MINUTES OF THE meeting
of the
ASSEMBLY sELECT Committee on Energy
Seventy-First Session
March 15, 2001
The Select Committee on Energy was called to order at 1:35 p.m., on Thursday, March 15, 2001. Chairman Douglas Bache presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Douglas Bache, Chairman
Ms. Barbara Buckley, Vice Chairman
Mr. Joseph Dini, Jr.
Ms. Sheila Leslie
Mr. Roy Neighbors
Mr. David Parks
Ms. Debbie Smith
Ms. Kathy Von Tobel
Mr. Lynn Hettrick
Ms. Sandra Tiffany
COMMITTEE MEMBERS EXCUSED:
Mr. David Humke
GUEST LEGISLATORS PRESENT:
Senator Randolph Townsend, District 4
STAFF MEMBERS PRESENT:
Kevin Powers, Committee Policy Analyst
David Ziegler, Committee Research Analyst
Cheryl Meyers, Committee Secretary
Chairman Bache stated the new committee would have a short agenda to adopt the standing rules of the committee (Exhibit C), and hear a presentation from Mr. Ziegler on S.B. 438 of the Seventieth Session and what had happened in the interim. He stated next Tuesday the committee would be hearing Mr. Goldwater’s bill on energy assistance, A.B. 349. Next Thursday the committee would be hearing A.B. 369 on the halting of divestiture. Mr. Bache mentioned some committee members had other meetings scheduled on Tuesday and Thursday; however, the Vice Chairman and he had felt, after reviewing the schedules of all members, those days had the least conflicts. The Chair understood some members had to leave from time to time and the committee would work the best it could.
Mr. Bache stated he would accept a motion to adopt the standing rules of the committee.
ASSEMBLYWOMAN TIFFANY MOTIONED TO ACCEPT THE STANDING RULES OF COMMITTEE.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
MOTION CARRIED UNANIMOUSLY.
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Chairman Bache remarked during the 1999 session, the Legislature had a select committee on S.B. 438 of the Seventieth Session. Many of the committee members who had served on that committee were present in the committee this session. Mr. Bache stated he was disappointed the energy problems had not been solved during the interim. However, he expected the committee would be able to examine the various issues involved with divestiture, increases in generation and the peripheral issues and handle them appropriately.
Senator Randolph Townsend, District 4 spoke to the committee on behalf of the Senate. He wanted to assure the committee, on behalf of the Senate Committee on Commerce and Labor, the complete cooperation of the Senate to act expeditiously on bills passed by the select committee. He stated the Senate appreciated the work the Assembly contributed last session on very complicated issues. To emphasize his point, he mentioned a bill that was introduced that day to expedite building permits and the bill would be heard the next day. The Senate committee did not have any changes in membership and all members were very familiar with the issues.
Chairman Bache appointed Vice Chairman Assemblywoman Buckley to chair the committee in his absence.
Ms. Buckley appreciated Senator Townsend’s remarks and stated the need to work together as a team to make energy affordable in our state.
David Ziegler, Committee Research Analyst, stated he would cover what he hoped was a review (Exhibit D) for most of the committee members and for others an orientation into a very complicated subject. He wanted to acknowledge the Research Division for the booklet that had been provided to the committee (Exhibit E. Original is on file in the Research Library.).
Mr. Ziegler stated in 1997 the Legislature adopted A.B. 366 of the Sixty-Ninth Session, which started the framework to introduce retail competition to Nevada’s electric industry. The chronology presented in the booklet on page 35 was very complete. In the 1999 Session, the Legislature adopted S.B. 438 of the Seventieth Session, which made some revisions to the framework established in 1997. Since that time there had been delays in the start of retail competition. The Governor’s Energy Policy Committee had met and produced a set of recommendations. There had also been legal challenges to restructuring in Nevada and a settlement had been reached.
An overview of A.B. 366 of the Sixty-Ninth Session provided consumers could begin obtaining generation, aggregation and other services from alternative sellers by December 31, 1999, unless the Public Utilities Commission (PUC) determined a different date that might be necessary to protect the public interest. The date was changed and had changed a couple of times since 1999. A.B. 366 of the Sixty-Ninth Session also provided rates for residential service could not exceed the rates charged for that service on July 1, 1997. The limitation was to stay in effect for two years after the PUC repealed the regulations that established the price for that service. Mr. Ziegler stated the issue of market power was present now even though there was a provision in A.B. 366 of the Sixty-Ninth Session that prohibited vertically integrated utilities from providing a potentially competitive service except through an affiliate. The bill had established a mechanism to calculate and recover stranded costs of vertically integrated utilities. Stranded costs were defined as what costs of the utility were recoverable and not recoverable from the ratepayers.
S.B. 438 of the Seventieth Session stayed within the basic framework of A.B. 366 of the Sixty-Ninth Session; however, it deleted the prior rate cap and established a new rate cap that was to have expired on March 1, 2003 for each class of customers, customers unable to obtain electricity from or who failed to select an alternative seller. Effective October 1, 1999, the deferred energy accounting authorization expired. The deferred energy accounting mechanism allowed changes in fuel and energy costs to be passed through to the consumer without going through a general rate case. S.B. 438 of the Seventieth Session changed the date from December 31, 1999 to March 1, 2000, at which time the consumer could begin obtaining potentially competitive services. There had been contentious debates in previous sessions in regard to affiliate rules, market power, and the idea that the PUC could not limit the ability of an alternative seller to combine customers into groups or the ability of customers to form groups to obtain services.
The Report of the Nevada Energy Policy in Exhibit E was mentioned, and Mr. Ziegler suggested the committee might want to become familiar with the ten principles mentioned in the summary that established the framework for the rest of the support. In regard to the global settlement, in July 2000 the PUC approved a settlement of state and federal lawsuits filed by Sierra Pacific Resources over deferred energy accounting and other issues. The settlement, because it had settled a number of issues, became known as a global settlement. Exhibit E contained a summary of the case. The settlement provided that Nevada Power could initially increase electric rates for a total amount of about $48 million to cover the company’s increased cost of fuel and purchase power. The settlement allowed Nevada Power and Sierra Pacific Power to implement monthly fuel and purchase power riders with various conditions and restraints. Mr. Ziegler stated the other conditions were listed in Exhibit E in detail. He also stated six months after the global settlement Nevada Power and Sierra Pacific Power filed a combined rate increase that totaled $310 million, a 17 percent overall average increase in rates. The increase included $5 million for assistance to low-income consumers. The project had become known as the Comprehensive Energy Plan.
Mr. Ziegler indicated that based on notes compiled, newspaper reports, conversations, Exhibit E and other items, the current topics listed could be some of the issues confronting the committee. The topics included:
1. Divestiture.
2. What adjustments did the State need to make right now in terms of divestiture of generation facilities?
3. How to secure a short-term supply of power with the situation in California.
4. New generation capacity, new transmission capacity and natural gas pipeline capacity.
5. Whether the affiliate rules been affected by the way things had changed in the last few months.
6. Whether the committee should look at portfolio standards and net metering.
7. Whether the global settlement should be discussed.
8. Drought in the western United States as a concern because of its effect on hydropower in the northwest and how it might impact short-term energy supplies.
9. Allowing large users to secure their own power supply.
Mr. Ziegler indicated there were quite a number of bills and bill draft requests that the committee would be hearing. Currently, A.B. 91, and A.B. 197 had been processed, and A.B. 369 and A.B. 349 had been referred to the committee.
Vice Chairman Buckley stated the committee should anticipate a comprehensive bill that had been drafted by the Assembly leadership. The bill would deal with issues such as the rate increases, the issue of full rate cases filed versus rate increases requested without backup and without proper hearing. If the committee would like to explore any of those issues in concept at this meeting they could do so. When the bill was received the Chair had suggested the issues would be broken up into subject matters such as hearings, alternative energy, etc.
Assemblyman Dini suggested the committee might want to look into the variable agriculture rates that were causing problems in central Nevada. Ms. Buckley suggested the committee could add the problem to the list on perhaps the day the committee discussed rates.
Vice Chairman Buckley asked the committee for any further questions and seeing none adjourned the meeting at 2:00 p.m.
RESPECTFULLY SUBMITTED:
Cheryl Meyers
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: