MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-First Session
February 26, 2001
The Committee on Government Affairswas called to order at 9:00 a.m., on Monday, February 26, 2001. Chairman Douglas Bache presided in Room 3143 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
Mr. John J. Lee, Vice Chairman
Ms. Merle Berman
Mr. David Brown
Mrs. Vivian Freeman
Ms. Dawn Gibbons
Mr. David Humke
Mr. Harry Mortenson
Mr. Roy Neighbors
Ms. Bonnie Parnell
Mr. Bob Price
Ms. Debbie Smith
Ms. Kathy Von Tobel
Mr. Wendell Williams
GUEST LEGISLATORS PRESENT:
Assemblyman Greg Bower
Assemblywoman Sheila Leslie
STAFF MEMBERS PRESENT:
Eileen O’Grady, Committee Counsel
Dave Ziegler, Committee Policy Analyst
Glenda Jacques, Committee Secretary
OTHERS PRESENT:
Gerald Willis, Director of Music, Sage Ridge School, Reno
Carol Bell, President of Hug High School Booster Club
Susan Reeder, Sierra Pacific and Nevada Power
Don Soderberg, Public Utilities Commission
Bob Cooper, Bureau of Consumer Protection
Marion Barritt, Sustainable Resources Group
Joe Johnson, Sierra Club, Toiyabe Chapter
Jan Gilbert, Progressive Leadership Alliance of Nevada
Ernest Nielson, Washoe County Senior Law Project
Delmar Leatham, Overton Power District
Assembly Bill No. 165: Declares “Silver State Fanfare” as official state march. (BDR 19-579)
Assemblyman Greg Brower, representing District No. 37, introduced A.B. 165. The song was written for the Hug High School band when they were invited to perform at the 1997 Presidential Inaugural Parade in Washington, D.C. Rather than perform a standard band march, Mr. Willis and his students took the challenge of composing a new march that would be unique to Nevada. That composition was “Silver State Fanfare.” In the Assembly caucus room there was a photo that showed the Hug High School Band performing in Washington, D.C. A.B. 357 of the Seventieth Session was introduced to create an official state march. The bill passed unanimously in the Assembly but did not make it through the Senate during the rush to close the session.
A.B. 165 might not be the most important public policy bill this committee would hear, but it would be important to those who have worked hard in composing and performing the song. This would not replace the state song. Many states had more than one state song (Exhibit C). Nevada had two official state trees, state gems, mottos, and a second official state animal was proposed during the session. The bill would officially recognize the accomplishments of Mr. Willis and the students of Hug High School and establish another symbol that all Nevadans could be proud of.
Chairman Bache excused Mr. Brower to return to the Judiciary Committee.
Mr. Gerald Willis, the composer of “Silver State Fanfare,” stated Ruby Mountain Symphony from Elko, Nevada, had premiered the composition in November 2000. A CD recording of this performance was played for the committee.
Carol Bell, President of Hug High School Booster Club, stated the song had been played by the Lovelock High School band for Representative Gibbons in Washington, D.C. During the Reno Mayors’ Conference, the march was played when the mayors marched down Virginia Street to the river. The march had been used already to represent the state of Nevada.
Mr. Mortensen inquired if copies of the CD were available for purchase and maybe copies could be put in the legislative gift shop for purchase. Mr. Willis stated the piece was not published yet, but he did own the copyright. The CD played today was available because of the performance of the Ruby River Symphony.
Ms. Smith thanked the presenters for the hours they had donated to bring about the composition.
Ms. Gibbons questioned whether Mr. Willis had donated his time and efforts in the capacity as composer. Mr. Willis stated he had received no monetary gain from the composition. He would like to make the song available to middle and high schools in Nevada as part of the schools’ musical library.
Mr. Price agreed he would like to have the CD available to the public.
Chairman Bache thanked the presenters and closed the hearing on A.B. 165.
Assembly Bill No. 197: Requires disclosure to customers of certain information concerning electric services by electric utilities and alternative sellers. (BDR 58-910)
Assemblywoman Sheila Leslie, representing District No. 27, stated A.B. 197 would not solve the energy crisis but would increase customer knowledge and encourage awareness and movement toward conservation efforts and the use of green energy technology. Several environmental groups had approached Ms. Leslie about the need for utility customers to have a better understanding of where their energy was coming from and how it was being generated. Surveys showed that customers tended to think there was a higher amount of renewable energy being used than was true. Many Nevadans thought geothermal energy was widely used. Only one percent of Nevada’s energy comes from renewable resources. In southern Nevada, only four percent of energy comes from Hoover Dam. Thirty-six percent of southern Nevada’s energy was generated from coal. Those basic facts should be made available to Nevadans.
More than twenty states had adopted some form of disclosure requirements to better educate electricity customers. Disclosure requirements of the bill are molded after disclosures found on packaged food products and appliances. A.B. 197 hoped to follow California’s disclosure requirements (Exhibit D). Studies have shown when consumers had the information they factored that knowledge into their conservation and other decisions that concerned utilities. The bill would require electric sellers to disclose to consumers twice a year the actual mix of fossil fuels to renewable fuels. Hopefully this would encourage conservation in the consumer’s personal usage, and greater utilization of renewable sources and green pricing programs. Participation in low-income energy programs would be encouraged also. A.B. 197 would encourage Nevada electric customers to make informed choices for themselves, Nevada’s power supply, and for the environment.
Susan Reeder, Sierra Pacific Power Company and Nevada Power Company, introduced a few amendments to A.B. 197 (Exhibit E). Amendment No. 1 would delete the word “prospective” in Section 1, Paragraph 1. Until Nevada was an open market everyone in the state was already a customer.
Amendment No. 2 would delete subparagraphs 2 and 3 of Section 1, which referred to contracts. The power company had numerous contracts with large-sized customers, vendors, and many suppliers. The language was unclear regarding what contracts were included. The information source for consumers would be their bills and they would not need a contract.
Amendment No. 3 would add a new paragraph to Section 1 that would place the disclosure information on the utility’s Web site.
Amendment No. 4, would add “in cooperation with the Nevada Division of Environmental Protection, determines may cause…” to Section 1, paragraph 2, Subsection b. The power company had worked with environmental protection agencies and the amendment would ensure continued work together.
Amendment No. 5 would delete subparagraphs (c) “data concerning price” and (d) “information concerning the variability of prices” in Section 1, paragraph 2. The language did not specify whether prices referred to what the power company paid for power or what the customer paid. The labeling information on the power company bill (Exhibit F) provided price per kilowatt information to the customer. Large customers had their prices disclosed to them through their contract.
Labeling would not cause customers to conserve, but would educate them to be aware of what they used and would help them conserve energy. For every kilowatt-hour of energy avoided, one pound of CO2 emission was saved. Energy conservation would help the environment.
Ms. Gibbons asked Ms. Leslie if she was concerned about the proposed removal of the sections that related to price data and information concerning the variability of price.
Ms. Leslie replied she would refer to the consumer advocate on that issue. The information provided on the Sierra Pacific California disclosure bill provided her with all of the necessary information she would want as a consumer.
Mr. Price questioned how the disclosure would work when the power supply could vary so much within a city.
Don Soderberg, Chairman of the Public Utilities Commission (PUC), stated the different power supply numbers disclosed would be on a system wide basis. There would be one for the Nevada Power service area, one for the Sierra Pacific service area, and any other service area. The kilowatts did not know where they came from when they entered the system. It was extremely difficult to identify what part of a region was getting specific types of power because power was mixed when received by the utility company.
Mr. Price wondered what good this would do if specific sources of power could not be identified. It seemed like an awful lot of work for the power company.
Ms. Reeder clarified the recommended disclosure statement would indicate a regional average mix of power. Currently, the power company produced about 50 percent of their energy and purchased the remaining 50 percent from outside suppliers. Because kilowatts did not know where they came from the power company could only produce a break down of the regional average mix.
Mr. Humke asked Ms. Reeder if Amendment No. 4 was inserted because the Nevada Division of Environmental Protection (NDEP) knew environmental protection issues and the PUC knew rates and economics.
Ms. Reeder responded the PUC had a broad knowledge about pollution but reports were made to the NDEP and they reported back to the power company. It would be beneficial for both agencies to have worked closely on this.
Mr. Humke referred to Amendment No. 5 which deleted the lines concerning price disclosure and questioned whether the price data related to alternative energy sources.
Ms. Reeder explained they were unclear as to what “price” referred to. If “price” referred to kilowatt-hours it was already on the bill or in contracts with large-usage customers.
Mr. Humke stated he would like to see what different types of energy were costing per kilowatt-hour. It could be that biomass-produced energy was costing more than it was equitable to use.
Ms. Reeder responded it could be included in the disclosure if “price” referred to what the power company was paying to those providers. The disclosure would reflect an average of what energy had cost for the previous six months.
Mr. Humke questioned if “biomass” in Section 1, paragraph 6, referred to the growing of corn where the by-product gas was used to produce energy. He wondered if biomass power was generated in Nevada and how much was acquired from out-of-state sources.
Ms. Leslie responded that she had no idea what “biomass” referred to, and it had been added by the bill drafters.
Mr. Neighbors questioned why the disclosure information needed to be made into a law. Often laws were passed when they did not need to be.
Ms. Leslie stated the information was being collected by the utilities and it would not take extra work to pass the information on to the consumer. The consumers were not getting the information now.
Mr. Neighbors inquired if he called the power company with a question would they provide him the information over the telephone.
Ms. Reeder stated the company would provide any information they could to any consumer. The power company did not provide full disclosure to Nevada residents because it was not required of them. The proposed bill would not only affect Nevada Power, but would also be required of any new power company coming into the area when deregulation took affect. Regular disclosure information was provided for the low-income assistance programs.
Ms. Von Tobel questioned why there was a fiscal note to the state on the bill.
Don Soderberg stated the fiscal note reflected certain costs in the process of rule making. The statute referred to the PUC adopting regulations. The rule making procedure would run an estimated $28,000. There were monitoring costs in the bill that would take approximately 25 percent of an economist’s time. The economist would be responsible for verifying the utility’s reporting of its fuel, resource mix and its emission mix. The cost was not included in the cost data information in Section 1, paragraph 2, (c) and (d).
The mix of resources the utility company generated or purchased and the emissions associated with that were information that was readily available. The PUC would routinely find a way to verify that the information was correctly provided to the consumers. The verification of the price information was difficult to accomplish and might require a proceeding. The PUC currently verified the cost of purchasing power 12 times a year for each utility.
Ms. Von Tobel asked whether an additional position was requested in the PUC budget. Mr. Soderberg replied they would not need another position. The added responsibilities would be absorbed by current personnel. The PUC had an obligation to disclose any fiscal cost to the committee.
Ms. Gibbons asked Ms. Leslie if the bill was intended to require new providers of energy to disclose information to consumers that Sierra Pacific was already willing to do.
Ms. Leslie replied that was part of the issue. A.B. 197 would institutionalize a process whereby consumers would get the information on a regular basis. Coupled with an educational effort, the information would help people understand where electricity came from and would encourage conservation.
Ms. Gibbons questioned what biomass and biofuel were and if they were clean sources of energy.
Mr. Soderberg replied that biomass was typically the burning of rotting sewage or garbage and harnessing the methane gas released from the process. Although the process had been used, it had not been used in Nevada. Biofuel typically burned agricultural wastes to produce energy. Because of emissions that were created when producing that energy it had not become the fuel of choice. Those categories could become more prevalent in the future with improved technology. Years ago wind farms were not an energy option and today they were. The engineers continually tried to discover new ways to create energy.
Ms. Gibbons wondered if a definition of biofuel should be included in the bill.
Mr. Soderberg suggested with ever-changing technology those issues should be addressed with regulations instead of statutes.
Mr. Price wondered if a utility company could take a tax write-off from the federal government if they were required to implement new procedures. Ms. Reeder stated she had no idea but she would find out.
Mr. Lee questioned the use of “nuclear energy” on page 2, line 10 and on line 16, “The average emissions, measured in pounds per megawatt hour, of high-level radioactive waste generated, …” Power in a grid was disbursed randomly. Consumers did not have the ability to choose what fuel they would or would not take.
Mr. Soderberg replied the consumer had no discretion over what energy was dispersed to them. The PUC would verify the sources of energy purchased and use the information to calculate power usage.
Mr. Lee wanted to know what “… average emissions measured…” referred to and what the average emission measured per pound of megawatt hour was. Mr. Soderberg explained the PUC did not draft that language and it would require a more technical explanation than he could give.
Mr. Lee wondered if the bill could be amended to state Sierra Pacific did not acquire nuclear energy for transmission through its lines. Mr. Soderberg stated the idea was conceivable. As stated earlier, it was difficult to determine where a kilowatt came from within the grid. Though you would not be able to tell where a kilowatt came from, you could tell the power companies they could not directly pay a nuclear power plant to generate power for them.
Mr. Lee stated for every kilowatt produced through nuclear power there was a surcharge that Nevada had to pay to the federal government to help solve the nuclear waste problem.
Mr. Soderberg did not know whether Nevadans paid a surcharge when nuclear power was used. Typically, utility companies bought economic energy on the spot market when a power plant had additional energy they needed to get rid of at bargain prices. He was unaware whether surcharges were applied when this was done.
Mr. Brown wanted to know if there were other entities in the state of Nevada besides Sierra Pacific and Nevada Power that would fall under the electrical utility definition.
Mr. Soderberg stated there were a variety of small power companies and cooperatives throughout the state. Idaho Power supplied electricity to a small northern portion of the state. Sierra Pacific was in the same situation in California with the small area they serviced around Lake Tahoe.
Mr. Brown wondered if the proposed amendments were drafted with a view to the proposed deregulation. Ms. Reeder answered in the affirmative.
Mr. Neighbors questioned why the $28,000 fiscal impact noted in the bill couldn’t be absorbed by the PUC’s budget.
Mr. Soderberg reiterated they would absorb that figure into other work they would do during the biennium. The current economist on staff would absorb the added monitoring workload A.B. 197 would create. The PUC was obligated to disclose any fiscal costs but it was strictly an accounting exercise.
Ms. Gibbons suggested “and” should be removed in Section 1, paragraph 1 along with the word “prospective.”
Chairman Bache commented the bill provided valuable information that he, as a consumer, and his constituents had requested. Supplying cost-efficient energy to the state of Nevada was a priority. Because of Yucca Mountain consumers would prefer to see nuclear energy a last resort.
Ms. Reeder stated most times the utility companies did not know where power came from when they bought it. Typically, energy could be traded two or three times before it was utilized. It was virtually impossible to provide an accurate source listing on a day-to-day basis.
Mrs. Freeman questioned whether rebates were available to homebuilders that had built energy-efficient homes using solar or other sources of power. Mr. Soderberg stated those types of programs were administered through the energy office and used federal funding. Right now there were no state programs available.
Mr. Price questioned whether A.B. 197 would require outside power sources to disclose information. Ms. Reeder stated Sierra Pacific had 44,000 customers around Lake Tahoe Basin. Sierra Pacific was required to provide disclosure information to those customers.
Bob Cooper, Regulatory Analyst with the Bureau of Consumer Protection, talked about the disclosures the bill would require concerning the availability of low-income energy programs. Low-income energy assistance could be received through the Welfare Division, through the housing division in regards to weatherization, and through the utility company through its Special Assistance Fund for Energy (SAFE) program. Disclosure of the information twice a year would be helpful to those who needed it. Mr. Cooper thanked the utility company for the amendments and stated his office would be comfortable with those amendments. In Amendment No. 5, the deleted area regarding price had already been addressed by the PUC pursuant to S.B. 438 of the Seventieth Session, where discretion was given to the PUC to regulate billing. The PUC had adopted very comprehensive regulations in docket no. 97-8001. Possibly the office could work on providing the price of renewable energy to the consumer. There was a green-pricing program available in southern Nevada that was administered by the Desert Research Institute. Nevada Power helped provide information for the program and could provide valuable information in the future. The program was one of only two or three green-pricing programs in the country that offered the benefit of tax write-offs. Hopefully people would take advantage of those programs when they realized the tax and environmental benefits.
There was an existing biomass project in Lake Tahoe where old growth forest was harvested and transported to California where it was used in biomass projects. Growth on the Nevada side was used and the energy office was very active in the project.
Mr. Humke wondered if cogeneration energy sources had been accounted for in the bill. Mr. Cooper did not know the answer and deferred the question to others present.
Marion Barritt, Director of Sustainable Resources Group (SUNRISE), which was a nonprofit organization that educated consumers and legislators about energy and alternative energy available in Nevada. Currently there was a lot of interest regarding renewable alternative energy. SUNRISE supported the bill. They would like to implement a “systems benefit charge program” that reflected California’s success with renewable energy.
Ms. Barritt read a statement from Rose McKinney James, Director of the Energy Foundation Board:
“These comments are offered in strong support of A.B. 197 with the revisions outlined this morning. This presents an important component to the state’s overall energy policy. It will ensure an informed consumer and provide an important foundation for future education and awareness. This will be critical as consumers are required to make important decisions on energy usage.”
Jan Gilbert, Progressive Leadership Alliance of Nevada, represented 43 groups statewide, of which SUNRISE was a member. When they discussed what issues would be monitored during the year, renewable energy and low-income energy assistance were part of the agenda. With increased renewable energy, consumers needed to know what they were buying, and hopefully would alter their buying habits. A more educated consumer would choose energy that was clean and renewable. The disclosure would be the beginning of an informed consumer. Ms. Gilbert urged the committee’s support of the bill.
Ms. Von Tobel said she thought the bill was for utility companies to list what power they purchased. She wondered if consumers would be irritated from the disclosure stressing what type of power they should buy.
Ms. Gilbert clarified she and members in her group would be interested in what types of power were produced but the bill was an information bill and not an advocacy bill. The consumer would decide what types of power they would like to use, not the legislators, the power company, or the state.
Ms. Von Tobel stated if competition was available with other power companies then the consumer could choose the type of power they felt comfortable with and the bill would not be necessary. Providing the cheapest power to the consumer would be the most important thing to consumers.
Ms. Reeder clarified that unless a power producer had a line that went directly from the plant to the home they would not be able to say what the mix was. The disclosure would cover a regional mix. Any power company competing for consumers business would have the same mix. The primary goal of the bill was to make consumers more aware. Water meters did not save water but the awareness of how much water was being used was a good conservation tool.
Joe Johnson, Toiyabe Chapter of the Sierra Club, stated geothermal energy should be specified in the energy sources listed in Section 1, paragraph 2. The distinction between biofuel and biomass was an artificial one made by definition. There presently was a plant in Susanville that produced electricity by burning forest slash and sawmill waste. Recycled wood products, construction waste, landscaping and yard waste were accumulated and shipped to Susanville from the Reno/Carson City area. A biomass definition would technically exclude that type of energy. Cogeneration was the term used for producing electricity and heat and it was not specific to a fuel base.
The members of the Sierra Club would like the information provided by A.B. 197 that regarded the mix of purchases for electricity.
Mr. Humke asked if the method Mr. Cooper described was defined in the bill and would be included in the disclosure. Mr. Cooper stated it would appear both as biofuel and energy from the incineration of solid waste.
Ernest Nielson, Washoe County Senior Law Project, supported A.B. 197 and felt that it was an appropriate bill for today’s energy environment. The bill was an absolute necessity if power competition came to Nevada. A consumer could use the information to make informed choices about different products. He suggested in Section 1, line 6 the words “or purchased for” be inserted and the word “to” be stricken. That would clarify the reason energy contracts were made was to provide electricity to consumer homes.
Chairman Bache asked Mr. Nielson to repeat the language so Dave Ziegler could get the proposed change. Mr. Nielson explained he would insert the words “or purchased for” after the word “provided” in Section 1, line 6, and remove the word “to.”
Chairman Bache closed the hearing on A.B. 197 and under the agenda “items from previous meetings” would reopen the hearing of A.B.104 to hear specifically from Mr. Leatham of Overton Power.
Assembly Bill No. 104: Makes various changes concerning collection of charges for services provided by certain general improvement districts. (BDR 25-880)
Delmar Leatham, Overton Power Company, apologized for missing the initial hearing on A.B. 104. He had been able to listen to part of the hearing on the Nevada Legislature web page. As a special improvement district within the state of Nevada, Overton Power Company had the ability to lien property to collect debts. The problem had arisen between apartment owners, landlords, and renters of those properties. The Overton district currently serviced 9,000 customers. If you were a homeowner that rented your home out and the renter left without paying their power bill, Overton Power had the ability to place a lien on the property. The overdue bill became the responsibility of the homeowner. In Mesquite there had been issues with large apartment complexes. In the past, a meter would have been removed if the bill had not been paid and would not be reinstalled until the overdue bill had been paid. That became impractical for apartment complexes. A compromise was reached when the debt was transferred to a common meter in the complex. That allowed the individual meter in the apartment to function for new tenants.
Overton had used this process for the last year and a half and no liens had been placed on any apartments. Individual homes or individual properties had liens placed on them. Overton’s concern was that water districts, sewer districts or the mosquito abatement district still maintained the right to lien property. Though the meter might be different between those entities the obligation was still on the landlord to pay the debt.
Chairman Bache stated at Thursday’s hearing Nevada Power and Sierra Pacific went after the customer who incurred the debt as opposed to the owner of the property. He questioned why Overton Power, which was similar to those companies, did not do that.
Mr. Leatham stated there was a fundamental difference between them and Nevada Power. Overton Power District was a nonprofit special improvement district and had an elected board of directors who set the rules and regulations that operated the company. Monies were collected from one source, the customers, and there was no profit margin to absorb debts. Overton was a political subdivision of the state and Nevada Power was not.
When someone came in to finalize his or her bill, the property owner was notified of an unpaid bill. Overton pursued collection of the bill for 30 days. If collection was unsuccessful the debt was moved to the common meter of the apartment complex. The debt followed the customer when they sought power at a new location.
Mr. Lee stated when a credit union had a customer default on a loan that debt was not transferred to other credit union members. The percentage of possible debts was worked into the mix of the credit union business. It would be absurd to make landlords responsible for their tenant’s debts. He referred to Thursday’s meeting where the apartment owners complained that when Overton did collect on a bad debt they did not receive a refund.
Mr. Leatham clarified they had not collected any bad debt since the inception of the practice and there were no funds to return to apartment owners. Overton’s boards of directors had a responsibility to not associate debts with other customers. It was appropriate to lien property owners for a renter’s outstanding debt whether it was the water, sewer, or power.
Mr. Lee answered that the property owner made a contract with the water or sewer company to provide the service. Overton Power Company made its contract with individual consumers. Overton had a contractual agreement with the tenant and not the landlord.
Mr. Leatham replied a water district had a single meter for the apartment complex and the power company was federally mandated to provide a single residential meter per single-family dwelling. Mr. Leatham questioned who had the obligation to cover the debt. The electricity had already been sold to the consumer and Overton was out the money used to purchase the electricity. The debt needed to be covered by either the landlord or the other consumers in the power district.
Mr. Lee recalled testimony from Thursday’s meeting stating that Overton was returning the security deposit within six months. Maybe the deposit could be kept longer and Overton could solve it’s own problems without bringing them to the legislature.
Mr. Leatham said the returning of security deposits was an issue of balancing the rights of consumers who paid their bill on a regular basis. Should the deposit be held for the lifetime of the account or should it be returned in an appropriate time frame. Six months was an appropriate amount of time to establish a credit history.
Chairman Bache said there was a statute that required the return of the security deposit with interest within a set amount of time.
Ms. Von Tobel stated the reason she brought A.B. 104 forward was because she received complaints from the apartment owners in Mesquite. Overton had placed the landlords in the position of including the cost of power as part of the rent to protect themselves. They would not be able to allow the tenant their own power bill or meter. The tenant would be charged the highest rate of record and that would be unfair to them. The apartment landlords were put in the position of being responsible for the bills when they had not contracted with Overton Power. The landlords contracted with the sewer and trash companies because the service cannot be turned off and the landlord was ultimately responsible to pay the service. Continued sewer and trash pickup were necessary to a communities health and welfare. Water and sewer were different than a power company.
Ms. Von Tobel questioned how many customers with delinquent bills got their security deposit back within six months. Mr. Coy Raynor, in Thursday’s meeting, testified they had been given notices to pay the delinquent bill within ten days or the power to their office would be turned off. Legislation had not given the power company the right to threaten people to pay their bills. It was not fair to threaten to turn off the office or clubhouse of the apartment complex because delinquent tenant bills were not paid. If a lien had been placed on the property, Overton would not be able to collect the outstanding debts until the property was sold.
Mr. Leatham answered the potential turning off of the common meter resulted because Overton tried to accommodate the apartment complex. A delinquent bill would be transferred to the common meter of the complex so the apartment meter would be turned on for the new tenant. Under the lien process, the landlord became responsible for the debt and Overton moved the delinquent bill to help the apartment owner keep those apartments occupied.
Chairman Bache wanted to know where Overton had been given the statutory authority to shift the debt of one customer to another.
Mr. Leatham stated the statute they worked under allowed them to lien the landlord’s property for a nonpayment of a debt. Foreclosure of property or forcing a lien for payment would collect a debt as property was sold. In Overton’s opinion the landlord was obligated to pay the debt. To help keep the apartment occupied and earning funds Overton had shifted the debt to the common meter. The landlord was obligated to pay the debt whether it was through the lien process or through the common meter. The apartment was kept open for usage and the landlord was given the opportunity to pay the debt before the lien process.
Ms. Von Tobel stated that was the basis for A.B. 104. Overton had not followed the statute. They had taken a statute that gave them lien authority and, rather than placing a lien, they had threatened owners to turn off their power for not having paid tenants’ bills. That did not follow the lien statute. If proper collection efforts had been followed, the lien would have to be removed when the debt had been paid. Question was raised whether Overton’s accounting procedures could show whether the tenants with clean records had previously had overdue power bills. Since the apartment owner had paid the debt, it would show paid.
Mr. Leatham stated the bad renter did not go away with a clean credit history because the debt remained associated with their name. Customer records were kept for three years.
Ms. Von Tobel wanted to know when a debt was paid by the apartment owner how it was reflected in Overton’s accounting practices. Mr. Leatham stated it would reflect as a credit towards the landlord’s apartment complex account.
Ms. Von Tobel wanted to know how the landlord was refunded when a bad debt was cleared up by the tenant. Mr. Leatham said the refund would go to the landlord.
Ms. Von Tobel stated that on Mr. Raynor’s bill there was no description of whom the bad debt belonged to. The question was raised how a tenant’s debt could be assigned to the apartment owner without letting the apartment owner know how much each tenant was delinquent.
Mr. Leatham replied the landlord was sent a note that stated what specific amount each tenant owed. The landlord was not notified again. If a detailed listing was wanted by the landlord Overton could provide that.
Mr. Humke stated he would vote for A.B. 104 after hearing the testimony. Public policy did not care if you were a private, nonprofit or a political subdivision of the state. The citizens of the state expected the legislature to hold Overton and other public utilities to a higher standard.
Mr. Leatham stated their intent was not to be mean-spirited in the lien process. Their goal was to keep the apartments functioning and still recover the bad debt they felt was legitimately the landlord’s responsibility. Should the landlord choose not to pay that bill then Overton would have the option of liening that common meter. This was the thought process Overton used in implementing those rules. Overton had the option of disconnecting the specific meter and placing a lien on the specific location. There was a balancing act of meeting the needs of the landlord and recovering those monies and not transferring the debt to other customers.
Mr. Brown wanted to know if Overton Power entered into a written guarantee or contract with the landlord whereby they agreed to cover unpaid tenant bills. Mr. Leatham stated they did not. Mr. Brown wondered why there was no contract. Mr. Leatham responded if the owner of the property lived in the property there was a contract.
Mr. Brown stated in Section 1, paragraph 4, Subsection c, the power company was able to gain a guarantee from the owner for collection of charges. The power company had no right to lien property unless a guarantee was obtained from the owner of the property. If the power company was not obtaining the guarantee they had no right to lien the property, and if they were obtaining it they would have the authority to do what they were doing.
Mr. Leatham stated maybe the requirement might have to be instituted. The question was raised why Overton was exempt from instituting lien powers. Mr. Brown said he was not stating Overton was exempt from the regulations but maybe they might have to modify some of their rules to accomplish their goals.
Chairman Bache commented the feeling from the committee was they did not care for Overton’s practice of charging customer B for customer A’s debt. Overton needed to do business differently.
Mr. Leatham responded that Overton’s feeling was where the assignment of the debt should be placed. Should the other customers absorb it or should it go to the landlord who made a profit. Overton felt the landlord was in business and incurred certain risks in business and should absorb the debt.
Chairman Bache closed the hearing on A.B. 104 and seeing no other business adjourned the meeting at 10:58 a.m.
RESPECTFULLY SUBMITTED:
Glenda Jacques
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: