MINUTES OF THE

SENATE Committee on Commerce and Labor

 

Seventy-First Session

May 15, 2001

 

 

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:05 a.m., on Tuesday, May 15, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada.  The meeting was video conferenced to the Grant Sawyer Office Building, Room 4401, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

COMMITTEE MEMBERS PRESENT:

 

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Dean A. Rhoads

Senator Mark Amodei

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman David Goldwater, Clark County Assembly District No. 10

Assemblywoman Sheila Leslie, Washoe County Assembly District No. 27

 

STAFF MEMBERS PRESENT:

 

John L. Meder, Committee Policy Analyst

Scott Young, Committee Policy Analyst

Jude Greytak, Committee Secretary

 

OTHERS PRESENT:

 

Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection,             Office of the Attorney General

Ernest Adler, Lobbyist, Nevada Housing Coalition

Jon B. Wellinghoff, Lobbyist, Green Energy Business Council of Nevada

 

Judy L. Stokey, Lobbyist, Nevada Power Company and Sierra Pacific Power Company

Mike Smart, Acting Vice President of Resource Management, Sierra Pacific             Power Company

Don Soderberg, Chairman, Public Utilities Commission of Nevada

Joyce A. Newman, Lobbyist, Utility Shareholders Association of Nevada

Scott M. Craigie, Lobbyist, Sterling Energy Systems

Michael J. Willden, Administrator, Welfare Division, Department of Human             Resources

Thomas Wilson, representing Nevada Utility Reform Alliance

Ernest K. Nielsen, Lobbyist, Washoe County Senior Law Project

Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada

Clay R. Fitch, Lobbyist, Nevada Rural Electric Association, and Wells Rural             Electric Association

Craig Davis, Weatherization Program Manager, Housing Division,             Department of Business and Industry

Bernard T. Santos, Lobbyist, American Association of Retired Persons (AARP)

Carole Vilardo, Lobbyist, Nevada Taxpayers Association

Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club

Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada

Jon L. Sasser, Lobbyist, Washoe Legal Services Incorporated

Susan L. Reeder, Lobbyist, Sierra Pacific Power Company, and Nevada Power             Company

 

Chairman Townsend opened the hearing at 7:05 a.m.  He stated Senate Bill (S.B.) 516, which relates to construction defects, is being heard in the Assembly Judiciary Committee.  He noted he was delaying the hearing on Assembly Bill (A.B.) 133 so the interested parties could attend the hearing on S.B. 516, and said he would hear A.B. 133 when they returned.  He opened the hearing on A.B. 197.

 

ASSEMBLY BILL 197:  Requires disclosure to customers of certain information concerning electric services by electric utilities and alternative sellers. (BDR 58-910)

 

Chairman Townsend asked interested parties to step forward.

 

 

Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, office of the Attorney General, stated, “It was my understanding Assemblywoman Leslie would be here about 7:30 [a.m.] so I don’t know if that’s still her intention.“

 

Chairman Townsend asked Mr. Hay, “Do you want to wait for her?” Mr. Hay answered, “That might be appropriate.” Chairman Townsend said, “I don’t like to do that to a colleague.”

                   

Chairman Townsend stated, “Let’s take up 349 [A.B. 349], Mr. Goldwater’s bill.”

 

ASSEMBLY BILL 349:  Establishes universal energy charge to fund low-income energy assistance and conservation. (BDR 58-1264)

 

Ernest Adler, Lobbyist, Nevada Housing Coalition, stated, “I believe Mr. Goldwater wanted to go through some sort of [Microsoft] PowerPoint presentation to summarize the bill.”

 

Chairman Townsend opened the hearing on A.B. 418

 

ASSEMBLY BILL 418:  Revises provisions concerning conservation of energy and use of renewable energy. (BDR 58-1198)

 

Jon B. Wellinghoff, Lobbyist, Green Energy Business council of Nevada, testified:

 

Assembly Bill 418 is a companion bill to S.B. 372.  They are very close in their core requirements, that being the renewable portfolio standard.

 

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

 

Mr. Wellinghoff stated:

 

Assembly Bill 418 was passed by the Assembly on a vote of 26, 14, with 2 [26 yea, 14 nay, 2 not voting].  Coming over to you here, it was our intent to conform A.B. 418 to S.B. 372.  We believe a number of provisions of S.B. 372 are very desirable, especially the penalty provision for example.  Also there was a provision related to the requirement, in essence the utility wouldn’t have to take the energy if it wasn’t available [and] the PUC [Public Utilities Commission of Nevada (PUCN)] could determine that.  So, there are a number of things of 372 [S.B. 372] that we think enhance 418, [A.B. 418].  So, for your consideration, we have before you, [proposed] Amendment 717 to . . . A.B. 418 (Exhibit C) . . . which basically conforms A.B. 418 to S.B. 372, and also preserves a number of provisions in A.B. 418 not in     S.B. 372 we think are desirables, such as providing for the economic development commission [Commission on Economic Development] to provide counties with information on power plants to be built in their counties.  And [the amendment] has a number of other provisions we think are desirable for the committee.  In addition, what we’ve added into Amendment 717 (Exhibit C), to try to contain in one place the entire sum of the provisions to assist renewables in this state, is the bill Senator Rhoads had, which        I believe was S.B. 273 and that’s been incorporated in section 18 of Amendment 717 (Exhibit C).

 

Mr. Wellinghoff continued:

 

So, we have here a compendium that will provide us, we believe, with substantial benefits to the state of Nevada from renewable energy systems.  Those benefits have been talked about many times before this committee, and a number of testimonies provided by numerous commentators.  It came to my attention yesterday there was a document being handed out to a number of senators;    I don’t know how many of you received this.

 

Chairman Townsend interjected for clarification, “The committee processed S.B. 372, and four of us sit on the tax committee [Senate Committee on Taxation], and we processed Senator Rhoads’ bill, 273 [S.B. 273].”

 

 

 

SENATE BILL 273: Exempts from local school support tax and certain analogous             taxes certain systems designed or adapted to use renewable energy to             generate electricity. (BDR 32-641)

 

Mr. Wellinghoff replied, “Correct.”

 

Chairman Townsend stated,

 

So we’re at least familiar with those things.  What are you recommending stay in A.B. 418, propose to add in Amendment 717 (Exhibit C) entirely new to the discussions that have taken place in either one of those bills?”

 

Mr. Wellinghoff replied:

 

There should be nothing in Amendment 717 (Exhibit C) that is new to you with respect to S.B. 372.  Because, in Amendment 717, we’re simply incorporating into . . . A.B. 418, those provisions relating to S.B. 372, with the exception as I mentioned, of also incorporating in Senator Rhoads’ bill in section 18 of S.B. 273.  So, you should find no surprises in Amendment 717. 

 

Chairman Townsend asked, “Then what is being left, or what is in A.B. 418, based on your expertise, different or being added to S.B. 372 or S.B. 273?”

 

Mr. Wellinghoff answered:

 

There are a number of provisions.  It raises the net metering from 10 kilowatts to 20 kilowatts.  It also provides for the economic development commission to provide information.  It’s primarily an informational provision to counties with respect to new power plant construction and the impacts of that construction.  And then finally, it has a provision relating to extending to state buildings an analysis for not only energy efficiency measures, but also for renewable measures as well.  So I think they’re all measures that should be considered positively by this committee.  They’re all measures that have no substantial fiscal impact of any kind, and     I think they’re measures that would promote either energy efficiency or renewable energy. 

Chairman Townsend stated:

 

Subsection 6 . . . of section 15. . . “to the extent practicable,” and this is where they add, “the Commission on Economic Development shall . . . to the extent practicable serve as a center of information concerning electric generating plants and facilities that a utility or other entity proposes to construct or locate in this state, and disseminate that information to counties whose population is less than 40,000.” Why would we limit the dissemination of information?

 

Mr. Wellinghoff answered:

 

We’re not.  We’re simply setting this up as a clearinghouse.  It no way limits the dissemination of information.  It just gives … the smaller counties a clearinghouse to go to so they have a place where this information can be aggregated and disseminated to them and put in one place.  Certainly, it doesn’t limit anyone else, including the PUC [PUCN], or any other entity in the state from providing that information to the counties, or [from] the counties gathering their information on their own.  It simply facilitates, for the counties, a central place where they can go when they hear of someone [who is] going to construct a new plant in their county.  Okay, what about it?  How big is it?  What is it going to entail?

 

Chairman Townsend stated:

 

I just don’t like the term.  I mean, we generally around here, whether it’s in tax [Senate Committee on Taxation], or this committee, or government affairs [Senate Committee on Government Affairs], limit things to counties of a certain size.  But the dissemination of information, I don’t think there ought to be a [limitation].

 

Mr. Wellinghoff replied:

 

I’m sorry.  I didn’t understand your point.  In other words, why shouldn’t bigger counties have the same ability to get this?            I don’t think it would limit that. . . .  I think the thought here was      Mayor Goodman [Oscar B. Goodman, Mayor, City of Las Vegas] could accumulate this information on his own and the county would accumulate it on its own, but the smaller counties may not be able to, that’s all.

 

Senator O'Connell stated:

 

Jon [Mr. Wellinghoff], you just made a statement that caught my attention, especially [with regard to] the other information I’ve been provided with. . . . There’s not going be any substantial economic impact?

 

Mr. Wellinghoff answered, “Correct.”

 

Senator O'Connell asked:

 

Would you care to elaborate?  Because the information I have, especially with the graduated amounts and impact by the time we get to the 15 percent, [it] is going to have a tremendous financial impact . . . on governments, on residential [users], et cetera, right on down the line.  So, tell me, how you do not believe there’s going to be a . . . financial impact?

 

Mr. Wellinghoff stated:

 

If you go to a sheet called “Verifiable Facts” (Exhibit D), concerning the renewable requirements in A.B. 418 and S.B. 372, I’ve laid out here for the committee a number of factual statements that can be supported, either through testimony to this committee, or in commonly accessible sources, such as the Wall Street Journal and other publications, regarding prices of various types of energy.  Using those facts, we can construct an analysis for the year 2003 determining what would be, in the near term, the potential cost of the renewable portfolio standard in A.B. 418 or S.B. 372.  If you do the analysis, based upon those facts, you determine, in 2003, it’s very likely we’ll actually save $4.7 million, by putting into effect the renewable portfolio standard.  And we may save considerably more money out through 2013, although I’d make it clear . . . I don’t think it’s possible to, in fact, make an analysis out to 2013, because I don’t think any of us can really estimate it. But in the near term, I think it’s very clear there are going to be substantial benefits, not only in potentially lower rates, but also as I note in the sheet (Exhibit D), substantial benefits primarily to rural counties in investment, at least $300 million in the first year and perhaps significantly more, and potentially out through 2013, in excess of a billion dollars in direct investment.  And that doesn’t even take into account the multiplier effect, where we’d have several billions of dollars of investment, primarily in rural counties in this state as I’ve indicated, perhaps no cost in increased rates, but in fact a lower cost.  And again, all these facts are verifiable.  All these numbers are supported and can be supported by testimony before this committee.

 

Senator O'Connell responded, “I wonder if I could hear the company’s side . . . Do you have a copy of the information given to us by Mr. Wellinghoff?”

 

Judy L. Stokey, Lobbyist, Nevada Power Company, and Sierra Pacific Power Company, stated, “With me today is Mike Smart.  He’s our Vice President of Resource Management.  He’ll be able to answer your questions.”

 

Mike Smart, Acting Vice President of Resource Management, Sierra Pacific Power Company, testified:

 

One thing you have to be careful of when you’re talking [about] power costs is, what time period are you looking at? We are currently evaluating the forward market for Sierra Pacific and Nevada Power Company.  The price may be, and I see on this piece of paper (Exhibit D) they’re talking about 69 [6.9] cents per kilowatt hour based on the Wall Street Journal, that could be looking at prices as early as this year and starting into next year.  What you run into in the forward [market], when you’re transacting power, is this year and next year, and also in 2003 the prices are a lot higher.  And the market price going forward, anticipating additional gas [and] anticipating additional generation to be built, the prices are dropping with time.  When I did the calculations,       I looked at starting in 2003 and going on and beyond for a 10-year period of time.  What you’re seeing out there is the price around $50 a megawatt hour, which is about 5 cents [per kilowatt hour].  So you have to be careful; what time period are you looking at?    If you look at just this year or next year, you’re getting an inflated price because of the lack of supply of new generation. 

 

The good news is: next year’s prices are cheaper than this year’s; and then the following year, 2003, the prices are again cheaper.  So the market is reacting to [new generation] in the forward period of time.  We are, right now, negotiating with developers . . . we’ve had some conversations with some geothermal developers, and on the fossil side, the natural gas side, they are willing to commit in the $50 range for a 10-year contract, including liquidated damages.  And what liquidated damages do is protect you in case they can not supply it out of their unit, they go out on the market and they either bring it in from the market or they allow you to do it, and they compensate you the difference of the price you had to pay to make up for their lack of delivery; and it’s kind of like a nice little insurance policy.  So, that is a benefit in transacting on the forward market with liquidated damages. 

 

To answer your question, yes, we do have the sheet.  I can’t say I disagree with the 6.9 cents.  You just have to know what year are they talking about the contract starting.  If they’re talking about this year, or as early as next year, it could very well be up in the 6.9 cents [range].  But, we’re talking about 2003, because I believe there’s been other testimony where these geothermal developers and solar photovoltaics need time to construct.  So we have to make sure we’ve got the timeline synchronized, and compare an apple to an apple. 

 

Senator O'Connell said:

 

I guess my confusion is in the information I’ve received from the companies (Exhibit E), it says “increased costs to government agencies will be [$]1.6 million in 2003 and will grow to          [$]5.8 million in the year 2013“; and, “The impact on businesses’ energy costs . . . is going to increase taxes to pay the governmental agencies’ power bills, and will impact Nevada’s businesses’ ability to compete with out-of-state business.”  And then in the first paragraph, we’re talking about “[$]57 million in the year 2003 and the premium will grow to $213 million by the year 2013.”  Obviously these are very big concerns.  So . . . there’s a big gap in the information we’re getting here, and we need to be able to ascertain . . . where are we going to land. 

 

Mr. Smart stated:

 

These are all very big numbers and I deal with these numbers every day.  And what I did is I took a value for the portfolio standard as it’s being outlined with the changes, and I valued that on the market.  And just as always, this morning I called our power traders to find out what’s the latest and greatest price of energy for 10 years fixed with liquidated damages starting in 2003.  The reason they had it on the tip of their tongue, is like I say, they are negotiating with some of the developers for some purchase power contracts going out that far. 

 

Our calculations for the amount of energy needed to be secured under this portfolio requirement is about $1.73 billion.  So then, what I did is, I looked at: Well, what would be the additional cost of the portfolio standard as it’s outlined in this bill and the geothermal component?  I was assuming $65 a megawatt hour with about a 66 percent capacity factor adds $300 million to the price.  So, you take from 1.733, and you’d have to add           $300 million for the geothermal component.  Now, that’s going from 2003 to 2013. 

 

Then, if you wanted to . . . make some assumptions: is it all solar thermal or is it all solar photovoltaic?  Let’s just say it’s all solar thermal.  I used an estimated price of about $160 a megawatt hour, which adds another $500 million on top of the $300 million for geothermal.  So now you’re playing with $800 million.  If you assume all solar photovoltaic . . . which is a lot of photo rays, it adds another billion dollars.  Now, that’s a billion dollars on top of the $300 million for geothermal.  So, it takes you up there real fast, real quick, and there’s an awful lot of money.  Now doing the calculation, what does it mean for the government or state agencies?  Yes, there would be a prorated share dependent upon

their usage of energy, but it trickles to business, it trickles to residential . . . it goes all over the place.  These are very big numbers.

 

Mr. Wellinghoff stated:

 

I put all my assumptions in my sheet (Exhibit D).  They’re all there for you.  You can verify them.  They’re all assumptions testified to before this committee.  The gentleman indicated he used 16 cents for solar, we have had testimony it’s 12 [cents]; so he used a number different from a number testified to.  With respect to the 10-year contracts, those are numbers that represent contracts actually signed.  They can negotiate all kinds of things, but when you come to point of actually signing, if you can get 5-cent electricity from natural gas, I’m sure California would like to talk to this gentleman, because it’s what they’re signing is what’s important.  So again, I’ve only used numbers that are verifiable, have been testified to, or can be determined from independent sources and that’s what I put in my sheet and it’s listed out there.

 

Senator O'Connell stated:

 

 I wonder, is there an objective opinion we can go to try and get some kind of a handle on this information, because we’re just so far apart.  I have voted against renewables because I believe in my heart and soul, they’re not available right now, and the impacts we’re putting on the companies are impossible to achieve.  And then we’ve got a huge fine on them if they can’t achieve that amount . . . .  This is just a nightmare for us to try and get a handle on.  Don [Mr. Soderberg] do you have any kind of information, since you’re going to be regulating this?

 

Don Soderberg, Chairman, Public Utilities Commission of Nevada, testified:

 

We have looked at the information that’s been distributed by both sides of this issue; and, from our perspective, I think we’re in the same spot we were [in] when this first started out.  In this issue, nobody with any great degree of specificity can tell you today what the prices are going to be for fossil fuel generation and what they’re going to be for renewable generation.  Had we known that 2 years ago, we would have sat in this room and completely predicted what’s gone on in the Western market.  So, we just don’t know.

 

I think if it is the state’s policy to promote renewable development, then something needs to be done to push it along.  If there are some safeguards you want to put into that type of a program, then you need to put them in.  Mr. Wellinghoff has given you a sheet of prices.  We . . . are aware of contracts offered for geothermal and wind development that have been very attractive lately.  We don’t know if it will continue.  We don’t know if those were the very best opportunities and therefore they could offer them lower, or whether they were going to be the average as things went on.  You can make the economic assumption those particular industries were very desperate.  Will they be willing to offer that good a contract when they have a guaranteed market?  We don’t know, possibly yes. 

 

We have heard testimony some advances in solar generation would bring the cost down.  We don’t know if those will occur or not.  Conversely, we have heard projections from the company that have very, very high figures on what this may cost us.  We don’t know if that’s accurate either, because they’re all based on projections at the moment, and quite frankly, 2 months from now, those projections can change in either direction.  So, what we’re here to tell you is: We can’t tell you which side is right in this debate.  These are all just projections.    

 

I would say, if you want to promote renewables and are willing to take a little bit of a risk, then take that risk.  If, in this environment, you don’t want to take the risk, then don’t.  What we would be looking at is monitoring it closely in any event, so 2 years from now, 4 years from now, we would be able to say, “This has been the impact.”; it turns out there was no impact; or, it turns out, “Yes, we can identify on the bill, how much higher the bill is, because you did this”, and therefore, you have an opportunity to correct it in the future.

 

Mr. Wellinghoff stated:

 

The other point you made, Senator O'Connell, I think this is very important, if it’s not out there, we’ve put safeguards in the bill.  There’s a clear safeguard in the bill: if it is not out there, they don’t have to buy it . . ..  We put it in Chairman Soderberg’s hands and the rest of the PUC [PUCN] to determine the amount of renewables there and if that amount does not meet what’s required under the portfolio, then the utility is under no obligation and no penalty.  And that’s clearly in the bill.  So, I think that’s a very important point; there are safeguards in the bill.

 

Senator O'Connell asked, “Would you point out to me, exactly where it is      Mr. Wellinghoff?”    

 

Mr. Wellinghoff replied, “Certainly.”

 

Senator O'Connell interjected:

 

And I want to make sure the company’s interpretation of the language is the same as yours.  I don’t know how many people heard the early news, but they’re now telling us we’re in a recession.  That is a very big concern to me.

 

Mr. Wellinghoff responded:

 

If we look in A.B. 418 . . . and you look . . . in section 9 of the bill, which is on the third page, item 6 [subsection 6], at line 44: “If during any calendar year, a provider is unable to comply with its portfolio standard through the generation of electricity from its own renewable energy systems or, if applicable, through the use of renewable energy credits, the provider shall take actions to acquire electricity from the renewable energy systems owned, operated . . . by other parties.  The actions taken by the provider must include making requests for proposals or . . . other appropriate actions . . . If, based upon the responses to the actions taken by the provider, the commission determines that there is not or will not be a sufficient supply of electricity from such renewable energy systems made available to the provider during a calendar year, the commission shall exempt the provider, for that calendar year, from the remaining requirements of its portfolio standard or from any appropriate portion thereof, as determined by the commission.”

 

Senator O'Connell asked, “Is that in your [amendment]?”

 

Mr. Wellinghoff replied:

 

Yes, that’s left in the amendment [Amendment No. 717 (Exhibit C)], that’s correct.  The amendment does not take it out.  That’s part of S.B. 372; it’s part of A.B. 418; it is in both and it is left in, yes.

 

Senator O'Connell asked, “OK, now what about the bill we passed requiring the very high penalty, if the percentage is not available?”

 

Mr. Wellinghoff replied:

 

Yes, the same provision is included in that bill, as well.  So, the penalty would not apply in those instances where the resource is not available during any particular year.  Sierra Pacific [Power Company], Nevada Power [Company], would not pay anything if, in fact, the commission determines the resource is not available to them.  And it is in S.B. 372 as [it] is in A.B. 418, as well.  It is in both bills, I assure you.

 

Joyce A. Newman, Lobbyist, Utility Shareholders Association of Nevada testified:

 

If you’ll look again, Senator O'Connell, at the provision               Mr. Wellinghoff just pointed out to you.  On the top of page 4, it just goes to the sufficiency of supply.  It doesn’t address the cost.  And, I think, Chairman Soderberg’s point was well taken, if these suppliers know the company is under an obligation to purchase, those prices could easily accelerate.  And I might also suggest, with the market as it is right now [and] the desperation many people feel for adequate supply, it appears to me, there’s sufficient incentive out there for these providers to take advantage of the market conditions.  Prices are high, as everyone knows.  And if their product is good, and if it’s reasonably priced, I should think the electric utilities would be encouraged and, in fact, excited about acquiring that supply.  So, I guess my question is: If not now, when?  When will these supplies be competitive in the market?

 

Chairman Townsend said, “Since you brought it up, let me ask you this: Why do you think natural gas is different than anything in this bill?”

 

Ms. Newman replied, “I’m sorry, I don’t understand your question,        Chairman Townsend.”

 

Chairman Townsend responded, “You just made a great statement about supply and demand, acquisition, take advantage of . . . .  Why is natural gas different?”

 

Ms. Newman asked, “Why is the price so high right now?  Is that the question?”

 

Chairman Townsend replied, “Yes, why do you separate the two?  Why do you separate the two?”

 

Ms. Newman answered, “I think that’s a good question, Chairman Townsend.”

 

Chairman Townsend stated, “You’re required to buy natural gas to fuel your plants, are you not?  You’re required to.  Are you not?”

 

Ms. Newman answered, “They’re not required by law.”

 

Chairman Townsend asked, “Well, then, how do you run them?”

 

Ms. Newman replied, “No one is required to build a natural gas-fired plant.  You know, it was a . . . joint choice, made by the PUC [PUCN] and the companies, due to the economics.”

 

Chairman Townsend said, “You own a whole bunch of natural gas-fired power plants.”

 

Ms. Newman stated, “That’s correct.  The company does.”

 

Chairman Townsend said:

 

You own a bunch of gas-fired power plants.  Okay?  You’re required by your agreement with the PUC [PUCN] to provide electricity to people.  In order to do so, you have to have a fuel source.  Okay, so therefore, you’re required to go buy it on the open market.  Why is that different from renewables, in terms of the price?

 

Ms. Newman responded, “Well, I think it’s a different situation.  With all due respect, Chairman Townsend, I think those decisions to build natural gas-fired plants were made some years in the past.”

 

Chairman Townsend interrupted, “No, we’re not talking about that.  We’re talking about supply and demand.  You brought it up.  So, why do you separate the two?”

 

Ms. Newman responded,

 

I separate the two because one . . . will be a legislative requirement to purchase a particular sort of supply; the other decision was made on the economics at the time.  And the economics at the time suggested natural gas, at that time, was the cheapest way to generate electricity.  It wasn’t a statutory requirement; it was an economic decision.

 

Chairman Townsend said:

 

Okay, now that’s fair.  Now let’s say this: If that was the case then, which was to buy the cheapest source at the time under the utility resource planning act, and it is now substantially higher, substantially higher, and we have given you the opportunity to recapture that cost, what is being proposed here is it is possibly a higher cost now, but since there is no fuel source associated with it, it will be spread out over time, and be a substantially less cost later.  What’s the difference?

 

 

 

Ms. Newman stated:

 

Well I agree with you the economics, perhaps, of those sources are different.  However, I would suggest rather than a statutory requirement, maybe this could be handled in a resource planning type of environment, where the economics could be totally fleshed out, so Senator O'Connell’s question could be answered.  There, obviously, is a difference of opinion as to the cost of the supply.  So, maybe, that could be handled without a statutory requirement, but in a condition where everybody puts their resource options on the table and choices are made based on the economics of the sources.

 

Chairman Townsend said:

 

Then let me ask you this: since the state of Nevada does not control either of the three resources, natural gas, petroleum, or coal; we have none here, none.  We’re at the mercy of Canada, Texas, and the Middle East.  This is an opportunity to control our own resource, forever.  You don’t see any benefit there?

 

Ms. Newman answered:

 

Oh, I absolutely do.  And I think that’s one of the things that certainly could be considered in the regulatory process, where the economics of the different sources of supply are delved into. . . .  It might be able to compete on that basis.

 

Chairman Townsend said, “So let me ask you this:  Who is responsible for handing this out [Exhibit E]?”

 

Ms. Newman responded, “. . . I don’t know what it is, sir.”

 

Chairman Townsend stated:

 

It says, “Facts Concerning the Renewable requirements in A.B. 418 and S.B. 372” [Exhibit E] . . . [Background discussion]  It’s the company’s.  Okay, then, let me ask why the company did not identify it as the company’s, per this committee’s requirements?

Ms. Stokey stated, “I apologize, Chairman Townsend, I didn’t realize our name was not on there.  We personally were handing them out.”

 

Chairman Townsend said, “And then, let me ask you another question.  Is there a reason the Chairman didn’t receive one?”

 

Ms. Stokey answered, “No, actually we didn’t get to couple of the people on the committee.  I apologize.”

 

Chairman Townsend said, “Well you can tell, I’m not very happy about this.”

 

Mr. Wellinghoff stated:

One nice thing, I think we all need to remember about this bill, is that if I’m really wrong on my numbers and Sierra [Sierra Pacific Power Company] is right, you can all revisit it in 2003.  If I’m really wrong beyond that, you can all revisit it in 2005.  You can revisit it in 2007.  So I think we have an opportunity here to start a process that again, as Chairman Soderberg said, is a policy decision for this committee, to determine whether or not you want to support renewables and whether or not you want to promote it within this state.  And if we’re wrong, somewhere down the road, we can change off that path, if we want to. 

 

Scott M. Craigie, Lobbyist, Sterling Energy Systems, testified:

 

I would just like to point out we were the ones, actually            Mr. Wellinghoff and I, on this side of the aisle, who brought this language which is the safety valve, if you will, into the bill.  And as I said then, and I’ll repeat it now, I had been, at times, skeptical of solar energy, which is what I represent in this discussion.  But we had many of these same questions when we did geothermal.  And we set geothermal up and got it started in the state, because as we looked at all of the information that we had, very similar to what we have now about the thermal solar technology I represent.  This technology I represent is not photovoltaic, it’s not a science that’s yet really been proven out and fully developed.  This is old‑fashioned heat, collected by mirrors, . . . old-fashioned heat put into old-fashioned turbines that run old-fashioned generators.  And the economics are there, and if we can build a hundred megawatts.  The business plan that they have, and I’ve looked at it, I truly believe it’s got every bit [of] an opportunity to produce what it says as 11-cent capacity on peak.  Now, we have to have, just as we had to when we started geothermal, enough of a commitment by the state so the financial community will let us build at that size level.  And I believe with the safety value that’s in there [S.B. 372] and I was not comfortable representing this program here until that was built in, and I’m glad that it’s in both bills now.  But I do believe that we need that jump-start, because in southern Nevada, the solar capacity potential is enormous.  And it would be greatly beneficial to us in the long run and in the near term.

 

Ms. Newman commented, “I would just . . . bring to your attention again, the provisions in the bill that only speak to supply; they don’t speak to price.” 

 

Mr. Smart stated:

 

If you look at the contracts we have in the portfolio now at Sierra Pacific, it’s roughly about 10 percent existing, that we have now . . . .  There was a period of time, roughly about 7 years, where those contracts were using a term that we use in marketing and power trading, “out of the money,” [which means] higher than the market price.  Now, they have, and they are this year, and they look like next year, going to be in the market, which means they’re valuable as compared to the outside market price of energy.  But, there again, you go to the forward market, and you look at the curves in the forward market, and the curves do cross in late 2003.  And that’s the market anticipating additional natural gas pipeline construction and additional generation.  And that’s all        I have to go with. 

 

I can, in fact, contract for fossil generation in the $50 range.  We are negotiating, as I speak, now, with developers that have proven technology that will, in fact, sign on the dotted line.  And we will include that in our resource plan that we plan on filing with the commission July 1, recommending for approval for some of those facilities.  And that’s all I have to go by is, will they sign on the dotted line and do they have liquidated damages if they do not perform?  These facilities don’t have that.     I would probably look for something in a contract with them to keep the company whole, in the event they don’t produce, especially if there’s going to be a penalty back to me on noncompliance of a law of having so much in the portfolio, so many megawatt hours at the end of 2003.  I will sign up contracts with these developers to comply with the law, to not face a penalty in front of the commission.  So saying you have additional time, maybe for another legislative session, I will probably already have some contracts in hand and those contracts are difficult to get out of, to break the contracts.  I’m obligated then to pay them for their product. 

 

Chairman Townsend closed the hearing on A.B. 418 and reopened the hearing on A.B. 349.

 

ASSEMBLY BILL 349:  Establishes universal energy charge to fund low-income energy assistance and conservation. (BDR 58-1264)

 

Assemblyman David Goldwater Clark County Assembly District No. 10, testified:

 

I have before you A.B. 349.  I have two handouts for you, the first is the presentation I’ve prepared [Exhibit F]. . . .  And then the second is the LCB [Legislative Counsel Bureau] bill explanation [Exhibit G], which       I always find helpful.  [It] puts kind of complicated language in simple terms. 

 

I’ll just tell you why we are here.  Homebound and hobbled by a variety of ailments, 73-year-old, Marge Ryan figures she can manage about 99 degrees [Fahrenheit].  Unfortunately, she’s going to face about 120 [degrees Fahrenheit] or more.  That’s how hot it could get this summer alone in the mobile home park where she retired, where this retired clothing buyer lives alone, with Cheeky, her pet cockatoo.  While blistering summer heat is an annual event, the likelihood Ms. Ryan, her neighbors, and . . . thousands of other Nevadans will periodically be without electricity.  “When it gets really hot, breathing becomes difficult,” Ms. Ryan says.  “What am I supposed to do?” 

 

Ms. Ryan lives on about $11,000 a year in social security payments.  Electricity is a luxury to be used sparingly during the summer.  To save money, she tries to not turn on her air conditioner until [the] temperature hits triple digits.  Outside her window is a large thermometer she monitors regularly.  “The biggest problem for the poor out here is paying energy bills,” says a former social worker.  “I’m afraid people will fall between the cracks.  It could be a disaster.”  This is what we’re looking at in Nevada.  And I appreciate everything that this committee has done to tackle the macroeconomic problems of the electric utility.  I appreciate all the things you’ve done to tackle the macroeconomic problems of supply and demand, of portfolio standards, of managing what’s going on in power.  But that’s a lot like Alan Greenspan handling the economy and trying to get interest rates down. 

 

What I’m trying to do here, in A.B. 349, is provide for the folks that have a $1000 mortgage payment with $500 in the bank.  What we’re going after in A.B. 349 is attempting to get the most vulnerable populations, during what is indeed a crisis, some assistance.  And some assistance they can count on, and some assistance that makes sense for them.  This is not as big a problem when it’s 70 degrees [Fahrenheit] and it’s wonderful and the consumption of electricity and air conditioning isn’t so bad.  But when it gets hot in Las Vegas, or freezing cold in Reno, we’re going to start getting some phone calls.  And how are we going to answer those phone calls?  How are we going to answer them when Mrs. Ryan calls you and says, “My power bill is as high as it’s ever been.  I can’t turn off my air or I will die”? What are you going to say you did?  Assembly Bill 349 is your opportunity to say, “I’ve done something.  I’ve done something smart and long-term, and this is what it is.”

 

Assemblyman Goldwater began his PowerPoint presentation [Exhibit F]:

 

This is what we’re looking at, a little graph of what the average [electric] bill can be.   You can see what a base rate [is], with all the riders on it, what you’re looking at and how big . . . the average bill can be 275 bucks a month for somebody that makes $11,000 a year is a heck of a big chunk.  And it’s more than just a feel-good piece of legislation.  It’s more than electric utility policy that you guys have grappled with since day one, and we all have tangentially.  It’s public health. 

 

You know, a lot of folks, a lot of states look at shut-off moratoria in cold months to preserve heat.  These are things that affect people’s lives.  They affect their health.  Older people die when they get too warm.  They become susceptible to more and more health problems.  We talk daily in the Senate and the Assembly about the quality of life, about how we’re going to enhance quality of life.  When you’re talking about electricity for poor people, we are talking about quality of life until that electricity becomes so expensive that it’s, What do I do?  Do    I turn on my air [conditioning] or do I eat?  So, now we’re talking about quality of life verses life itself.  The public policy is adverse to low income [people] that need cooling. 

 

Let me explain the LIHEA [Low Income Housing Energy Assistance] benefit.  We get a benefit for low-income people . . . to help them with their power.  We do.  It is computed in and awarded for heating days.  The bulk of our population is in the south.  So . . . it’s computed on heating days, which, of course, we don’t need too much of in southern Nevada.  It’s only computed for those in the north.  When we really need help with low-income power assistance is when the electric rates go very high in the south.  Those are our peak demands.  Our federal benefit isn’t computed using those numbers; it’s computed using the northern numbers for heating-days.  So, we have a very meager federal benefit.  Therefore, we need to do something at the state level to enhance the benefit for low-income folks. 

 

What are they doing in some other states, is always a good question.  In Oregon, during the negotiations with Pacific Gas and Electric and Sierra [Sierra Pacific Resources], our own power company, [they] stipulated to some things in their agreement.        I don’t know if they signed that, but it was stipulated to.  They agreed to a public goods charge of 3 percent, raising $71 million, 13 percent of it went to weatherization. That’s in their Senate Bill 1149.  And then $10 million annually for low-income bill pay assistance.  That’s what our own utility agreed to in another state, which is great.  And I have to say, our utilities, both Sierra Pacific and Southwest Gas, have been nothing but helpful, when it comes to low-income assistance in Nevada.  They think, and as evidenced, we need to do more.  They’re willing to do more in other states.  Southwest Gas in Arizona, 20 percent discount on the first 100 therms for 150 percent of poverty, [and] a big chunk of change for weatherization.  And you can see what they do in California as well.  This is what A.B. 349 does.  It funds energy assistance through a mill [assessment] and conservation through a mill assessment. 

 

Assemblyman Goldwater continued his presentation:

 

What is a mill assessment? Just for your edification, I’m sure you guys have all been through it.  It’s one tenth of a cent, or one thousandth of a dollar from intrastate operations, only on gas and electric, no telephone or railroad.  The issues about mill jurisdiction: this has been something I grappled with.  The original bill did not include rural co-ops.  They weren’t under PUC [PUCN] jurisdiction, and I didn’t think they necessarily needed to be.  I was approached by some people in the mining industry who made a very good case that the co-ops should be included, so, we put them back in.  Whether we want to keep them in or take them out is completely up to you.  But, keeping them in kind of spreads the burden a little bit more; taking them out increases the burden on a few; just like any tax. . . . 

 

What is a mill assessment?  [It] goes on end-use retail customers.  It’s a “non-bypassable” surcharge of .39 mills for electric for all end-use retailers.  And on gas it’s 3.3 mills per therm on all end-use customers.  [This] estimates to raise $12 million to $14 million for the fixed energy credit assistance program.  What’s that going to mean to our residential folks? . . . It’s very important to know, because I don’t operate under the premise that this is an increase burden on our residents.  It is . . . very much [an] increase on industry.  But, what’s it going to mean to our residents?  On an average 650-kilowatt hour for northern Nevadans, it’s going to mean about 25 cents a month on their bill.  For southerners,       43 cents a month, based on their average uses.  That’s what we’re talking about:  43 cents a month on the electric bill and gas [in] northern [Nevada] [would] be about 20 cents a month, and in the south about 14 cents a month.  To me, for the benefit you’re getting out of this bill, for the benefit you’re giving to thousands of people, it’s worth that amount of money.  It’s worth the extra change in your pocket on any given day to help people at         150 percent of poverty or less.

 

Assemblyman Goldwater went on:

 

Where’s the money going to go after we collect it?            Twenty-five percent is distributed to the Housing Division for conservation weatherization and efficiency programs. . . . They’re estimating 2000 to 2500 [dollars] per unit that they spend on weatherization.  Now, this is an existing program.  I’m not checking on the program, I assume “Chas” Horsey [Charles L. Horsey III] at the Housing Division is running a good operation.  We do his budgets; it looks good to me unless we know something else about it.  We’re not starting a new program; we’re not doing anything other than enhancing a program that currently exists.  Then 75 percent goes to the state Welfare Division to assist people to pay their household energy costs.  Okay, so it’s [a] 75 [to] 25 breakdown.  How the fixed credit system works, we’re not just going to be writing checks to low-income folks.  We’re going to figure out a good way to help them with their energy bills.  That was very important to me when I was putting this bill together.  And just to help you out in concept, what we wanted to do was figure out what the average guy on the street pays as a percentage of his utility bill.  And then use that same percentage as the amount of assistance that we will provide to people at 150 percent or less of poverty.  Is that clear?  That’s basically how the fixed credit system works. 

 

Let me just show you the benefit of it before I go through the math of it. . . . This is what energy assistance is available now.  From LIHEA, [they] serve about 7800 households for an average benefit of about 212 [dollars].  That leaves 139,000 households not served.   The utilities have a program; [they] contribute about $403,000; [they] serve another 1900 [households], and again, the average benefit is still the same.  So you can see [in] total what you [have] gotten there.  Now let’s take a look at what happens.  Here with A.B. 349.  You have LIHEA [Low Income Housing Energy Assistance grants]; you have utilities; [you] raise another estimated 10 million bucks in assistance from the mill; you’ve upped that benefit from $212 to $304; you serve a heck of a lot more people and heck of a lot more households; and you do some real good.  You really do some good for not too much burden. 

 

Assemblyman Goldwater continued his PowerPoint presentation:

 

This is what you’re doing on the weatherization side.  You can see we have [a] very . . . small program for weatherization.  See the number of households you help out?  We can increase that . . .  And this matters.  This is a consumption of energy.  And you can see, the national data suggests there’s a 25 percent reduction.  So we’re doing great things here.  We’re helping out.  We’re increasing conservation and weatherization, lowering the demand side of the curve, while helping out our most vulnerable population.  These are the federal poverty levels.  These are the income levels [at which] we’ll be helping them out.  [You] can see where they kind of fall, just [to] give you an idea of whom we’re working on here. 

 

[To] give you the math of the fixed credit program.  Here’s a first step.  Let’s assume it’s a two-person household at 100 percent of poverty [the federal poverty level]. . . . The bill says 150 percent, but work with whatever you want; it was just easy here.  So you have got annual income of $11,256 for two people.  The median statewide payment for energy is 6 percent of income, and the PUC [PUCN] knows these things, as everyone on this committee knows, 6 percent is $675.  That’s the average annual payment a household pays in energy.  That’s the first step.  Step two:  Okay, the utility knows what the average energy bill for the household is, and they offer that.  That equal payment option; that’s what they use.  The utility has a long record for household use.  For the purpose of . . . illustration, let’s say it’s 140 bucks a month for the 6 hot months and 50 bucks a month for the other months.  That’s $1140.  Okay?  Here’s your third step: Deduct, from the annual energy bill, 6 percent of the income to determine the fixed credit.  There’s your annual bill.  There’s your . . . 6 percent of income, all right?  Deduct it.  There’s your fixed-credit amount, divided by     12 months, so there’s your . . . benefit . . . and that goes as a credit.

 

Now, you have to remember there are other benefits besides just what are in A.B. 349.  There’s also LIHEA. . . . It’s not a windfall for anybody.  It is energy assistance only.  So we want to figure out the fixed credit after any other energy assistance.  Thus, the Nevada calculation becomes:  there’s your annual bill, there’s your LIHEA payment, there’s [there is] your percent of income . . .  [and] there’s your fixed credit.  The fixed credit remains the same throughout the year. . . .

 

Additional items in this bill [include]:  Welfare to develop the regulations to administer the fixed-credit program alongside LIHEA, and there’s [there is] an administrative allowance in there to help them do it.  This bill also authorizes emergency assistance, and the housing division is authorized to render emergency relief if the      air conditioning or heating unit is unsafe.

 

In conclusion, Assemblyman Goldwater stated:

 

We need this bill.  Summer is coming and people like Mrs. Ryan [and] other seniors are going to be calling us, asking what we did.  What did we do to help them?  And while I appreciate being able to offer an elaborate macroeconomic analysis of the three components of generation, distribution, and transmission, that doesn’t help Mrs. Ryan when she’s sweating, figuring out whether or not she wants to turn on her air [conditioning] or eat.  Assembly Bill 349 allows us to tell our constituents we did something.  If you’re hurting, which we know you are, you can go down to Welfare Division, apply for this program, do quite well.

 

 

 

Senator Carlton asked Assemblyman Goldwater:

 

With the Welfare Division, is there a group of people we may not reach?  I know every time we try to do something like this, we try
to help as many people as possible.  In any of your research, did you find there might be a group who may not be able to apply for this?

 

Assemblyman Goldwater replied:

 

There are tons of people.  You know what those federal poverty guidelines [are like], you know, if you’re $1 over, then you get in a tough spot.  But you have to draw the line somewhere.  And there are a lot of people who are a few dollars over the federal poverty level that you and I both know need some help . . . .  We do the best we can to set it to catch as many folks as we can get.  But even [of] all the people who qualify for the program, a very small percentage . . . actually use the program.  But, you can be guaranteed they’ll be using this program when their bills start getting up there to the point where it hurts, and, if you provide them a benefit that’s an actual benefit, like this program.  This program now isn’t much of a benefit, so nobody wants to use it, but if you provide him or her with a decent benefit, why then, somebody is going to use it; a lot more people will.  But I wish we could get everybody where . . . the common guy says, “That person needs some help,” [and be able to help] the folks that you and I see.  But, unfortunately we have to draw the line somewhere and [it is at] 150 percent of poverty.

 

Chairman Townsend asked Assemblyman Goldwater, “In section 14 and section 15, how did you decide on 3.3 mills on a therm and 3.9 mills on a kilowatt?  Was there a rational?”

 

Assemblyman Goldwater replied:

 

The rationale was a total amount of money, we estimated, needs to be raised to fund this program at adequate levels.  Those were
the numbers that raise between $12 million and $14 million. . . .  They can be raised or lowered, depending on what you see as the need out there.

 

Chairman Townsend inquired:

 

With regards to those charges, the PUC [PUCN] will have to answer this.  I’ll just throw this out and maybe the advocate can [comment].  I have seen, apparently, as the PUC [PUCN] reduced their mill tax last May from 3.04 to 2.5, do we have numbers on how much it was collecting, the 3.04?  There’s a projected reserve of $3.3 million [at the] end of the current fiscal year.  What I’m trying to say [is], How much do we capture because of the rising cost of energy that can be used for this purpose? and, if we’re going to assume the total number you got to is the right number to help people, which is fine. We want to know, are there other dollars that are “captureable” already there?  So I think . . . that’s a simple calculation that can be done; that’s not hard at all. . . .     Mr. Hay, I think you know.  You and I have had this discussion about this issue. . . .  The 75 [to] 25 [collected] going to the bill versus the weatherization, was there a particular rationale [for] picking those two [percentages]?

 

Assemblyman Goldwater replied:

 

No, those two percentage breakdowns were rather arbitrary.      We didn’t want to leave the weatherization and conservation portion out of this concept because, as you can see and as we all know, it’s been underfunded.  This was a way to provide a stream of funding that can really do something in the area of conservation and decreasing demand, which helps some folks.

 

Chairman Townsend commented:

 

The debate tends to get very excitable when it comes to the usage side, but the demand side tends to get lost in the shuffle, and I’m glad you spent some time on that.  The last question is, this has to do with the Welfare Division, I don’t know what section it’s in, but it has to do with the 3 percent.  They’re not allowed to use more than 3 percent to administer this?  Why do they need to use anything if they already have this mechanism in place?  I mean we’re trying to get money in people’s hands.

 

Assemblyman Goldwater answered, “That, my friend, is the eternal question of almost everything in state government.  You can not lift a finger without [someone] saying it’s going to cost me $8 million to run it.“

 

Ernest Adler, Lobbyist, Nevada Housing Coalition, testified:

 

We have Mr. Willden [Michael J. Willden, Administrator, Welfare Division, Department of Human Resources] with us.  I think one of the reasons is it expands the program.  But the 3 percent is not     3 percent expended.  It’s up to 3 percent.  And it’s whatever is required to administer the program.  So that’s actually a cap on expenditures.  It’s not something they will expend.  Mr. Willden,     I think, can answer that better than I. 

 

Chairman Townsend stated:

 

Mr. Willden, you understand our goal here is to get as much of this money in the hands of the people who need it, particularly during the tough time.  Mr. Goldwater made an excellent point, and          I believe it was either Senator Adler or Mr. Neilson or Mr. Hay who brought it up, they measure these issues for heating purposes, because obviously the beltway in Washington [D.C.] doesn’t quite extend west [to] where it gets a little warmer, and so our friends in the West, particularly in southern Nevada, get penalized under this measurement, which is kind of a disaster.

 

Mr. Adler stated, “I believe we are the second-lowest funded state, per capita, in the union and that’s one reason this bill is coming forward.”

 

Chairman Townsend commented:

 

And we’ve had this debate before. . . .  It’s amazing; they all want to come here, and come to Mecca to enjoy their weekends and their days off, but they . . . must think nobody lives here, or that we have people who don’t suffer from needs.  Because it’s a severe penalty, and I think the whole issue you brought up and emphasized is one this committee has heard before. . . .  It’s still kind of a … slap in the face to this state and it really bothers us.        Mr. Willden can you address the 3 percent issue?

 

Michael J. Willden, Administrator, Welfare Division, Department of Human Resources, testified:

 

I’d like to put the administrative cost question a little bit into perspective.  In the current LIHEA program, we serve about 10,000 individuals, which Mr. Goldwater’s presentation accurately showed.  And if you look at the numbers, I think he also indicated we’re going to go up to serving about 40,000 people if this bill is passed.  Under the current federal limitation we have on “admin” [administrative costs], we’re allowed to spend 10 percent of the federal grant on “admin.”  That makes about $350,000 a year for us for “admin.”  We employ only 5 staff and a few contractors to administer the current program.  As I understand this bill, with the 3 percent, we would only get about another $300,000 to        $350,000 on the 3 percent, to make the program four times bigger than the existing program.  So we’re going to be operating a four times larger program with only roughly double the staff.  We will not hire state employees; they will be contract individuals.  As we need to peak and ebb with revenues generated, we will use contract resources.  So, we’re not trying to be “fat” here.  We are running a lean-and-mean operation overall.  We will be well under 10 percent overall in administrative costs. 

 

I would also like to point out, in the bill, we will need to change our automated system.  I believe . . . in the first year, we run the current eligibility rules, and by the second year in the biennium, we convert to the fixed energy credit.  So we’re going to need to spend some of our dollars changing our automated system so we can interface with the utility companies, pick up those annual costs, feed in the gross annual income of the households, and make the calculation to determine what the fixed energy credit would be.  So, we will have to run lean and mean to stay within the overall appropriation.

 

Chairman Townsend asked Assemblyman Goldwater:

 

During the debate, was the issue of the cost to the utility ever brought up?  And if so, is that a part of what they collect already?  And therefore, there really shouldn’t be much, or was there going to be an expense?  How is that dealt with?

 

Assemblyman Goldwater answered:

 

My negotiations with the utilities have been very positive. . . .  The representatives of the utilities never represented to me it would be administratively difficult to figure these things out.  And we did make a provision for the one request they made of me, which        I thought was more than fair, allowing them to delineate it as a line item on the bill, which many of us in elected office don’t like to see.  I know I certainly would prefer to be able to hide.  But quite honestly, in the spirit of full disclosure, I think, let them delineate it on the bill.  I’m happy to say, for 14 or 20 cents a month, we’re providing a benefit to 40,000 people. 

 

Chairman Townsend commented:

 

One of the things this committee took testimony on [and it] was quite shocking, was the issue of weatherization.  The point being, it’s a disproportionate usage because low-income individuals usually are in residences having the least amount of weatherization.  So you really have a double problem.  That’s why    I thought what you put in here on 25 percent was crucial, because they’re air-conditioning Clark County because they can’t keep anything in.  And I think your point about the loss of life due to heat is an important one, but that weatherization is always underestimated.  And until you’ve had a utility audit and they do a blower test and all those things they do, you’d be surprised how many of the homes, built as early as maybe just 10 years ago, are not energy-efficient, due to windows, due to the fact they just don’t trap the appropriate heat. . . . And you’re satisfied with regard to the breakdown of the numbers you showed in the total amount of people this is going to get to, which was             Senator Carlton’s question?  You’re satisfied it should help the most needy of our individuals, if things tend to spike?

 

Assemblyman Goldwater responded:

 

I’ll tell you, like everything we do, a balance needs to be struck.  We have to weigh the burden on residential ratepayers as well as large industry, which is really where we are going here: the opposition [arising] from this bill versus the benefit we’re giving to folks.  In my efforts to try to attain balance, this is where the fulcrum came. . . .  You may, as a committee, change it.

 

Chairman Townsend stated, “Well, you’re probably as close to the point as can be found without somebody spending 2 years on it. “

 

Timothy Hay, Chief Deputy, Bureau of Consumer Protection, Office of the Attorney General, testified:

 

I’d just like to, first of all, commend Assemblyman Goldwater for his work on this bill.  I think it’s a very progressive step the state needs to take. . . .  My office testified in front of the Governor’s energy policy committee [Nevada Energy Policy Committee] to this concept and Mr. Goldwater has followed through with it.  I ‘d just like to note, he showed you one graph [Exhibit F] with the average [electric] bill in Las Vegas peaking at about $275 next summer, in August of ‘02 [2002].  Those were numbers we prepared before the bill reinstituting deferred accounting was enacted.  So, if anything, the chart is now on the low side, and the $275 number will be higher in August of 2002, for the average residential consumer in Las Vegas, unless something miraculous happens during the course of the next 12 months.  So, the need for the bill is even greater than it was when it was introduced. 

 

We believe there is a vulnerable population out there, particularly in southern Nevada that needs every bit of assistance we can     come up with.  We’re working with [U.S. Senator Harry Reid]        Senator Reid’s office to address the heating degree-days’ issue, which hopefully can be resolved at the federal level.  But the need for this is evident, and the burden on the non-low-income residential consumer Mr. Goldwater indicated, of a few cents a month, we think is an appropriate mechanism for a permanent funding source for these purposes.  Hopefully, as energy prices come down, we’ll be able to redirect more of the funds, possibly to weatherization or other purposes.  But the next couple of summers are obviously going to be very rough for everyone.  I think this is certainly a major step in the right direction, and we strongly support it.

 

Chairman Townsend asked:

 

Under the deferred energy mechanism now in place, when would they first be able to capture . . . the new rising fuel and purchase power prices?  . . . Was the test period going to start in June or are they going to start to collect in June?

 

Mr. Hay replied:

 

The companies are able currently to accrue the deferred balances, as of April 1 of this year.  So those amounts are currently accruing.  As you know, the mill tax is set for the purpose of the PUC [PUCN] and for our office’s budget, once a year, based on the preceding year’s revenue.  So those will be captured on a going-forward basis at that point.

 

Chairman Townsend stated:

 

I’m just looking at this.  When will the customer start to see that? Because we allowed them to spread out and I believe the commission is allowed to spread it out over 3 years, once they accrue it. 

 

Mr. Hay explained:

 

Under the schedule approved by the legislature, the deferred case will be filed and decided in the spring of ‘02 [2002]. so you’ll actually see the rate increase, assuming that schedule holds, at sometime . . . late spring [or] early summer of ‘02 [2002] and that will be the next major spike up.  The top tier, would have represented the adjustments under the global settlement, the continuing F and PP [fuel and purchase price] riders.  So you’re not going to see those, but you will see a spike at some point earlier in the year of ‘02 [2002], when the deferred case and its associated rates are put into place.

 

Chairman Townsend asked, “[Are there] any questions for Mr. Hay?”

 

Thomas Wilson, representing Nevada Utility Reform Alliance, presented a written statement to the committee (Exhibit H) and testified:

 

We strongly support A.B. 349.  It’s well thought-out, well-crafted.  Faced with the probability of huge [numbers of] stroke deaths in the south due to high utility rates, it’s a godsend.  We took a look at the state agency, which administers it.  We found it was      well-staffed in the north, well-led, and it could be strengthened by having its telephone number listed in the phone book . . . .  The state agency is not listed, north, south, anywhere.  You have to know to get to the welfare department, and if you get there, you’re told to take a hike down to Catholic welfare, [or] the Salvation Army.  And if you finally get the right words out, you get to the agency and you get a voice mail telling you . . . your application is going to be processed in 6 weeks.  It’s not an easy thing for a consumer to get in there. 

 

Chairman Townsend interjected:

 

Before you go further, I think your point is extremely well-made.  And that is no reflection on you, Mike [Mr. Willden, Administrator, Welfare Division], or your agency; it’s [it is] just the nature.  Is there a way to deal with this in a more immediate way?  Because, number one:  If the utilities incurred these expenses and the PUC [PUCN] has authorized them to recapture them, just because we have a program, we don’t want them in [the] position of not being able to make that payment when they need to make it.  So we need to have . . . an official way of doing that.  Do you understand the gentleman’s position?  Because sometimes things don’t go as quickly as we would like them to . . . happen. 

 

Mr. Willden responded: 

 

The section of the bill, section 19, provides that we can use funds for outreach and we would certainly intend to do that.  We have started with some of those activities presently with actions we’ve already taken for the next program . . . this summer . . . season in Las Vegas.  So, we will be making every effort to make ourselves better-known.  I would want the committee to understand, part of the reason we haven’t done significant outreach in the past, is we’ve run basically a $2-million program for the last 10 years.  We’ve had to be very careful about targeting those dollars to those most in need.  So, we haven’t done gross outreach.  We’ve done some limited mailings in utility bills, periodically, and provided literature to nonprofit agencies and sister agencies, but we have not done a significant amount of outreach simply because $2 million didn’t go very far in serving low-income families.  So we will commit to do better outreach. 

 

Assemblyman Goldwater commented:

 

I’ll build on that. . . . When it’s not much of a benefit, nobody knows about it; and when there’s not much of a burden, nobody cares much about it.  We won’t have to do much outreach when those [power] bills get to be about 300 bucks a month.

 

Chairman Townsend said to Mr. Wilson, “Go ahead, sir.  I’m sorry [for the interruption].  You brought up a good point I wanted not to overlook it.”

 

Mr. Wilson replied:

 

I certainly do not mean to criticize the welfare department.  I found the staff really does well when they find a person whose power is going to be cut off today or tomorrow, they’re able to reach out to the local agencies with cash, county welfare, or the Salvation Army, or other agencies, and get money in that party’s hand quick enough not to have their power cut off. . . .  We were strong about trying to keep the agency in the Welfare Division because it did have its outreach capacity, even though it does lack staff in Clark County; there is none down there. 

Senator Carlton raised the issue of: Whom are we missing? . . . We’re concerned about southern Lincoln County: [the towns of] Caliente and Alamo; southern Nye County . . . [the town of] Beatty; the new city down in southern Nye County,[Pahrump] and there you’re dealing with the Armagosa Valley Co-op [Valley Electric Association] over which the PUCN has no jurisdiction; and … Lincoln County with the public power district [Lincoln County Power District] set-up.  It’s going to take some additional reaching out there.  In northern Nevada, people on . . . propane are facing extreme increases in their power bills.  We have had one member who, since December, hasn’t had any propane in his tank because he can’t afford any, [he] tried to get on the program and couldn’t quite get through.  I know none of the tax is aimed at that party.  It’s collected from propane and my reading of the language in the bill indicates . . . it is uncertain whether propane users are eligible.

 

Mr. Adler stated:

 

This bill is drafted so the Welfare Division can help somebody whose only source of heat is propane.  They could even help somebody whose only source of heat is wood.  So, that would not be a problem under this bill, if Mr. Willden were to discover somebody who is in dire circumstances who does not have a traditional source of heating.

 

Chairman Townsend asked, “What about the air conditioning side of it?”

Mr. Adler replied, “Same thing.”

 

Mr. Adler stated:

 

One thing the chairman brought up, and I think we all need to be aware of. is things have changed in this state in the last 10 years.  Although Mr. Willden ’s source of funding has not gone up, we’ve had the fastest-growing population in the country.  We’ve  also had the fastest-growing poverty population in America.  We are getting more and more people into this category.  And even with . . . this bill, I think everybody has got to be keenly aware, we’re only going
to be addressing 25 percent of the eligible households.  This bill just identifies and addresses the needs of the neediest of the needy.

 

Chairman Townsend commented, “You had a slide [Exhibit F] that said you got to about 100,000 of the 137,000 or 139,000 [people].”

 

Assemblyman Goldwater responded:

 

Yes, . . . that’s about right. . . . That’s what it is now [citing information from the PowerPoint presentation (Exhibit F)], and then there you go, even with the bill, you’re still not serving 100,000 people.  But we take a nice big bite out of what we’re currently doing.  We’re only getting about 10 [thousand households], we’re going to pick up another 30 [thousand households].  Those are a lot of people and they’re important people.  They’re important people to everybody who was elected to office, and we can’t ignore them.  I would leave you, Mr. Chairman, with my thoughts, and I almost feel like I’m betraying the people in politics I admired so much, like the O’Callaghans and the Sedways, because the opposition to this bill will . . . come from the major users of power:  the mining industry, the gaming industry, the large users.  And you just want to say, “Forget it, the low-income people are more important than that.”  But that’s not the spirit of the way we legislate these days.  We want to find a way to provide this benefit, and I know the mining industry and the gaming industry also believe this.  They want to find a way to provide this benefit without burdening their management and shareholders and employees with an unforeseen burden.  If we can find a balance, if we can strike that balance, in that same spirit, not the spirit of      “I don’t want to pay” versus the spirit of “You’re going to pay,” but “We’ve got a problem, let’s find a way.” I am more than happy to engage in those kinds of discussions and find a nice balance, with the chairman’s assistance. 

 

Chairman Townsend commented, “This is a very important topic and you’ve laid it out for us very nicely.  We’ll work on this with the diligence we’ve worked on all the other stuff.”

 

Mr. Wilson said:

 

I have one last point regarding the federal program.  After Chicago went through its disaster of a super-hot summer and had many deaths, their Governor Ryan [George H. Ryan, Governor of Illinois] went back to Washington [District of Columbia], and took everybody who had juice with him, and made a raid on “flying heap”, and went home with a lot of money.  We personally, would like to see our U.S. senators, our Governor, and our U.S. representatives back there making a lot of noise about this.  I think it would pay off.

 

Ernest K. Nielsen, Lobbyist, Washoe County Senior Law Project, stated:

 

I have one amendment to propose [Exhibit I] and two brief comments.  The amendment has to do with evaluation and reporting.  And in talking to a number of legislators, there is a desire to develop some greater accountability.  So I’m proposing an amendment, which would add language [for a] subsection 6 to section. . . .

 

Chairman Townsend broke in with the question, “Did you present this to the sponsor of the bill?” Mr. Nielsen replied, “Yes.”

 

Mr. Nielsen continued:

 

This has to do with accountability.  We would suggest, on page 4, amending section 17 by adding a subsection 6, which would read: “The welfare division and the housing division shall jointly perform an annual evaluation of the programs assisted by the fund and report the results of each such evaluation to the Governor, the Interim Finance Committee, and the Legislative Commission.  Such evaluations and reports shall include without limitation, a description of the objectives of the programs, a description of the program’s effectiveness and efficiency in meeting program objectives, the amount of funds and services leveraged, the coordination between agencies and programs and any planned program changes.”  Then to ensure it occurs, amend the two additional sections, section 18, subsection 2 at page 4, by adding a subparagraph (c), which reads, “Pay for evaluations and program design.” And then again, amend section 19, subsection 2, by adding paragraph (d), this is at page 5, “Pay for the evaluation and program design.”  I think these are really important features to build into this program so that … , I think we all want very well run and coordinated programs.  Just briefly, on the impacts . . .

 

Chairman Townsend interjected:

 

You wouldn’t mind . . . and it doesn’t necessarily have to be in your amendment, but there should be some reference here [saying], “[the] welfare division and housing division shall jointly perform an annual evaluation of the programs assisted by the fund.”  And perhaps the PUC [PUCN] should provide information, because with the rising cost of energy and the various changes in the mechanisms they account for, there should be some kind of ability to make reference to it.  This is how prices have gone up, or come down, flattened out, what the cost of natural gas has been, et cetera.  So [the information is] not just appearing in some kind of vacuum. . . .  You don’t have to put it in the language, maybe we can.  I just want to make sure they provide the appropriate input.

 

Mr. Nielsen responded:

 

I think that’s a good comment and we’ll do that.  On the impacts,   I just wanted to let you know [about] the one survey I’m aware of, where rate payers were actually asked whether they supported [an] additional fee to support low-income energy programs.  In Texas, the average customers said they would be willing to pay $2.42 extra per month to provide energy-efficiency programs to more low-income persons.  That’s just to . . . hopefully develop a little bit of comfort for you, in terms of the impacts this bill will have on customers.

 

Chairman Townsend asked, “Where was that done?”

 

 

 

Mr. Nielsen replied:

 

I don’t have it in my written handout [Exhibit I] . . . .  It was in Texas.  It was done by Texas utilities in 1998 . . . .  This was done by the utility itself and it was a random sample of the ratepayers.  Lastly, I have the data showing 101,000 households still being not served on the chart Mr. Goldwater showed you [Exhibit F].  That’s based on 1999 census data of households, and we’ve gone now    2 years since then.  So, you can imagine that number is increasing.  I’ve also attached to my handout a chart showing what other states are doing in this regard, for your information.

 

Chairman Townsend stated:

 

You understand the position the committee is [in].  Mr. Goldwater has put in a huge amount of work, working with all the agencies, trying to identify a number.  [He] tried to work with all your groups to find the balance he’s articulated.  I think the seven of us would be reluctant to start tinkering unless some epiphany of knowledge fell out of the sky that would be shared with all of us.  Because, obviously, the goal here is not to have a wonderful headline, the goal is to have a law. . . .  I’d hate to say, “Well we’re not leaving here without these other 100,000 people being covered.”  Well, that’s another $10 or something.  We have to be a little careful.  He’s done a lot of work and without his input and support, I would be reluctant to start.  Because . . . it’s the age-old story; you start tinkering and, all of the sudden, you’re off into things that might undo everything.  I think your point is well-taken and maybe it’s a higher figure, maybe it’s 120,000, I don’t know.  But I think what it points to, number one, is the money committee should be notifying the two committees processing these bills how much money of the original $5 million in the Governor’s State of the State [Address] is going to be left.  How it’s going to be administered should be identified.  And number two, there should be some mechanism by, and I’m not a guy who’s wild about interim committees, I would prefer the commission look at this, plot this, and maybe every quarter find out what’s going on, and make a plan for the next 100,000 people for the coming session. 

 

Mr. Nielsen stated, “The last comment covers the intent of my proposed amendment.  I am not at all trying to suggest any changes to the bill as it reads other than that amendment.”

 

Chairman Townsend stated, “I think your point is well-taken, but I think Mr. Goldwater, in wading into this very complex and sensitive area, struck a chord of potential harmony due to a lot of work.  I think your point is well‑taken.”

 

Don Soderberg, Chairman, Public Utilities Commission of Nevada, said:

 

With me is Neill Dimmick, our Director of Regulatory Operations.  Our purpose today is to provide a fiscal note that needs to be attached to this bill and some proposed amendments having to do with the fiscal impact.  I would like to say, before I go through that, this is actually a pleasure.  [Not] to come up with a fiscal note, but to have the drafters of the bill have already provided for the funding has become very rare in our law-making process.  So the fact that Assemblyman Goldwater and the people assisting him in drafting this have taken into account this program adds a certain level of new responsibilities to two agencies, and has provided for that, quite frankly, is to be commended. 

 

We believe, when looking at the current draft of the bill, we’re going to be . . . coming into a new role, and it’s not a role we think is negative.  Prior to the drafting of this bill, and actually in the very first version of this bill, the concept was . . . to add to an already-existing mill assessment that would go to already-existing payers of that mill assessment.  There was a realization by a number of entities, and our agency included, if you . . . only created a mill-assessment rider, so to speak, you would be taxing a subset of the entire population to fund a benefit that would actually go to qualifying members of the entire population.  For example: an electric customer who qualifies as a low-income customer who resides in the certificated area of a co-op would be qualified to receive benefits under this program.  However, the community at large there would not be paying into the program.  What we see in this bill is an attempt to capture the entire universe, so the burden of funding this program is spread equally among all electric and gas customers.  We think this is probably as extensive a type of outreach for that program as we’ve ever seen. 

 

What it does for us, though, is makes us a tax collection agency, as opposed to a mill assessment-processing agency.  In our fiscal note [Exhibit J], we have provided an estimate for doing . . . rulemaking, which the bill provides [for] us to do. . . .  We asked to fund two full-time employees to administer this program, and some contract money to get us going.  We need to identify who all these people are in this universe.  It’s very easy [for] us to figure out who the co-ops and electric companies are.  When you get into gas customers, we can’t tell you with any certainty at the moment who all of those customers are.  That market has been deregulated and opened to competition by the federal government for some time.  There are many customers who take their gas from the traditional gas utilities; there are customers who take it directly from a supplier, but have it delivered by the traditional gas utilities; and there are a number of customers out there, and we don’t know who they are, who take it directly off the pipeline.  We will need to find out who they are before we knock on their door and tell them that they now have an assessment.  So, we have provided the fiscal note, Mr. Chairman, which we would ask that you attach to the bill. 

 

We would note that the bill itself provides for up to 4 percent for administrative charges.  We think that is more than generous and that can be lowered.  We don’t need 4 percent of the projected earnings of this bill.  If you were to move that to 3 percent or even 2 percent, we think it would cover what we are estimating this bill will cost us. 

 

The proposed amendments [Exhibit K] we have offered up are by way of technical cleanup.  The bill before you creates a mechanism where we collect the money, send it over to another agency, and then ask for the money back to reimburse ourselves for our expenses.  Not only is it cumbersome, it just creates more administrative burden for those two agencies, which takes up another employee’s time.  We feel it would be easier if we took out

the money we use and send the rest on.  That would create a lot less paperwork between two agencies and would be a lot     cleaner . . . . 

 

Mr. Dimmick has, in his review of the bill, found one, unintended glitch he would like to point out to you, vis-à-vis the difference between end-use customers and retail customers.  We believe it’s the intent of the bill to capture everybody who is using the utility service, so we have a large enough group to pay into the fund.  There is a language quirk Mr. Dimmick has just identified yesterday afternoon.  We haven’t even had an opportunity to discuss it with Assemblyman Goldwater, and he would like to point that out to you. 

 

Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada, testified:

 

In reviewing the bill, part of the problem is some of the bill addresses assessing this tax or mill charge at the wholesale level, especially on the energy side, but it implies it’s only for retail.  So we have some complications, if you assess at the generation level and you . . . recover from customers, you have the problem of taxing energy consumed in getting the energy to the end-use customer.  It’s what we call “line loss.”  It also occurs in the natural gas industry.  It translates into a less-clear end-use calculation for customers.  In addition, the issue of retail or end-use becomes important, because if a customer is, in fact, taking direct service off a pipeline, as compared to similar businesses taking service, and has it delivered by one of our gas companies, we want to make sure the two parties essentially using the gas for the same kind of purpose are not taxed in different manners. 

 

One of those adverse consequences is . . . people will migrate to the way they can avoid a tax.  So you could end up with people bypassing the system and trying to get away to avoid the tax.  So we want to make sure whatever the base is, [it] is as broad as possible and leads to end-use consumption.  That needs to be reconciled with the fact, at least on the electric side, it appears to be an assessment at the generation level and an attempt to capture all generation, both within the state and generation exported out of the state.  So we need to work on language to make sure we don’t leave a loophole for people to exit, because they consider themselves an interstate commerce, or they consider themselves not at retail.

 

Chairman Townsend asked, “Are you then recommending, under section 14 and section 15, where it says, ‘each energy provider shall pay a universal energy charge,’ are you talking about the end user shall pay the charge?”

 

Mr. Dimmick answered:

 

Well, as the bill is stated today, Senator, it makes the energy provider pay the tax to us and then authorizes them, if they are one of our regulated public utilities, to pass it on directly as a separate line item on the bill, which is different from saying the end user is responsible for paying it and we will have the person who delivers it collect the tax from them. 

 

Chairman Townsend stated:

 

I don’t want to put thoughts in Mr. Goldwater’s head, but I believe the goal was, since there is a mill tax being collected per your statement, you wanted to make it as easy as possible, and simply add to that.

 

Mr. Dimmick replied, “The idea is to reduce the administrative burden of trying to get to these folks and get to where the transaction is.”

 

Assemblyman Goldwater explained:

 

The bill summary I passed out to the committee members [Exhibit G] explains this concept in legislative language: “[The measure] establishes a Universal Energy Charge on each therm of natural gas sold at the [sic] retail [for] use [within Nevada] and on each kilowatt-hour [of electricity] that is: (1) generated from a facility within Nevada and sold at wholesale or retail [for] use outside Nevada.”  That’s number 1, and “(2) generated or acquired at wholesale from a facility within Nevada and sold at retail within Nevada; or generated [or acquired] at a wholesale from a facility outside Nevada and sold at retail within Nevada.” So you can see, we tried to . . . make “universal” mean universal.

 

Mr. Soderberg stated:

 

Assemblyman Goldwater has made a clarification on the record, which is now part of the legislative history, and which, I believe, solves our problem.  If we could make that document [Exhibit G] part of the record of this hearing of this bill, then when we go to regulations, we have the legislative history, which has clarified the language we actually had problems with.  At that point we would not suggest you make any changes. 

 

Mr. Adler stated:

 

I think there is a problem in the bill after listening to Mr. Dimmick.  It probably does need to say, “ratepayers or end users.” Because [in] certain circumstances the end user is going to be different from what is a real ratepayer, [in] the way the PUCN interprets it.         It might clarify it, just to insert that language.

 

Chairman Townsend asked:

 

Mr. Goldwater has stated his philosophy was to be all encompassing, which is what this ends up clarifying, hopefully.  And yet it also adds a substantive fiscal note.   If this were to only be on current mill tax paying people, what does that do to this fiscal note, and how narrow does that take the field?

 

Mr. Soderberg answered:

 

Mr. Chairman, I think that gives us two questions. . . .  The first question is:  If we don’t make this all-encompassing, what does it do to the fiscal note?  I don’t think it affects it, unless we go back to a concept of a rider on an existing mill assessment.  If we were to do that, and if we were not to have the audit and enforcement duties this bill puts us into, I think we’ve estimated one quarter of an account clerk’s time, as opposed to a full [time] account clerk and an auditor.  The reason we have this larger fiscal note is we are doing things we weren’t normally doing, as opposed to expanding slightly existing goals.  I’ll let Mr. Dimmick address how much more money goes onto the regulated utility customers.

 

Mr. Dimmick stated:

 

If I understood the other part of your question, [it] is:  If you narrow this to collecting only from regulated utility sales, you will substantially shrink the base, [to] which you would be applying this tax, which will be substantially reduced, because you will not be taxing generation and delivery.  For example, there is more natural gas moved as a transportation customer by Southwest Gas then is delivered to end users in a normal bundled rate.  So you’re going to have substantial volumes of electricity and substantial volumes of natural gas, and all your co-ops, all of your municipal suppliers, dropping out of this coverage, which means you will substantially reduce the budget.

 

Chairman Townsend stated, “That’s exactly what I was looking for.  I wanted to make sure it was clear and everybody understood why his philosophy has the impact it does. . . .”

 

Senator O'Connell asked, “Was there any consideration, [for] instead of putting this under welfare, of putting it under social services?”

 

Assemblyman Goldwater answered:

 

There was that consideration, and as I mentioned to some folks before, I’m as amenable to the delivery of this benefit to whomever knows best.  This is not an area in which I am an expert.  The people I worked with in crafting this bill are experts in the delivery of services to low-income folks, and they felt [using] the existing program in welfare was the best, but if you want to change it, that’s fine. 

 

 

 

 

Senator O'Connell inquired:

 

The reason I asked, Mr. Goldwater, is they already have, and         I think it’s about an $80,000 program that is set up.  They have a program doing this specifically, so I was wondering if you had done any kind of a chart showing the different agencies that provide this assistance, so you would have some kind of a total to know.  And is it in a handout?

 

Mr. Adler stated:

 

When they were drafting this, and I took part in some of the negotiations with the agency, what this bill attempts to do is place these services deliveries with agencies that already do this and have expertise in this field.  That’s why it is with the Housing [Division].  That’s why it is with the Welfare [Division].  These people are already trained.  The reason it was left with the Welfare [Division] is the idea that Welfare [Division] knows who is delivering these energy assistance programs at the moment, and language in the bill allows them to kind of coordinate the delivery.  For instance, they may use their federal money for a specific purpose and their state money for other purposes, and they will know how to coordinate it because it will all be going to the same people, and likewise with the Housing Division.  Currently the Housing Division, for instance, under the federal law, can’t replace an air-conditioning unit . . . somebody in Clark County [if] their [air] conditioning unit gives out, they need to do some conservation measures and replace it, they can’t do that.  But they can do it, under this [bill].  And the reason they were put in this bill [the Housing Division] is so they can make those adjustments.  They know what the shortfalls are.  They know what they can’t fund under the federal statutes and this gives them the ability to do things that make sense.  And that’s why those existing agencies were included in the bill.  And there was a lot of discussion over that. 

 

Senator O'Connell asked, “Okay, this bill is predicted to raise about $10 million? Was that a correct number?”

 

Assemblyman Goldwater answered, “Estimates are actually a little bit higher, $12 [million] to $14 [million].”

 

Senator O'Connell stated:

 

My concern is unless we have really good oversight on this, we don’t know who is being paid, or where, or what, or when, [or] who is collecting the money.  Are we going to have some kind of . . .

 

Mr. Adler interjected, “I believe Ernie Neilson proffered an amendment dealing  with the question of legislative review, and he can address it.”

 

Senator O'Connell asked, “So, are we going to have a sunset on this to review it or a kind of reporting system back to us . . . ?”

 

Mr. Nielsen replied:

 

The answer is yes.  The amendment I proffered requires the Welfare Division and the Housing Division to jointly . . . do an evaluation and annual reports to the Governor, the IFC [Interim Finance Committee], and the Legislative Commission.

 

Assemblyman Goldwater added:

 

Additionally, Senator O'Connell, these are programs that are in place.  These are state agencies running them.  We do their budgets.  We do their LIHEA budget.  I can tell you, as a member of the money committee, we look at these things.  We develop performance indicators, and I’m sure those will be developed.

 

Senator O'Connell commented:

 

The thing that really troubles me in reading this is I read all the audits, and when you’re trying to track something through an audit . . . we leave a lot to be desired as far as handling taxpayer money.  So I just want to make sure that is built into it.  And David [Assemblyman Goldwater], do you sit on the energy committee?

 

Assemblyman Goldwater answered, “No.”

 

Senator O'Connell continued:

 

I understand in that bill we have an excess of a 1-cent property tax in the Cooperative Extension [University of Nevada Cooperative Extension].  How does that interact with this [proposed revision to the] bill, or does it?

 

Assemblyman Goldwater answered:

 

That was a suggestion.  Weatherization is such an important part of energy policy, we attempted to find a way to get a constant funding stream for weatherization.  The idea came about to take a little bit of the growth of the property tax from Cooperative Extension and fund a weatherization program.  I am not sure where it is in negotiations, but to the best of my understanding, the Cooperative Extension [people] said Nevada will disappear from the map if we take it away from them.  So they probably will have it removed.

 

Senator O'Connell responded, “Okay, so that’s not going to be a part of this.  Then, does the fund that the utility has become a part of this funding as well, the program the utilities have, right now, for the elderly?”

 

Assemblyman Goldwater replied:

 

No, the program the utilities have would be computed under       the fixed-credit system.  [It] is part of the benefit low-income [households] receive.  So it wouldn’t be a windfall for low-income [households].  That would lessen the burden on A.B. 349.  It would lessen the credit low-income [households] would receive from the mill tax. 

 

Senator O'Connell elucidated, “So, you’re making sure there is no double-dipping in this . . . with the amendment.”

 

Assemblyman Goldwater responded, “Exactly, that’s why the fixed-credit system works really well.”

Senator O'Connell asked, “We are talking about the federal level for the welfare, why are we having two different . . . divisions coming up with this?  Why [are we] not just using the federal . . . poverty level [guidelines]?”

 

Assemblyman Goldwater:

 

An excellent point, Madam Chair, and I think we’re  simply asking each agency, independently, to determine whether or not somebody . . . is at that poverty level.  But I’m sure if we can find a mechanism for having only one agency do it that would be fine.  We’re running into this same problem in our health programs in Medicaid and checkup [Nevada Check Up] where we have the same health division determining eligibility twice . . . .  If we could make only one agency determine eligibility that would certainly be preferable.

 

Mr. Adler added:

 

I think the reason you have two different agencies is you really have two distinct programs.  The Housing Division, of course, does conservation and weatherization.  The Department of Human Resources, however, has got a lot of different factors, which impact how you subsidize the energy bill.  For instance, you may have a household with ten people living in it; well, you are going to get a different subsidy there than you would with, say, two elderly people in that same household, in terms of energy assistance.  But it may not change the formula at all for weatherization and conservation of the same house.  So, they do need to have slightly different formulas, because they’re essentially dealing with different products, completely different products.  So . . . they’re both 150 percent of poverty level, but how they administer those programs is going to be different.

 

Senator O'Connell commented, “I guess I’m not exactly tracking.”

 

Assemblyman Goldwater interjected, “I don’t get it either.  You’re either 150 percent of poverty or you’re not.”

 

Mr. Adler replied, “Well, you’re 150 percent of poverty on the initial part, but [as to] how they administer it, there are other factors they need to take into account.”

 

Senator O'Connell asked, “Do we have a breakdown between the power and the gas?”  Mr. Nielsen responded, “Are you asking about the mill assessment itself?”  Senator O'Connell answered, “yes.”

 

Mr. Nielsen stated,

 

I think Mr. Goldwater showed a chart earlier describing the various impacts on residential customers [Exhibit F].  For example, in the north, for the electric user, the average use would be 25 cents a month; in the south, it would be about 43 cents a month.  With respect to gas, in the north, we’re talking about probably about    20 cents a month; and in the south, approximately 14 cents a month.

 

Senator O'Connell asked, “Is there any kind of a fee we’re going to pay to the electric company or the power company for the collection of these?” Assemblyman Goldwater answered, “No.”  Senator O'Connell responded, “No, they’re just going to do this gratis?”

 

Assemblyman Goldwater replied, “Yes, Senator O'Connell, and in my discussions with them, in drafting and asking them about those kinds of things, they represented to me that it was not an administrative difficulty.”

 

Senator Rhoads said, “I would like to hear the rural co-ops’ position on this bill.  I believe there is a gentlemen there who would like to [testify].”

 

Clay R. Fitch Lobbyist, Nevada Rural Electric Association testified:

 

I think it’s important to do a little bit of background.  I’ll try to be brief and just try to hit some points, and then will be willing to answer some questions.  The Nevada Rural Electric Association is a statewide association consisting of seven electric cooperatives and two power districts.  The owners and consumers of these organizations are one in the same in every case.  The owners, as members, elect the governing boards of the companies, and have the ability as well as the responsibility, to adopt regulations regarding the provision of electric service to its members.  As such, they both have the authority and ability to establish programs [to] provide assistance to the consumers. 

 

The first point I would like to make . . . here is that the statewide [association] does not oppose the concepts in A.B. 349.  In fact, we have embraced them from our board of directors and have already been working on these for a number of years.  The cooperatives understand the necessity of A.B. 349 to assist and protect lower-income consumers from the volatility of market prices for electricity.  However, A.B. 349 would have a significant effect on us by establishing a financial obligation upon all of our consumers without the consent of our owners.

 

Most cooperatives in the states currently have programs to provide funds for bill assistance to . . . members in hardship circumstances.  These programs are administered at no cost to the organization, through efforts of volunteer committees.  During 2000, these groups provided nearly $10,000 of member funds as assistance.  Assembly Bill 349 would require funding from these customers in the amount of $736,500; [$736,500] is what we’d be looking at. We only had, actually, funds that had gone out of $64,147.  So     I doubt there would be 73 times the demand for funds if we were to come under the provisions of A.B. 349. 

 

The other thing we are concerned about is A.B. 349 lacks any provision assuring the funding generated from our members would be returned to our members.  So basically, as we see it, this is just a transfer out of our system, and not really a help to our members. 

 

Also additionally, most cooperatives in the state have annual or    5-month “levelized” payment programs.  What this does is it reduces the monthly amount due [customers] would have to pay in order to avoid disconnect for nonpayment.  What it does is it spreads it [costs] out during the high months for the northern
cooperatives . . . for the cold months, so they can pay a portion of their bill, not have their service disconnected; and, as the bills go down, they end up catching up during the summer months.

 

Another thing I’d like to point out is . . . the best protection from what we look at as volatility of market prices are long-term contracts.  One of the things I would like to point out is at Wells Electric we signed a 10-year prescriptive contract, and without getting into a bunch of those details, it was with the Bonneville Power Administration.  We negotiated that contract about 3 years ago, and what that provided . . .  is the rates we pay today are the same rates we’re going to pay for wholesale costs for the next     5 years.  Being included in A.B. 349 basically just . . . negates all the benefits of that negotiation and [it] turns out we have to raise rates to our members about 4 percent in order to provide the funding for this. 

 

There was some suggestion we should all be inclusive and by having a universal program, it would apply.  I kind of agree to that, except if you look at a case, say, at Harney Electric [Cooperative], who is a cooperative that serves . . . mostly irrigation loads north of Winnemucca.  Over 90 percent of their loads are irrigation.  They have a very small residential load.  If you were to apply the mill tax to their irrigation loads, it would generate enough funds to pay the entire residential bill for all of their members.  And that goes back to the point again, there still is no provision guaranteeing the funding generated from the cooperatives would ever make it back, at any substantial amount, to help those [members]. 

 

I think it’s ending with the fact that there are volunteer programs.  The boards of directors are very interested in serving their members; that’s all we are geared for.  We are there for our member-owners, and if there is a need, our member-owners will come and tell us there’s a need. … Say there was not enough money being funded for low-income [households], I’m sure we would hear from those volunteer groups saying we have had much larger requests, and is there any way that cooperative boards could consider that? 

 

I also heard earlier today . . . there was concern for the members who lived down in . . . Pahrump in Valley Electric’s service territory.  What I strongly encourage there is the people who are affected by high summer bills should go to their board of directors.  They should call the manager.  They should say, “We have a problem here and we would like the cooperative to address that.”    I think if the cooperative didn’t address that, then that would be a case to come to the legislature and say, “We just cannot seem to get anywhere here with our board.” 

 

I guess, [in] closing, I ‘d like to point out the association does not oppose the . . . merits of the bill.  I understand completely, there is a need to try to help folks.  It’s just we feel we are already ahead of the game on that fact and would like . . . the committee to consider amending the bill to exclude the cooperatives and power districts from the bill.

 

Assemblyman Goldwater stated:

 

He [Mr. Fitch] made some excellent points.  In the original version of the bill, co-ops were not included.  We’re attempting, in tax policies, you know, to spread the burden out and make it less on folks.  I’d like to work with the rural folks and see if we can’t get something where we all can agree on what’s going on.

 

Senator O'Connell asked, “There are 200 people a year currently on the program, and there is a waiting list of how many?  Did we cover that?          ”Mr. Adler asked, “Which program were you referring to?”

 

Senator O'Connell replied, “I’m assuming it’s the only program we have currently in place and that would be the one the southern Nevada power company and northern . . . .”

 

Assemblyman Goldwater responded:

 

There’s a bill summary [Exhibit G] and a blue packet in there [Exhibit F].  In that blue packet [Exhibit F], there are two slides:  one shows the benefit of the low-income energy assistance
currently; and the following slide shows low-income energy assistance with the proposed bill.  So, you can see we serve, if       I recall, about . . .

 

Senator O'Connell interjected:

 

Do you all remember, those of you who were here when we looked at this issue before, do you remember the date we heard this issue when we were talking about weatherizing?  When was that Ernie [Mr. Nielsen]?

 

Mr. Nielsen replied, “Probably the third week of the session, some place around there.”

 

Assemblyman Goldwater stated, “We serve 9700 households, roughly.  This is in about the middle of the packet [Exhibit F], right now.  And should this program be put into effect, we would serve about 45,000 households.

 

Senator O'Connell asked, “What have we done to establish the need?  Are these people who are on a waiting list now?”

 

Assemblyman Goldwater answered:

 

They’re not necessarily on a waiting list. . . .  What we have available is what we provide to them. . . . Let’s take small numbers, if we have $1000, and 10,000 people who need it, we just give them all a penny.

 

Mr. Nielsen stated:

 

I think, Senator, you’re referring to the weatherization program, which now serves about 176 people a year and has, by the Housing Division’s calculation, approximately, a waiting list of 126,000 households to weatherize. 

 

 

 

 

Assemblyman Goldwater noted, “There is a slide [Exhibit F] . . . [which] shows the weatherization, 176 [households currently served.]”  Senator O'Connell responded, “Do they come to you and ask to be put on a list for help?”

 

Mr. Nielsen stated, “Craig Davis from the Housing Division is here and he could be the best person to answer the weatherization questions.”

 

Senator O'Connell explained:

 

The reason I’m asking this, you know we’ve had trouble with the CHIP [Community Home Based Initiatives Program], any of you who have been involved with that, where we’re actually going into laundromats and asking if they need to be on that program.  Do you know what I’m referring to, David [Assemblyman Goldwater]? And I’m wondering how you’re going to find out about these people, and if they’re going to make a phone call to you.  [Do] you know, exactly, how is this information disseminated?

 

Craig Davis, Weatherization Program Manager, Housing Division, Department of Business and Industry, testified:

 

With regards to your comment on how are they are referred, the large majority of our referrals come from Southwest Gas or Nevada Power [Company] or Sierra Pacific [Power Company].  We also use, because of the similarities in income eligibility, the LIHEA list. . . .  If we go into a rural area and we’re not familiar with which households may be eligible, we get a printout from the LIHEA Program.  We’ve worked in conjunction with the LIHEA Program for 15 years now, so it works very well.  The 126,000 estimated [eligible households] was based on the ‘90 [1990] census, so it’s a conservative number.  I think the pictorial we saw earlier [Exhibit F] for eligible households had it listed somewhere around 144,000. . . . There is an absolute need in every county in this state.  Right now, because of the limited funds, we’re only able to operate in Las Vegas and Reno.  Based on just economics, that’s close to     80 percent of the state’s population and assuming proportionate low-income people.

 

Senator O'Connell asked, “Sir, have you worked in connection with Mr. Fitch from the rural cooperatives?”  Mr. Craig answered, “No, we have not.”

Senator O'Connell stated, “It might be a good idea to have some communication there, since he doesn’t  . . .”

 

Mr. Fitch interjected:

 

We have had programs for conservation in our service territory that have run through the LIHEA program.  Also, I’d like to point out, in Wells [Rural] Electric, and I can only really talk on conservation and renewables or efficiency for Wells Rural [Electric], we’ve already placed a half-mill surcharge on all of our members.  That’s going to generate around a half of a million dollars that we are going to spend on weatherization, and conservation, and energy efficiency for the members of Wells Rural Electric.  That investment will go out over the next 5 years.  I think we have made an investment in the [weatherization] area, and we would be more than happy to work with the state . . . .

 

Chairman Townsend stated:

 

So that we don’t leave the sponsor hanging on this stuff . . .         I think there is an issue we need to resolve with the rural co-ops.  Let’s find a solution as quickly as we can to the issue, and we want to make sure the PUC’s [PUCN’s] questions are answered.      I think those are fairly easy to do, but I’d like to get to this as quickly as we can, because I know you’re getting some of our bills and we’re waiting on a couple of others that are going to take some time for the committee. So we want to deal with this as efficiently as we can.

 

Bernard T. Santos, Lobbyist, American Association of Retired Persons (AARP), testified, “I speak on behalf of 245,000 members of AARP in the state of Nevada.  I will make it very simple.  We support Mr. Goldwater’s bill wholeheartedly.”

 

 

 

 

Carole Vilardo, Lobbyist, Nevada Tax Payers Association, testified:

 

We support the concept of what the bill is trying to do.  I have spoken to Assemblyman Goldwater and worked with some of the proponents of the bill.  Some of the issues of concern we had, are the coordination points.  I know in the larger counties, social service [agencies] are providing that assistance.  We have the Salvation Army being used as the conduit for funds.  I think you want to make sure, given that I don’t know how we [will] ever get enough funds to do what you want, that we’re not going to have any duplicate payments. . . .

 

I think the rural cooperative issue is a concern, but this is a socialized program, if you will.  It’s a fee being set to handle a social problem, or a tax, because it actually is a tax, by nature of the purpose of what it’s being used on.  I believe, and again,          I spoke to Assemblyman Goldwater on this, we probably need a capping mechanism. 

 

You heard just the example of what would happen with an irrigation farmer.  It’s possible we need a double cap . . . particularly because you’re not addressing your small businesses, or even your larger businesses, which are going to have an impact on their profit margins and their profitability by the amount of this charge.  And it’s a charge where a business, through competition, can pass it on.  They will pass it on in higher prices; it’s that kind of domino effect.  And I think, some discussion [is necessary], possibly with proponents, because obviously you want to get enough money, but you don’t want to impact those businesses to the point where you’re putting them out of business or giving them a hard time.  [It] might be a percentage of a bill with an overall-total cap, a double-capping mechanism . . . .  I believe, from the comments I heard Assemblyman Goldwater make before this committee, he seems to be receptive.  And I’m most appreciative of that, he’s been very good to work with on the issues on the bill.

I also would like to see more specificity to the regulations adopted.  One of the concerns I have is, if that level of increase goes through in southern Nevada with air conditioning, there’s going to have to be some determination as to how you incrementally ratchet up, because the bill is effective upon passage and approval.  If you collected a month or two by nature of the quarterly payments, it’s still not enough to handle everybody.  I’d like to know that even though you have two agencies setting these rules, it’s one form.  I think we want to make it as simple as possible.  I think there needs to be a coordination with the social service agencies already handling some of this.  So I’d like to see some specificity to the rules, so everybody knows exactly what we’re looking at, because we want to get maximum bang for the buck collected. 

 

Chairman Townsend stated:

 

I think, Ms. Vilardo, Senator O'Connell’s point is not about whether you agree or disagree with the concept.  [The point is] If you’re going to do it, how do we make it the most efficient, so people in the greatest need get the most for the dollar we’re raising?  I think her question goes specifically to those points, so this is not a whole pot of money, some of which is just wandering out there and getting absorbed into bureaucratic administrative costs, which may or may not be appropriate.  We’re not a committee very supportive of administrative costs, so I think her point and your point are well-taken.

 

Senator O'Connell asked:

 

Since this becomes effective upon passage and approval, have we asked the company how long they think it might take to put this kind of a mandate into place?  I mean, can they do it on passage and approval, that quickly?  Or do they need some time to administratively get a system set up for this?  Did that question come up?

 

Chairman Townsend stated:

 

I think that’s the question that went to Mr. Dimmick.  If you do not have the mill tax add-on, which would be very simple, because then it goes from point A to point B, and it’s already being collected.  But if you broaden it, that’s why the requirement of the PUC [PUCN] for this fiscal note is an order to audit, to make sure everything is being captured.

 

Senator O'Connell asked, “Was that the question I came in on in the middle of?”

Chairman Townsend answered:

 

Yes, and that’s what makes it tough.  If you narrow it to only those who are paying the mill tax now, you narrow the field dramatically, which means the $10 million you thought you were going to raise, now becomes a bigger burden on each individual person.  But we’re hearing that Senator Rhoads’ group is already doing a program, so we have got to talk about that and find out how it narrows the field.  There are issues here I think have to be addressed, that I think are legitimate questions.  But, I think they can all be answered, it’s just a function of what you want to        do. . . .  It will go to work session . . . .

 

Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club, testified:

 

On behalf of the approximately 4000 Nevada members of Toiyabe Chapter of the Sierra Club, I ask for your support on A.B. 349.  We are particularly interested in the weatherization portion of this bill.  Weatherization reduces long-term need for energy assistance, and will reduce [the] energy burden on the family.  In addition, weatherization also reduces the cost of the system by reducing the . . . total demand for energy.  A national study conducted by the U.S. Department of Energy indicates a 20 to 30 percent reduction in utility bills for households participating in . . . low-income weatherization programs.  In [the] fiscal year 1999 to 2000 program summary, approximately 92 percent of those homes receiving weatherization were owner-occupied; [for] elderly [applicants], that are 60 [years of age] or older, 71 percent received [weatherization]; [for] disabled [applicants], 61 percent; [those] in mobile homes [were] 61 percent.  I think [with regard to] the weatherization, we would simply like to go on record as supporting it. 

 

I think Senator O'Connell’s questions about passage and approval and when this becomes effective, because we’re tying this program into an existing program and supplying money, there would be some ability to use present funding and/or the one-shot from the Governor’s appropriation to offset the immediate needs, and would allow some time to collect the additional monies on this quarterly basis.  So I think this is certainly a concern we need to address in this issue, but the existing programs are there.  We’re not really looking to create new bureaucracies or new oversights . . . .   The way we structured this was to kind of supply additional money into existing programs with the existing oversight. 

 

Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada, testified:

 

We would also like to go on record in support of this bill.  The only comment I could add is: The $5 million, one-shot appropriation is recommended by the Governor and Assemblywoman Parnell [Assemblywoman Bonnie Parnell, Carson City Assembly District No. 40] [and] has currently been heard in ways and means [Assembly Committee on Ways and Means].  There is some,          I know, interest in a one-shot appropriation, but most of us do feel that would be able to get us through the summer to assist people with their energy bills that may be a burden.  This is such a positive step, to have a long-term commitment to weatherization and low-income energy assistance, we feel it is very necessary.  And that one-shot, whether it is $5 million, or $4 million, or whatever they can find out of the existing budget; this is an important step and a much needed [program]. 

 

I would also like to mention I think it should go through the Welfare Division and the Housing Division.  They are established, excellent programs, [and] having worked with low-income people, they know where to go for assistance.  Some counties aren’t as sophisticated as Clark County and don’t have an infrastructure set aside like Clark [County] to deliver this service.  So I would urge you to put it into the state agencies that know how to do it, and they are going to do it at a very low cost.

 

Jon L. Sasser, Lobbyist, Washoe Legal Services Inc., stated, “Mr. Johnson and Ms. Gilbert basically took the points I was going to make, so I just urge your support of the bill.”

 

Chairman Townsend stated, “We will close the hearing on A.B. 349.  We will work on it.  We expect to see A.B. 661 soon.  We’ll take this up [in a] workshop on Friday, and go from there.”

 

Chairman Townsend reopened the hearing on A.B. 197.

 

ASSEMBLY BILL 197:  Requires disclosure to customers of certain information concerning electric services by electric utilities and alternative sellers. (BDR 58-910)

 

Assemblywoman Sheila Leslie, Washoe County Assembly District No. 27, stepped forward to testify:

 

Assembly Bill 197 will not solve our energy crisis, but in the long run it should help move us towards a better-informed customer base, and hopefully, encourage awareness of movements towards conservation and more use of green energy technologies.  I brought this bill forward on behalf of several environmental groups who believe utility customers need to have a better understanding about where their electricity is coming from. 

 

Surveys have shown customers generally think there is a higher amount of renewable energy being used than is true, especially in Nevada, due to our proximity to Hoover Dam and our geothermal resources, when actually Hoover Dam produces just about            4 percent of our electric needs in southern Nevada, while           36 percent of southern Nevada’s electricity is generated by coal.  In the north, geothermal only makes up about 9 percent of the power we have. 

 

In order to better educate electricity customers, more than          20 other states have adopted some form of disclosure requirement for sellers of electricity, which is basically what A.B. 197 does.  The disclosure requirements are modeled after food disclosures we are used to seeing on cereal boxes, or the energy usage disclosures attached to new appliances.  I passed out for you, a sample . . . of things done in other states [Exhibit L].  The sample I have, that says “SPPCO North Tahoe” on it, is actually what our utility does in California in the Lake Tahoe area, because they do have this requirement in California.  Assembly Bill 197 will require that twice a year, electric sellers in our state will tell consumers the actual mix of fossil fuels to renewable fuels, through a standard disclosure form that is understandable to customers.  It’s hoped customers will use this information to modify their energy-using behavior by encouraging conservation in their personal electricity usage. 

 

So we expect this bill to encourage conservation similar to water conservation programs, encourage greater utilization of renewable energy sources, and encourage participation in green-pricing programs, whereby, they can voluntarily choose to pay more for            energy produced through renewable resources, and also              encourage participation in low-income energy programs, should                  Mr. Goldwater’s bill be successful, or even if it’s not, with the current low-income energy program we do have, as limited as it is, this will help us get that information out to the public.  Studies have shown when consumers have information through food labeling, fuel economy labels, and appliance energy-use labels, they will factor this information into their overall decision-making.  If A.B. 197 becomes law, I believe Nevada’s electric customers will use this important environmental information from their energy bills to make more informed choices for themselves, for Nevada’s power supply, and for Nevada’s environment.

 

And here with me . . . I have the chairman of the PUC [PUCN], the consumer advocate, and a representative from the utility who are all in full support of this bill.  It’s been passed through our government affairs committee [Assembly Committee on Government Affairs] and also has been passed by our ways and means committee [Assembly Committee on Ways and Means].  We took a hard look at it and Chairman Soderberg can address the fact that, unlike Mr. Goldwater, I asked him to do this with existing resources, and I think he’ll tell you he can.

 

[There was a brief interlude when the committee discussed Senator O'Connell’s earlier testimony on another unidentified bill before the Senate Committee on Judiciary.]

 

Don Soderberg, Chairman, Public Utilities Commission of Nevada, testified:

 

I’m here today to explain our fiscal note.  Unlike the bill before us, this is what we refer to as a theoretical fiscal note.  It was submitted at the time the bill was submitted in the Assembly.  It’s not something we’re asking you to introduce.  We just wanted to explain it.  We’ve been under the charge, this year, of providing fiscal notes to all bills, and I guess a deviation from past practice.  [We are] trying to be as accurate as possible, regardless of the policy considerations within the bill.  Our fiscal note here provides for a rule making, and a one-quarter time economist.  When we actually look at it, this is a very simple rule making.  This is something that’s being done in other states.  We actually have, in the legislative history, an example of how the author of the bill would like to see these.  So although we have our standard, simple, rule-making fee of approximately $28,000, we don’t think it’s going to cost us that much.  It’s would come out of our regular operating fund, and we clearly don’t intend to hire a full-time economist to do one-quarter of an economist’s work.  So, although this fiscal note is attached to the bill, we’re here today to tell you this bill itself is not going to cost us the theoretical estimate of $63,000 one year, and $20,000 the next [year].  We don’t really see that this is going to have any real-life impact on our budget. 

 

Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, testified:

 

We just would like to commend Assemblywoman Leslie, and strongly endorse this bill.  Bob Cooper [Robert Cooper, Senior Regulatory Analyst, Bureau of Consumer Protection, Office of the Attorney General] from my staff has been providing technical support for this matter.  We think, in light of the previous discussion, particularly the dissemination of information on low‑income energy programs along with the environmental mix of power supplied to the state, are very important factors for consumers to be aware of.  So we strongly support it.

 

Susan L. Reeder Lobbyist, Sierra Pacific Power Company, and Nevada Power Company, testified:

 

We also support Assemblywoman Leslie’s efforts in passage of A.B. 197.  We are currently required to provide this sort of labeling on the [power] bills for our California customers.  That’s what you have in front of you [Exhibit L]. . . .  When it’s included in the [power] bills, it would be a little insert this size, this is what we put in our bills now [Exhibit M].  The cost to the company for a black and white insert would be about $28,000 a year, so it’s not a huge amount.  [The cost for] color, statewide, would be about $36,000 a year.  I do want to point out, while we support this, it is impossible to know exactly what the mix is, because 50 percent of our power is purchased power.  We don’t know what it is.  We buy it off the grid.  It’s like ordering a bowl of minestrone soup from a restaurant; you don’t know where the potatoes were grown, or where the carrots were grown, or tomatoes.  So, it’s sort of the same thing.  We know . . . what the regional mix is and the numbers that are on here [Exhibit L] were actually generated by the California Public Utility Commission.  We used those numbers, so we would be working with the PUCN and also with the other regional agencies for what comes off of the entire grid. 

 

Chairman Townsend stated:

 

May I ask you something about this having nothing to do with the energy mix, but having to do with your inserts, because we had a debate about telecommunications in this committee. . . .  Is there a way any of your research organizations, or your ad agencies, or your internal people, do they know the kind of impact . . . those inserts have?  Are you averaging 5 percent of the people read them and have inquiries?  Or [do] they believe [it’s] 10 percent or         20 percent?  Is there a sense of the kind of impact they’re having?

 

 

 

Ms. Reeder responded:

 

[It was] surprising to me, the numbers are very, very high [and also] the [number of] responses we get back.  Let me ask our communications expert; he’s in the back of the room.  [Ms. Reeder speaking to someone in the room, off-microphone] It’s been awhile.

 

Chairman Townsend stated, “I’m just curious, because the ‘telecos’ [telecommunications people] were debating with us about the effect of these things.”

 

Ms. Reeder stated:

 

I’ve been surprised.  [From] surveys we had done in the past, the numbers have been quite high.  We do get a fair amount of response from customers on inserts.  This one [Exhibit M], for instance, is on natural gas piping and making sure you call before you dig, and this is on the SAFE [Special Assistance Fund for Energy] program that we send out a couple of times a year.  We do provide on our bills, already, a lot of information about your actual usage, comparing this month to last month, to a year ago at the same time.  So awareness is the first step in conservation.  So that’s why we’re supporting this.  

 

Chairman Townsend stated:

 

They [the telecommunications companies] were unwilling to give us their statistics, and theirs, as you know, are more market-driven because they compete.  They were having a rough time with understanding the issue of not calling when we were debating a bill about not calling.  They said, “Well, how else are we going to get to these people?”  We said, “What about direct mail?”  Well, they were convinced direct mail was not effective.  So we then asked them, “Well what about the stuffers you currently use?”  “Oh, well, that’s a different story,” [they answered]. . . .  I think they have value, particularly for our more vulnerable population groups who probably have more time to actually study what is in there.      I think the information in there is important, and I think your issue
about showing the previous years versus last month is very important.  I think it has huge value.  So I’m glad you’re doing those kinds of things.

 

Chairman Townsend closed the hearing on A.B. 197.

 

SENATOR O’CONNELL MOVED TO DO PASS A.B. 197.

 

SENATOR CARLTON SECONDED THE MOTION.

THE MOTION CARRIED.  (Senator Shaffer, Senator Schneider, and Senator Amodei WERE ABSENT FOR THE VOTE.)

 

*****

 

Chairman Townsend asked if any of the parties that were interested in A.B. 133 had returned.  Senator O'Connell and Senator Carlton said they were still in the Assembly Committee on Judiciary hearing on S.B. 516.

 

Chairman Townsend stated he had intended to hear A.B. 661, but it was not yet processed.  He said in Friday’s work session he would take up the two bills they did not hear at this meeting and also hear A.B. 661.  He stated if A.B. 661 is not processed by then, they would still be able to discuss the readied portions.

 

Assembly Bill 661:  Revises and repeals various provisions concerning utilities and energy. (BDR 58-1128)

 

Chairman Townsend addressed Douglas R. Ponn, Lobbyist, Sierra Pacific Resources.  Chairman Townsend stated:

 

I haven’t had this conversation with either the committee or any of the representatives who appeared in front of the Assembly on A.B. 661.  But, I want to alert [you], and I haven’t had this conversation with [the] consumer advocate, the PUC [PUCN] or any of the members of your company, but I know there is substantial debate on the mechanism to force some of our large users to go elsewhere.

 

I am going to wear the hat for Senator Rhoads, Senator Amodei, and myself for the moment . . . .  We are deeply concerned about those two mines going somewhere else . . .  They take up          25 percent of our base load.  Now, the debate is much larger than that, and we respect that, and we respect the consumer advocate’s position, and your position about notification.  But the three of us know what it does to the service territory of Sierra Pacific Power Company, not the whole company, and we’re really sensitive to it, and what it does, and what the benefits to our residential [and] small commercial customers might be if we were able to find a place for those two groups.  So I wanted to alert you to that so there wasn’t any hidden agenda by the three of us who are served by Sierra Pacific Power Company.

 

Now, the issues in southern Nevada are different.  They have a different mix; they have different demands; they have different growth issues; they have different large-user groups spread across a much bigger portfolio of use. . . .  We can pretty much identify who the two biggest people are, in our area.  So that’s why I wanted to alert you, to let you know the three of us are pretty sensitive to at least those two companies.  If we can encourage them to find other resources that would really help our folks.  So,    I wanted to alert you to that as the debate goes on. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman Townsend closed the hearing at 9:58 a.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Jude Greytak,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator Randolph J. Townsend, Chairman

 

 

DATE: