed Mr. Johnson’s amendment was worth voting on as it would not hold up any time lines and in the future the committee might be glad it was back to the 30-day time line.

 

ASSEMBLYWOMAN LESLIE MOVED TO ACCEPT THE SIERRA CLUB’S AMENDMENT TO RETAIN THE 30-DAY NOTICE OF INTERVENTION.

 

ASSEMBLYWOMAN SMITH SECONDED THE MOTION.

 

MOTION CARRIED.

 

ASSEMBLYWOMAN VON TOBEL, ASSEMBLYWOMAN TIFFANY, ASSEMBLYMAN HUMKE, ASSEMBLYMAN DINI, AND ASSEMBLYMAN HETTRICK VOTED NO.

 

Chairman Bache stated the committee would now vote on the main motion by Assemblyman Dini and seconded by Assemblyman Humke to amend and do pass as amended.

 

MOTION CARRIED UNANIMOUSLY.

 

Chairman Bache asked Mr. Ziegler to review S.B. 372 for the committee.  Mr. Ziegler stated the bill was heard by the committee the previous Thursday when Mr. Wellinghoff and Assemblyman de Braga presented the bill.  S.B. 372 revised the provisions governing the portfolio standards for renewable energy resources.  There was a summary of the bill in the work session packet (Exhibit K).  There had been amendments offered by Mr. Wellinghoff and they were included in the packet.  There was also an amendment proposed by “the company.”  Chairman Bache asked for discussion of the bill.

 

Assemblywoman Leslie stated for the record she had re-read the energy plan that had been submitted by the Bush Administration.  While there were some items she personally did not care for there were a couple of items she wanted to share with the committee.  In the President’s Energy Plan he did have a plan to extend and expand the tax credits for electricity produced using wind and biomass.  There was also a new 15 percent tax credit for residential solar energy property up to a maximum of $2,000.  There were definitely some aspects of the President’s plan that would support the whole premise behind S.B. 372.

 

ASSEMBLYMAN DINI MOVED TO DO PASS S.B. 372.

 

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

Assemblyman Humke asked if the motion included the proposed Sierra Pacific Resource amendments.  Chairman Bache stated the motion was a do pass.

 

ASSEMBLYMAN HUMKE MOVED TO AMEND THE MOTION TO INCLUDE THE AMENDMENTS PROPOSED BY SIERRA PACIFIC RESOURCES.

 

ASSEMBLYWOMAN TIFFANY SECONDED THE MOTION.

 

MOTION FAILED.

 

ASSEMBLYWOMAN SMITH, ASSEMBLYWOMAN LESLIE, ASSEMBLYWOMAN BUCKLEY, ASSEMBLYMAN DINI, ASSEMBLYMAN NEIGHBORS, CHAIRMAN BACHE, AND ASSEMBLYMAN PARKS VOTED NO.

 

Chairman Bache asked for any discussion on the main motion.  Assemblywoman Von Tobel found it interesting the committee was entertaining a motion to offer subsidies to companies that wanted to provide renewable energy in the state.  One such company was British Petroleum (BP), which had a market cap of $215 billion dollars.  She questioned why the state would be subsidizing companies such as that in our state.  Those companies would come into the state and force one of the state’s other companies, with a much smaller market cap, to purchase the power they produced.  She could not support the bill with the subsidies considered.

 

MOTION CARRIED.

 

ASSEMBLYWOMAN VON TOBEL, ASSEMBLYWOMAN TIFFANY, ASSEMBLYMAN HETTRICK, AND ASSEMBLYMAN PARKS VOTED NO.

 

Chairman Bache stated the work session had been completed.  He asked if there was any other business to come before the committee and seeing none he adjourned the meeting at 8:05 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

Cheryl Meyers

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman Douglas Bache, Chairman

 

 

DATE: