MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-First Session
May 29, 2001
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 8:08 a.m., on Tuesday, May 29, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. This meeting was video conferenced to the Grant Sawyer State Office Building, Room 4406, 555 East Washington Ave., 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
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Kevin C. Powers, Committee Counsel
Laura Adler, Committee Secretary
OTHERS PRESENT:
Adriana Escobar Chanos, Commissioner, Public Utilities Commission of Nevada
Fred L. Hillerby, Lobbyist, Nevada State Board of Dental Examiners, Verizon Wireless, Nevada State Contractors’ Board, and Professional Insurance Agents of California and Nevada
James L. Wadhams, Lobbyist, Nevada Dental Association
Don Soderberg, Chairman, Public Utilities Commission of Nevada
Susan L. Reeder, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company
Dan R. Reaser, Lobbyist, Nevada Bell
Scott M. Craigie, Lobbyist, Sprint
Kathleen M. Drakulich, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General
Keith L. Lee, Lobbyist, Dynegy, and NRG Energy
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry
Douglas R. Ponn, Lobbyist, Nevada Power Company, and Sierra Pacific Power Company
Michael J. Brown, Lobbyist, Barrick Goldstrike Mines Inc.
Ernest Adler, Lobbyist, International Brotherhood of Electrical Workers Local 1245, and Nevada Housing Coalition
Harvey Whittemore, Lobbyist, Nevada Resort Association
Rose E. McKinney-James, Lobbyist, Clark County School District
Michael A. Pitlock, Lobbyist, Shell Energy LLC
Thomas Kinnane, Lobbyist, Shell Energy LLC
William E. Isaeff, Lobbyist, City of Sparks
Michael Hillerby, Deputy Chief of Staff for Legislative Affairs, Office of the Governor
Fred J. Schmidt, Lobbyist, Southern Nevada Water Authority
Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club
Terry K. Graves, Lobbyist, Nevada Independent Electric Coalition
Ernest K. Nielson, Lobbyist, Washoe County Senior Law Project
Judy L. Stokey, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company
Rob F. Powers, Lobbyist, Las Vegas Convention and Visitors Authority
Chairman Townsend:
Let us go right down the line starting with Senate Bill (S.B.) 99.
SENATE BILL 99: Makes various changes to provisions governing health insurance. (BDR 57-132)
Chairman Townsend:
Apparently the Assembly has removed the Senate’s interest penalty waiver language, so we should probably go to conference, at least once, to try to resolve our concern on that.
SENATOR O’CONNELL MOVED TO NOT CONCUR ON AMENDMENT NO. 996 TO S.B. 99.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS AMODEI AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Next on our list is Senate Bill (S.B.) 133.
SENATE BILL 133: Authorizes board of dental examiners of Nevada to issue certain licenses without examinations or clinical demonstrations to dentists and dental hygienists licensed in other jurisdictions under certain circumstances. (BDR 54-241)
Chairman Townsend:
This is Assembly Amendment No. 975. It changes the language of the first reprint that mandates revocation of the temporary license or specialist license for any violation of the entire dentistry chapter. Instead, “revocation is mandatory if the licensee violates any of the statutes or regulations pertaining to the temporary or specialist license. Any violations of proportions of dental laws to allow the board to impose lesser disciplinary action.” The amendment also makes a technical change to the language regarding “obtaining a license.” Since the special license category does not require the clinical portion of the test, it is more accurate to use the term “apply for a license” than the phrase “take an examination.”
Mr. Hillerby, I did not know whether you and Mr. Wadhams or any of the other parties involved in this wanted to make comments on these changes.
Ah, this is the new commissioner; we have never been introduced. Committee, welcome our new commissioner. It is nice to have you.
Adriana Escobar Chanos, Commissioner, Public Utilities Commission of Nevada:
I am Adriana Escobar Chanos. Hello. Thank you.
Fred L. Hillerby, Lobbyist, Nevada State board of Dental Examiners (NSBDE):
The amendment the Assembly adopted is one we requested. It is just as you described it. It was a technical amendment the board requested to clean up some language we found after the bill moved on. I talked to Senator Carlton. She is in concurrence, and the reprint does reflect what we agreed on.
James L. Wadhams, Lobbyist, Nevada Dental Association:
In reviewing the bill we have found there are issues beyond the policy question which the profession has difficulty with. In the application of that policy first adopted by this committee, we think the failure to include dental hygiene in section 2 is an inconsistent application of policy. I think that oversight could be addressed in conference committee.
Senator Carlton:
That issue was discussed in some of the meetings I had with some of the people. I did look into it. It was brought up on the Assembly side. In going back through my notes and discussing it with the people I had discussed it with before, we had looked at why we were not going to include the amendment, we did not want to take that step. Also we felt that with two accredited dental hygiene schools in Nevada, it would not be necessary. And as coincidence, just yesterday Senate Bill (S.B.) 208 passed in the Senate. It calls for the creation of a bachelor and master dental hygiene program and a state dental director. So I do not believe this would be a necessary addition. Right now we are taking a first step towards dental access, and if we find this to be a problem over the next 2 years, I would be happy to bring that back through the next session, if I am blessed enough to be reelected. If the committee has any other questions about this particular issue, I would be glad to give you more information.
SENATE BILL 208: Makes various changes to provisions concerning public dental health. (BDR 40-738)
Mr. Wadhams:
Hoping not to engage in a debate, I think the recent investigative reporting done by the Las Vegas Sun indicated obtaining appointments with dentists is a relatively easy thing; obtaining appointments with dental hygienists is very difficult. The potential existence of a school apparently does not effect that. Again, this committee has prided itself over the years in consistent application of policy, and that disparity does not seem to be warranted.
Senator Carlton:
If the committee would like any more, as I said before, I do have other points I can share. But unfortunately, with all due respect to Mr. Wadhams, I disagree with the statement he made. It was something discussed through the evolution of this piece of legislation.
SENATOR CARLTON MOVED TO CONCUR WITH AMENDMENT NO. 975 TO S.B. 133.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL VOTED NO. SENATORS AMODEI AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Let us move on to Senate Bill (S.B.) 210.
SENATE BILL 210: Makes various changes concerning regulation of utilities. (BDR 58-540)
Chairman Townsend:
Assembly Amendment No. 954, “Provides that information in accident reports filed with the PUCN is public, except to the extent it excludes trade secrets or confidential commercial information as defined in statute.” Commissioner Soderberg, do you have anything you would like to add to that? Remember, committee, what this was about. It has to do with open records after accidents on trains and train wrecks. The committee processed it in a manner leaving it quite clear about public access to that information. Apparently there was some concern about proprietary information, and I believe, commissioner, you have attempted to clear that up.
Don Soderberg, Chairman, Public Utilities Commission of Nevada (PUCN):
When the bill was amended in your committee, the language that came out, at least in my opinion, was not exactly clear as to the intent you had stated. On the Assembly side, we worked with Mr. Johnson from the Sierra Club and Southwest Gas (Company) to come up with language that would meet our goal of allowing our agency to share these reports with our counterparts in the federal Office of Pipeline Safety, but to also bring in a certain degree of public scrutiny as well. The language before you we felt met our goals, and was agreed to by the gas company and the Sierra Club.
SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT NO. 954 TO S.B. 210.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS AMODEI AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Let the record reflect that Southwest Gas Company, the Sierra Club, and Union Pacific Railroad, agreed on something.
Committee, we now have S.B. 320.
SENATE BILL 320: Provides for external review of certain determinations made by managed care and health maintenance organizations. (BDR 57-676)
Senator O’Connell:
The industry has registered with me their concern about the amendment, and preferred we go to conference.
Senator Carlton:
And which bill is this?
Chairman Townsend:
Senate Bill 320 requires managed care organizations to establish systems for independent review, final adverse determination concerning allocation of Delta Resources.
Remember, this is where we had two bills. We had Mrs. Buckley’s (Assemblywoman Barbara E. Buckley, Clark County Assembly District No. 8) and Senator O’Connell’s, and they did the identical thing; it was how they did it and who the independent reviewers were going to be. Apparently there was some disagreement on that, so we thought we would let them confer. But in order to do that we cannot concur.
SENATOR O’CONNELL MOVED TO NOT CONCUR WITH AMENDMENT NO. 974 TO S.B. 320.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS AMODEI AND SCHNEIDER WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Okay, S.B. 330.
SENATE BILL 330: Makes various changes relating to financial businesses. (BDR 54-748)
Chairman Townsend:
Assembly Amendment No. 898 deletes sections 2 and 5. These sections merely stated what is already established in the general rules of jurisdiction, namely the transaction; in this case, “mortgages occurring entirely outside Nevada are not subject to regulation in Nevada.” It also adds a section 12, which authorizes “credit unions organized under Nevada law to exercise any authority, perform any act a federal credit union can, with the approval of the commissioner of financial institutions.” All the parties seem agreed, including the regulatory agency.
Senator O’Connell:
Mr. Chairman, before we do that, I need to put on the record that my son is a mortgage banker.
Chairman Townsend:
I will also declare the bank, on which I am a board member and a share holder, owns a mortgage company.
SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT NO. 898 TO S.B. 330.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Senate Bill 362.
SENATE BILL 362: Consolidates and revises process for reviewing applications for permits, licenses and other approvals required to construct certain utility facilities. (BDR 58-689)
Chairman Townsend:
This was Senator Titus’ (Senator Dina Titus, Clark County Senatorial District No. 7) bill about accelerating the permitting process. They have taken out the state water engineer. She has asked the committee to not concur in order to go to conference to resolve the difference.
SENATOR RHOADS MOVED TO NOT CONCUR WITH AMENDMENT NO. 955 TO S.B. 362.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman townsend:
What was in your notes?
Senator O’Connell:
That Mr. Turnipseed had stated what was being asked for could not happen. I guess we need to check with what they have done on the Assembly side.
Chairman Townsend:
Senate Bill 405.
SENATE BILL 405: Makes various changes relating to practice of podiatry. (BDR 54-38)
Chairman Townsend:
Assembly Amendment No. 881, “Requires a podiatrist who performs amputations of toes to complete a program of surgical training as resident, and provide proof of completion to the hospital or surgical center where the amputation is to be performed.”
According to both the able Doctor Rawsons, plural, along with the boards, this seems to be acceptable.
SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT NO. 881 TO S.B. 405.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Let us move on to S.B. 245, which is Senator Mathew’s (Senator Bernice Mathews, Washoe County Senatorial District No. 1) bill.
SENATE BILL 245: Provides for regulation of interpreters for persons who are deaf or whose hearing is impaired. (BDR 54-231)
Chairman Townsend:
Amendment No. 838 gives interpreters 2 more years, which is until 2005, to obtain certification, and also, “provides additional time for school interpreters in areas where there are not enough available interpreters, so long as the interpreter makes a good faith effort to obtain certification.” This apparently was worked out between the proponents and the school districts in which there was some serious concern.
SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT NO. 838 TO S.B. 245.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Next is S.B. 425. Does anyone have anything they would like to add to this?
SENATE BILL 425: Makes various changes concerning certain utilities operated by certain governmental entities. (BDR 20-1243)
Susan L. Reeder, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company:
We are happy with this amendment the Assembly added.
Chairman Townsend:
Committee, let us look at Senate Bill 544.
SENATE BILL 544: Makes various changes to provisions governing practice of pharmacy. (BDR 40-400)
Chairman Townsend:
This amendment resolves conflicts with S.B. 52 and S.B. 91, and that is all it does.
SENATE BILL 52: Authorizes advanced practitioner of nursing to prescribe controlled substances under certain circumstances. (BDR 54-291)
SENATE BILL 91: Makes various changes to provisions governing practice of medicine and respiratory care. (BDR 54-290)
SENATOR CARLTON MOVED TO CONCUR WITH AMENDMENT NO. 886 TO S.B. 544.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS SCHNEIDER AND O’CONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Now let us go to Assembly Bill (A.B.) 620. This is on behalf of the contractors’ board. This is the six-member education commission. They made a change.
ASSEMBLY BILL 620: Makes various changes relating to contractors. (BDR 54‑407)
Fred L. Hillerby, Lobbyist, Nevada State Contractors’ Board:
You adopted an amendment here and, unfortunately, on the Assembly side they did not understand, and no one was there to explain it to them. We just want to go to conference so they would understand the amendment adopted by this committee. We ask you to not recede so we can have a conference committee.
SENATOR RHOADS MOVED TO NOT RECEDE WITH AMENDMENT NO. 552 TO A.B. 620.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS SCHNEIDER AND O’CONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Senator Shaffer, I will secure the resident contractor. I will make you head of this committee right now.
Now we can go back to S.B. 425 which is the government utility issue.
SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT 914 TO S.B. 425.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Now let us go to S.B. 418.
SENATE BILL 418: Makes various changes to provisions governing sale of real property. (BDR 54-159)
Chairman Townsend:
We are going to conference on that. It is with Assemblywoman Buckley, Speaker Emeritus Dini (Assemblyman Joseph (Joe) E. Dini, Jr., Assembly District No. 38), and Minority Leader Hettrick (Lynn C. Hettrick, Assembly District No. 39). Anybody here from the real estate profession who has any insight into this particular situation? Oh, I know, this is the one where they changed the fees dramatically. This is the real estate thing where they cut the fees. That is going to create a problem in their budget, because they collect them over a 2-year period. Anybody in particular want to be on this one? Senator Amodei, you are in charge.
Senator Carlton:
I will back him up, Mr. Chairman.
Chairman Townsend:
We do have S.B. 48. Senator Amodei you’re the chairman, and Senator Shaffer, and Senator Rhoads. I do not know if you have had a chance to meet with them, but let us try to resolve that issue as soon as we can; and also on S.B. 195.
SENATE BILL 48: Prohibits various acts related to Internet, networks, computers and electronic mail. (BDR 15-259)
SENATE BILL 195: Revises provisions governing issuance of certain permits to occupy or encroach upon state highways or rights of way. (BDR 35-932)
Chairman Townsend:
Before we proceed with A.B. 661 relative to the issues regarding electric side of the utility situation, the members of the well-respected telecommunication industry are here. I believe you have clarifying language on the issue of mergers and acquisitions, that I believe you discussed with at least one member of the commission. I do not know about the advocates office. Does everyone have copies of this (Exhibit C)?
ASSEMBLY BILL 661: Revises and repeals various provisions concerning utilities and energy. (BDR 58-1128)
Dan R. Reaser, Lobbyist, Nevada Bell:
I have provided to your staff, who are handing out some prepared testimony (Exhibit C). I do not intend to go through that, but attached thereto is a proposed amendment. What we are talking about is section 60.
Chairman Townsend:
Slow way down. I received this handout. This either is what we are doing or it is not.
Mr. Reaser:
That is the same language that is attached to mine. We are talking about section 35 of the original A.B. 661, or section 60 of the first reprint. What we have discussed amongst the telecommunications industry, and also with certain of the energy industry, is a proposal that the committee revert to the language in A.B. 369, which has already passed and been signed by the Governor, with one change. That is the addition of subsection 7, which is in the handout we have given to you.
ASSEMBLY BILL 369: Revises and repeals various provisions governing the regulation of public utilities. (BDR 58-1156)
Mr. Reaser:
Our basic position is this . . .
Chairman Townsend:
Can you slow way down so we can try to track this for a second? What you are saying, on this 2-page handout where it says section 22 . . .
Mr. Reaser:
Section 22 is the section of A.B. 369 that made an amendment to Nevada Revised Statutes (NRS) 704.329.
Chairman Townsend:
So the double underline here is, in essence, the new language, you would like to have adopted to A.B. 369?
Mr. Reaser:
That is correct.
Chairman Townsend:
Section 22, subsection 7 (Exhibit C) says, “The provisions of this section do not apply to a public utility doing business in this state or a holding company that holds a controlling interest in a public utility doing business in this state if, in the most recently completed calendar quarter, not more than 10 percent of the gross operating revenue of such public utility or holding company was derived from intrastate services provided to retail customers in this state by the public utility.”
Mr. Reaser:
Mr. Chairman, in committee this same exemption or exception language was included in the first reprint to A.B. 661 that came over from the Assembly, so we are not doing anything that the Assembly did not already agree to. The language they provided in section 60 is, in our view, in all respects, captured by section 22 of A.B. 369. Therefore the only real provision that needs to be put into A.B. 369 to capture all of the changes made by the Assembly relative to NRS 704.329 is this new subsection 7. The purpose of this is pretty straightforward.
Chairman Townsend:
Is there somebody on the panel who is going to explain what Mr. Reaser just said? You have got us on a bill that has already passed; now you have a bill that is in front of us. Since I cannot deal with what has already passed, what do I need to do in this section? Just simply codify in this what we did in A.B. 369?
Mr. Reaser:
Correct.
Chairman Townsend:
Plus something?
Mr. Reaser:
The amendment we are proposing to you is that you add to A.B. 661 the identical language that is in A.B. 369, plus the subsection 7.
Chairman Townsend:
But you remove the stuff that is currently in section 60.
Mr. Reaser:
Correct.
Chairman Townsend:
Okay. That is pretty easy.
Mr. Reaser:
I am sorry I was confusing. There are three basic reasons. One is the provisions without this new subsection 7 would extend the jurisdiction of the State of Nevada to transactions that are wholly outside of the state, that have no nexus in the state. An example from my client, Nevada Bell’s parent company is SBC Communications; it is an international company. It decides to buy a stake in a Spanish software company. Without this subsection 7, the Nevada public utilities commission could exert jurisdiction if it desired to look at SBC, a Texas-based company buying a Spanish software company. It has nothing to do with telecommunications; it has nothing to do with Nevada. The 10-percent provision makes sure that unless the home-based utility, Nevada Bell, is involved, or the subsidiary of the home-based company provides 10 percent of the revenue of the parent company, Nevada would not exert jurisdiction.
Why we picked the 10 percent is simple; the cases say the least aggressive position a state can take is 25 percent. The most aggressive position a state can take is 10 percent; that is a North Carolina Supreme Court case. So, we selected the 10 percent giving the maximum jurisdiction under the interstate commerce clause that we believe the Nevada commission could exercise.
Senator Townsend:
Well, with all due respect to the commission, if there were such an acquisition to take place, and they exerted jurisdiction, they have far too much time on their hands; or they were looking for a junket, one or the other. We understand the necessity to protect the public interest, particularly all the base users, whether it is an electric utility or gas or telecommunications; but if the customers are either held harmless inside the state or have the potential of gaining some benefit, then we do not need to be out trying to create a large corral. That is just my sense; it has always been my sense. What the worry is, you cannot predetermine whether there is going to be a good outcome or not. With the federal implications in all of these areas moving at a rather fluid and rapid rate, it is hard to make sure that we do this perfectly. I do not have any problem with this amendment; I cannot speak for the committee. Of course, I do not know whether the advocates have seen it or the PUCN has seen it, but if we adopt what was in A.B. 369, and then adopt subsection 7 as an additional amendment, I do not particularly have any heartburn other than making sure it is clean for purposes of interpretation by the regulatory bodies, so that there isn’t any misunderstanding. Is that a fair statement?
Mr. Reaser:
I think that is fair, Mr. Chairman, in that respect. That is why in my testimony I have referred to the basic constitutional issues here that are similar to the constitutional issues that were identified by an opinion of legislative counsel in 1999.
Senator O'Connell:
I do not think the committee has a copy of this; we have all been looking.
Mr. Reaser:
It is the last page of the handout. It is called Testimony of Nevada Bell Telephone Company (Exhibit C).
Senator O'Connell:
This talks about amending section 35, not section 60.
Mr. Reaser:
Correct. My understanding, when I prepared this, was that the committee would be using the original A.B. 661, and not the amendment, the first reprint, so this is an amendment.
Scott M. Craigie, Lobbyist, Sprint:
Just so everybody knows, we are in total accord with what has been put on the table, and I will let Sierra Pacific Power Company speak for themselves. What we have done here is precisely what you have articulated. And that is, to the extent there is the potential for benefit, or there is the need to make sure there is no negative impact or harm to consumers in Nevada, this gives Nevada’s regulators the full authority to come in and do a full review of the merger.
If there is no activity in the state, there is no need nor value to have regulators do a full case on that merger. What we are trying to do here is reserve all the authority that, as Mr. Reaser says, if it is as small as 10 percent, then the ability for the commission to choose to review it and assert their jurisdiction is there. Even a small amount of our business being done in the state would trigger that right. The regulators do, in fact, need to have the ability to assert jurisdiction when a merger takes place that affects customers here. And they do not have the time or the resources to go through mergers that do not have a direct impact on the state. I will let the commission speak for themselves, and the consumer advocate; but what we tried to do here is simply that. We have come off the amendment that was offered before, because of the concerns of Sierra Pacific Power Company. We were happy to accommodate their needs as well, as long as we could have this threshold. Sprint, obviously, is another multi-disciplinary international company. Frankly, it would not be valuable to the state for every merger that Sprint might enter into that does not directly effect business here. It would certainly drain the resources, and that’s really the only focus, the intent.
Kathleen M. Drakulich, Lobbyist, Associate General Counsel, Sierra Pacific Power Company, and Nevada Power Company:
We are in support of the amendment that’s being proposed by Mr. Reaser this morning. We are in support of the language as stated in subsection 7, for the reasons Mr. Reaser stated. We believe there were legal issues surrounding the way section 60, and A.B. 661, was drafted, and we do agree with this. But we are also supportive of the NRS 704.329 language that was in section 22 of A.B. 369, and the proposal is to substitute that language for section 60 in the first reprint of A.B. 661. We, too, had concerns about whether the language of section 60 was overreaching. The Public Utilities Commission of Nevada has jurisdiction over certain transactions, but the utility companies do have subsidiary companies that are not regulated, and do not rely on rate-payer money for their support. The way section 60 was drafted, ventures between those companies and third-party companies would end up being regulated, and I don’t think that was what was intended. I don’t believe that is the type jurisdiction the Public Utilities Commission is authorized to have. So, for that reason we are supportive of this amendment, and we would encourage you to adopt it.
Fred L. Hillerby, Lobbyist, Verizon Wireless:
I am representing Verizon Wireless, another international company with holdings all over the world. We agree with the amendment, and also urge your support.
Kevin C. Powers, Committee Counsel, Legal Division, Legislative Counsel Bureau:
I just want to point out for the committee, if you look at the proposal prepared by Mr. Reaser, one of the reasons A.B. 661 included the amendment to NRS 704.329 merger section was so the commission could exercise jurisdiction over a transaction like the SPR (Sierra Pacific Resources) acquisition of Portland General Electric. If you look at subsection 1 under the proposal of Mr. Reaser, that is essentially the existing subsection 1 of NRS 704.329. The commission has interpreted the existing subsection 1 of NRS 704.329 to not give it jurisdiction over a transaction like the SPR acquisition of Portland General Electric. So, if the committee adopts the language in Mr. Reaser’s proposed amendment on June 6, and if SPR were to go out and purchase Portland General Electric, the commission would not have jurisdiction over that transaction. I just wanted to point that out to the committee, because I believe that is one of the reasons the merger language was included in section 60 of A.B. 661, as it stands now.
Ms. Drakulich:
The utility’s understanding of the intent with respect to A.B. 369, and with regard to the Portland General Electric transaction, was that section 36 of A.B. 369 was included for the specific purpose of ensuring the commission’s jurisdiction over that transaction. That section says, ”If, on or after January 1, 1999, and before the effective date of this act, the electric utility company entered into a transaction to acquire a holding interest,” then the Public Utilities Commission would have jurisdiction over that. My understanding of this body’s intent with respect to section 36 was to take hold of jurisdiction over that transaction through section 36 of A.B. 369.
Mr. Powers:
Mr. Chairman, section 36 applies specifically to the Portland General Electric transaction as entered into before the effective date of A.B. 369. I should not have used that as an example to create confusion. The point is simply this; if SPR, after the effective date of June 6, 2001, and under the proposed Mr. Reaser amendment, goes out and purchases any other public utility in any state, the commission would not have jurisdiction over that transaction, whether it be trying to purchase Portland General Electric under a new transaction after session, or purchasing a utility in Washington or a utility in California, Arizona or in any other jurisdiction. The point is that subsection 1 under the proposal of Mr. Reaser, or subsection 1, which is included in A.B. 369, would not give the commission jurisdiction over that transaction.
What subsection 1 in A.B. 369 does, as does the existing NRS 704.329, is give the commission jurisdiction when an entity tries to acquire a public utility doing business in this state or a holding company that holds a controlling interest in a public utility doing business in this state. What the existing merger statute does not do is give the commission jurisdiction over a transaction when those public utilities in this state, or a holding company that holds a controlling interest in a public utility in this state, tries to go out and acquire other entities. So, if someone is coming to acquire an entity in this state, public utility or holding company, then the commission has jurisdiction. If those entities, public utility or public utility holding company in this state, acquire another entity, the commission does not have jurisdiction under the existing statute or under A.B. 369.
Senator Townsend:
Chairman Soderberg, I do not know you or your council or how you want to do this. And, Mr. Hay would you like to come up and give us your interpretation, since you are the one that is going to interpret this? You are welcome to stay Ms. Drakulich, since I have a feeling this directly affects your company.
Mr. Powers has given us an interpretation, which is not surprising. However, I was surprised in his language that perhaps the Assembly did not consider that interpretation. The goal, I would think, would be the following: That there be an ability of the commission to review an acquisition in a manner only with which it dealt with Nevada customers. If they had money that was non-regulated and they wanted to buy anything else that did not affect Nevada customers, I do not think that is an issue. But, if there was something, whether it was bridge financing or some kind of bonding requirement for that acquisition that might affect the company’s stability or ability to serve their customers under the current rate structure, that might be a concern. I am just bringing that up. I do not know how you go about that, whether Ms. Drakulich would have to affirmatively come to the commission and say, let us show you why you do not need jurisdiction in this case, because it does not effect our current Nevada customers; or whether you would have to affirmatively take jurisdiction until you found it did not affect those customers.
But, Mr. Powers is saying what he said, and that is not necessarily bad or good. It is just, now something new has come to this committee, and we have to deal with whether we want that kind of preclusion because of what went on in a previous merger that we have seen. Suddenly, we did not have jurisdiction, we thought that was the right thing. But then the other jurisdiction started putting protections in for their customers that might have, in fact, affected our customers, which was not the company’s fault. So, help me out with what we now see in front of us.
Mr. Soderberg:
The provision that Mr. Powers speaks of has been, I guess since I have been with the agency, fairly controversial. There was an incident in 1999 where the commission exerted jurisdiction, probably did not have it, and that was worked out; and, no harm, no foul. Then we were faced with the transaction that has been discussed between Sierra Pacific and Portland General, where we did not have jurisdiction, yet there were some obvious state interests. We were put in the position of having to utilize our intervention with the federal energy regulatory commission, and the FCC (Federal Communications Commission) to effectuate the protections that we would have normally done through a regular merger case.
I was a little surprised that on the Assembly side this was not dealt with. There was, clearly, a lot of discussion. What came out was, people were so focused on the one transaction that language was put into the bills that would give us jurisdiction over that specific transaction, it but did not cure the long-term problem that you articulated, Mr. Chairman. From our perspective, we still feel that we are in the same spot that we were before the session, that there is ability for transactions to be structured to avoid our jurisdiction. In probably nine-tenths of those cases there is no problem, but there is going to be that one-tenth where there would be some significant issues that either involve the transaction or develop as the transaction moves along. There are other regulatory hurdles. Unless the law has changed, we would be forced to do what we think we have to do in front of the federal regulators in order to protect customers. I do not have a specific proposal for you today, but I do agree with your articulation of the problem.
Senator Townsend:
Mr. Hay, do you have the same view of this, or is your view different? The goal here is, if nothing else, to make sure the company who has the ability to pass these costs on is least burdened in the manner that is necessary to provide for protections to the public. If they have to provide a million dollar filing on a billion dollar acquisition, then as ratepayers we are going to pick that tab up if, in fact, that acquisition is deemed to be in the public interest by the regulators. We are trying to make sure that we have appropriate control and protections without it being burdensome, where you just keep adding layer and layer of cost on. The way the world is, rate payers end up with that cost, and we just trying to be a little sensitive to that with this language. We know something happens the day after we leave. We have had two sessions in a row where that is the case, so we are trying to be a little sensitive.
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General:
First of all, I concur with the Chairman and Mr. Powers’ analysis that A.B. 369’s provision was drafted so that it only applied to transactions that occurred before the effective date of the act, which, I believe, was April 18, 2001; so that analysis is flawed. We believe that if the committee chooses to adopt this, it should modify it by adding the phrase at the end of the proposed section 7, “unless the merger affects services or consumers in the State of Nevada.” I think this will give the commission the ability it may need to look at unusual circumstances and still assure that we do not have a burdensome regulatory structure, and that Nevada’s consumers’ interests are protected.
Ms. Drakulich:
Chairman, if I might. Just a couple of comments to add again. On the Assembly side that focus did change toward the “Repower Nevada” amendment at one point. Early on, the utilities did present an amendment to A.B. 661 to the Assembly that would have dealt with our concerns regarding this language. Again, it was very broad, and that it drew in a lot of transactions over which I do not think the law gives the Public Utilities Commission jurisdiction, namely subsidiary companies. We have a company called E-3 that helps large entities around the State of Nevada with conservation of energy and retrofitting of their facilities, which is not something our rate payers are responsible for. It is a service that we provide with an affiliate company of the parent. It is that type of transaction that this language addressed that we believe was not within the jurisdiction of the Public Utilities Commission.
A couple of other things: One of the things the utility companies, Sierra Pacific and Nevada Power Company, did promise the commission with the Portland General Electric transaction is that none of the costs of that transaction would be born by Nevada customers. My understanding of the Public Utilities Company Holding Act is that registered public utilities must bring their transactions with regard to a merger to the public utilities commission in their states. At the time we merged with Portland General Electric, it is my understanding we were not a registered public utility company. The other thing to keep in mind is that no matter what transaction the public utility company enters into, there will be strict review from the Federal Energy Regulatory Commission (FERC) and the Securities and Exchange Commission. To give you some comfort about where we were headed, I wanted to make sure that those comments got on the record.
Senator Townsend:
We need to concentrate on “Repower Nevada” as opposed to this, for the moment. I am going to give some time to the parties to think this through. The committee did not have the language either. I just want to make sure that we accomplish what was stated previously about the ability and not being burdensome. I know that is easy to say until you draft it, because then it is ultimately left up to those who sit in regulatory authority to make that determination, but we can do the best we can.
Mr. Soderberg:
I guess, before we switch subjects, Mr. Hay has some language he has shown to me that appears to do the trick. I do not know if we want to take a quick minute. Maybe we can resolve this issue at the moment.
Ms. Drakulich:
Mr. Hay’s language is the language I wrote down as he recited it on the record a few moments ago, and maybe we could take some time and deal with some of the other issues in A.B. 661. I could have an opportunity to confer with some of the members of the utility team, and let you know if we concur with this language.
Senator Townsend:
We would encourage all the parties on this. We are not trying to give them deified authority to manage the company. I think that is crucial. They need an ability to look long term on its effects on our smaller users, particularly, without muddling with the management of the company. I think that is why you have a regulatory authority. There is a fine line between letting you or any utility who is regulated have unfettered access to all markets, et cetera, with impacts moving down the line to end users; and in an oppressive kind of atmosphere. We’re trying to find that line, if we can get to it. So, committee, why do not we put that part in abeyance for a second, and let us take up the “Repower Nevada” portions. I believe we can start with section 18. Mr. Lee, you had offered some concern.
Keith L. Lee, Lobbyist, Dynegy, and NRG Energy:
Dynegy and NRG are two of the successful bidders for several Sierra Pacific and Nevada Power’s generation facilities. Specifically, we were the successful bidder for Clark and Reid Gardner, and Clark County, and NRG, alone, the successful bidder for one-half of Valmy Power Plant in the north.
Obviously, A.B. 369 has obviated those transactions. When we entered into those transactions and became the successful bidders, it was our intention then, and it continues to be our intention, to become long-term good citizens, corporation citizens of the State of Nevada. Obviously, after A.B. 369, some concerns were raised. It has been our intention all along to try to resolve the dilemma created by A.B. 369 through a business method rather than legislatively. To that end, shortly after A.B. 369 was signed by the Governor, we entered into some discussions with Sierra Pacific to see if we could not reach some accord. Those discussions culminated last week. Members of the committee participated in several telephone conversations between Mr. Higgins, the chairman of Sierra Pacific, and the chairman and senior executives of both of our companies. The understanding is that all of us will work together in good faith to try to reach some accommodations that will allow us to become good long-term citizens of the State of Nevada, and to fulfill some of our needs and desires.
Consequently, Mr. Chairman, we respectfully withdraw the amendment that was offered last Thursday, May 24, 2001, I believe by Mr. Semenza and Mr. Lloyd, and we would express to you our support of what was characterized as “Repower Nevada” in full. We specifically support what now has become section 18 of A.B. 661. There are, however, Mr. Chairman, if I may, two points of clarification that we would seek with respect to the language in section 18, and I have discussed both of these concerns with the power company. I think we are going forward on the same page with respect to those.
The first concern or suggestion I might make is on section 18, page 4, line 40, where the term “without limitation” is included in subparagraph (a). I think for point of clarification, Mr. Chairman, it may more appropriately go in line 39, in some iteration that would say, “such agreements without limitation may . . .,” and then (a) and (b). Our concern is that “without limitation” modification to agreements would apply to both those agreements contemplated in subsections (a) and (b) of section 18. As I said, I think the power company is in line with us on that as well. That was a concern, that the power company still has all this discretion to enter into any or all of these agreements, but it makes it clear that those agreements delineated in (a) and (b) are by way of example, and are without the limitation.
The second issue is raised on page 5, line 5, where it talks about what the provider of new electric resources, that is not a public utility, may do with the increased capacity it owns. It is clear that under subsection (a), beginning on line 3, that the non-utility electrical provider owns that electric resource. The point of clarification we seek is in (b), that says, “Used or consumed by such parties for their own purposes or sold by such parties to one or more eligible customers.” An eligible customer, of course, is one of the 1-megawatt users who has the opportunity to opt out. Our concern is to seek clarification of the legislative intent that we, as a non-regulated, non-electric utility who owns that capacity, may go forward and sell at wholesale in the marketplace. We believe we are entitled to do that already. We just need clarification as to the legislative intent with “used or consumed” to make it clear that the provider of new electric resources that is not a public utility may continue to offer into the wholesale market the increased capacity it owns under subparagraph (a).
Chairman Townsend:
It is my fault. We have the commissioner of insurance who is going to come forward on A.B. 618 so we can deal with it and get the amendment drafted.
ASSEMBLY BILL 618: Makes various changes relating to regulation of insurance. (BDR 57-564)
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry:
Thank you for giving me this opportunity to return on A.B. 618. I apologize for perhaps missing explaining exactly why I was opposed to the Amendment No. 1077 proposed by Bob Feldman, which was included when the bill was passed out of committee previously. Mr. Feldman’s amendment would effectively allowed anyone to sell insurance from the initial transactions of sale without a license. That is not the existing law. A.B. 618 does not change the status quo. Administrative and clerical employees may still work for insurance agencies without having a license. Under the Gramm-Leach-Bliley Act of 1999 for Financial Services Modernization (GLBA) the states are required to become either uniform or reciprocal by November 12, 2002. The GLBA does not establish how that is to be accomplished, nor does it evaluate the state’s laws. It is the National Association of Insurance Commissioners (NAIC) that has been designated by the federal government to evaluate each state’s laws to determine whether they are reciprocal. I believe with this proposed amendment, Nevada would not be considered reciprocal.
Senator O'Connell:
I think if we just quickly cut to the chase. The concern, at least for me when I made the motion, was that anybody answering the phone in an insurance office would be able to do that without a license. It has been expressed to me that the moment a person on the phone quotes a price, they would be considered selling insurance. Also, when callers ask for the cost to insure their vehicle, home or other items, the person on the other end must transfer that call to someone who has a license. The person who received the call cannot state any of the company’s prices if he or she is not licensed. Is that correct?
Ms. Molasky-Arman:
That is correct. That is the existing state of the law. If the caller is an existing policyholder or customer, then they may respond because there are records pertaining to that particular customer.
Senator O'Connell:
And the customer would already have that knowledge, unless there had been a change in the company. Our concern is that now everybody in an insurance office must be licensed. I guess the language then, would be, “anybody giving a quote to a customer, must be licensed.”
Ms. Molasky-Arman:
Yes, they are required to be licensed, and that does not change within the bill. There was some discussion about the availability of rate quotes on the computer programs, but those are not interactive programs. It is the person quoting back that is presently required to be licensed nationally, and that is the position the NAIC agreed on when Internet solicitation and advertising began.
Senator O'Connell:
What happens when a customer calls your office asking for direction as to the best buy on insurance. Do your people then have to be licensed?
Ms. Molasky-Arman:
Ours, no.
Senator O'Connell:
That is the current practice, is it not? If somebody were to call your office shopping for insurance rates, you would give them?
Ms. Molasky-Arman:
We do not quote rates. What we do is produce the Comparison Guide to Auto Insurance. We survey the companies to determine the premiums for the same kind of coverage for the same vehicle. So we do publish that information. But generally we do not have the information needed to be quoting rates. We may review rates to determine if the insurance agent or insurance company is making proper quotes.
Senator O'Connell:
It seemed like such a fine line to me, since they are published. Mr. Chairman, I would withdraw the earlier motion and to include Mr. Feldman’s amendment to A.B. 618. But I am still not clear in my own mind what the distinction is between listing prices on the Internet, publishing them in a guide, or stating them over the telephone. But if it is causing such heartburn, I will withdraw the motion.
Chairman Townsend:
I guess the concern is, if there is an existing customer who makes an inquiry by telephone, because there is already an existing relationship brought to that particular company through a licensed individual, that person should be able to make the determination as to whether they want to talk to a licensed individual or take the word of someone who is not licensed. That is not a current requirement, is that correct?
Ms. Molasky-Arman:
It is not an activity that requires a license. In the trade it is known as “servicing the customer.”
Chairman Townsend:
The question comes as a result of Mr. Feldman’s question and Senator O’Connell’s concern. That is, if a person has the premium coming due on his home or health insurance, or wants to add another driver, and decides this would be a good time to shop for pricing and coverage, and it is currently required under law, and you want to retain that ability which might give you reciprocity with other states, that anyone who provides information to that potential customer must be a licensed individual.
Ms. Molasky-Arman:
There is an explanation of the cost of insurance, or the benefits to be derived from that insurance; then, yes, the person has to be licensed.
Chairman Townsend:
Mr. Feldman felt that one of his non-licensed people could give quotes over the telephone to new people. I think that is what he was trying to accomplish.
Ms. Molasky-Arman:
I feel the amendment “bleeds.” It opens the door to questionably-qualified people to sell or solicit insurance. We have always taken a strong position in requiring the highest of qualifications and competency in Nevada.
Fred L. Hillerby, Lobbyist, Professional Insurance Agents of California and Nevada (PIA Group):
We are supportive of the commissioner’s testimony to remove Amendment No. 1077 from A.B. 618. Historically people who perform strictly clerical or administrative duties are not required licensure, and nothing changes with this statute. We support the notion of withdrawing that part of this amendment that opens it up to any salaried employee, which opens up a whole host of things from a one-agent shop with 30 people who are not licensed.
Senator O’Connell:
I will put into a motion to withdraw Mr. Feldman’s amendment, and to include Mr. Wadham’s Amendment No. 1153, presented at an earlier hearing.
SENATOR O’CONNELL MOVED TO RESCIND AMENDMENT NO. 1077 TO A.B. 618.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
*****
SENATOR O’CONNELL MOVED TO AMEND A.B. 618 WITH AMENDMENT NO. 1153 AND TO DO PASS AS AMENDED.
SENATOR CARLTON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Let us now go back to A.B. 661. Was there any resolution on the question under A.B. 661 of the merger language, or do we still need to work on that? They are working on it. Okay. If we could have the parties that are interested on the proposed changes in section 18 regarding “without limitation,” and the issues on page 5 regarding “used and consumed,” and the ability to sell wholesale.
Douglas R. Ponn, Lobbyist, Nevada Power Company, and Sierra Pacific Power Company:
The company has had discussions with Mr. Lee on his proposals to section 18, and we concur in those proposals.
Chairman Townsend:
I think the purpose here, Mr. Lee, is that Mr. Ponn just agreed to your proposals and you have had dialogue. I think the goal on section 18 is to provide this company and the marketplace the financial flexibility to work with the financial markets, the builders, and the various users; to work together with the company to find solutions as opposed to have them government directed. Find market solutions with partnerships, particularly in our load pocket problem areas in the north, and some of the tremendous demands that we face in the south. I think that is what the goal was of this language. Obviously, it’s very sophisticated language, and it takes some time to get a sense of its effects.
Michael J. Brown, Lobbyist, Barrick Goldstrike Mines Inc.:
I would just echo that, Mr. Chairman. This is one of the provisions that our company had an interest in, as Mr. Carpenter was promoting the expansion or renovation of the Valmy Plant. Potentially, this is one path we could go down where Barrick could make credit or capital available to help companies like these two gentlemen represent to expand or enhance those plants. We are not committed to that, but it is one potential avenue we could take.
Mr. Lee:
We certainly concur with your statement that there needs to be as much flexibility as possible in section 18, both for the company and for its financing needs, for companies like ours that are in the business of generating, building, and repowering generating capacity. There are plants where we could increase the capacity for a company like Mr. Brown represents. Therefore, the reason I made the suggestion that we put “without limitation” above paragraphs (a) and (b), I think, it makes it clear there is a whole number of agreements, if the power company thinks it is in their best interest, it can begin negotiating with companies like ours or companies like Mr. Brown’s. Likewise, I think the other piece of this puzzle with respect to the total flexibility that can be granted in section 18, is to make sure that companies like ours, and companies like Mr. Brown’s, that may become providers of additional electrical service, can have a great deal of flexibility with what they can do with the capacity they own as well. It gives them the additional comfort that they can sit down with the power company or sit down with the mining company and make the appropriate kind of agreement that is going to, at the end of the day, add capacity in this state, which is what we are after.
Ernest Adler, Lobbyist, International Brotherhood of Electrical Workers Local 1245, and Nevada Housing Coalition:
I just want to make it clear, though, when we are talking about section 18, we are talking about energy capacity and ancillary services. Because, if we get beyond those types of agreements, you may be talking about energy doing meter reading or line repairs or all that being contracted out, and that starts getting into deregulation without all the safeguards that you had in the previous legislation. The union supports this concept as it addresses energy capacity and ancillary services, but if it goes beyond that, I think it opens up a whole new set of problems. The union strongly supports reenergizing these plants and everything Mr. Lee’s client wishes to do, but if it gets too broad, then we have deregulation with no rules. The way it is written is fine.
Chairman Townsend:
I believe, to quote Ms. Sheldrew, “It was an unregulated monopoly;” her quote from 5 or 6 years ago.
Mr. Adler:
And that’s my concern.
Chairman Townsend:
I think there is also some misunderstanding by a great many people that we are going to build these plants overnight, and there are thousands of jobs waiting for people to just run in and take. I do not think you do that in a power plant. These are very sophisticated operations to build, very sophisticated operations to run, and you need highly qualified people to do that. If anybody has never had an opportunity to go to a power plant, whether it is coal-fired or gas-fired or any other type plant, he or she should go and see one. They are a lot different from what, I think, most of us perceive them to be. If you have ever had a chance to do that, I hope you took advantage of it; and if not, take advantage of it in the future. The people that work at these plants are very sophisticated individuals, no matter what their capacity. These things do not run on their own. This is not some autopilot kind of operation; it requires constant monitoring and attention, and, of course, in the case of our older plants, constant maintenance attention. And that, I think, is something the public, particularly with California, doesn’t understand. When they come to the end of their lifespan, it takes a lot more effort to maintain them.
Mr. Adler:
Again, I would like to see us avoid the California situation. They started losing money so they started laying off these highly qualified people. They cannot deliver the same level of services they use to. They are short 3000 people, and I think that we need to be careful of the language here so that type of situation doesn’t happen.
Chairman Townsend:
I am particularly interested in section 18 because I do not think, with all due respect to the company who is in the toughest situation we find them, and as good a people as they have, they are going to be able to do this on their own. I think these kinds of potential partnerships give them the flexibility they need to continue to provide the service they have in the past. With a growing economy, and a burgeoning population change in the state of Nevada, they are going to need as many partners and as many friends as they can find in this arena. So, I think, we need to be a little flexible in this language without throwing open the doors, as your previous statement suggests, and I think that is important.
Any other questions on section 18, or anyone from the regulatory side, or competitive side, or any other side on section 18? Are we going to wait on the merger language until we have had an opportunity? Okay, not a problem. How long will that take? Till after lunch.
All right, let us move on to sections 19, 20 and 21 which deal specifically with the differentiation between Sierra Pacific Power’s service territory, and Nevada Power’s territory, and how customers in those two areas may leave. If you will remember, committee, we talked specifically under section 21 about eligible customers whose loads are in the service territory of densely populated counties, which is, in essence, Nevada Power’s service territory, and each eligible customer purchases from providers before July 1, 2003, must not exceed 80 percent of the load.
So, if large users wanted to apply to be an eligible customer, they must not purchase outside of their current contract with the power company more than 80 percent. And those who leave must not exceed 50 percent of the difference between the existing power supply and the availability of the electric utility and existing demand. Then it deals with the eligible customer as a non-governmental, commercial, or industrial end-user whose load is in the service territory. Then it says, “an additional amount of energy, which is equal to 10 percent of the total amount of energy that the eligible customer is purchasing for its own use.” They are not only leaving, but they are giving 10 percent of the benefit of that contract. Now the question I have, and I will try to go through this, but towards the end of the session you are not as clear on some of these.
Let me ask this, and anyone can answer. If an eligible customer in a densely populated community decides to leave and sign a very long term contract that is front loaded for various reasons; in other words, he is going to pay more up front, but is going to stabilize later and buy this extra 10 percent to feed back to the existing customer base, and it is actually higher priced than what is currently being provided. Under this language it does not say you cannot do that. It says that is what you have got to do. Did I read that differently? The theory is that someone who leaves can find a very, very long-term contract that might have a benefit to it, so that if they bought an extra 10 percent, they could feed it back, provide that to a residential customer. But, what if that contract actually has a kind of opt-in provision by the large user who might leave that would end up being costly for that additional 10 percent. I am just trying to find ways to understand, because it’s a little different in the south than it is in the north.
Harvey Whittemore, Lobbyist, Nevada Resort Association:
The provision in the bill, which requires that the commission make a determination as to whether it is in the interest of the consumer, would allow the commission to establish broad parameters to determine whether, on the whole, the contract was deemed to be beneficial for the residential customers who are remaining. Remember this provision, that not only is the 10 percent assigned to the utility for delivery to its customers, but under the bill it is designed to protect the smallest residential customer. So, the commission would, much like a resource plan and a development of a plan that says we have 1-year contracts, 2-year contracts, 3‑year contracts, or longer-term contracts, look at those standards and make a determination that, on the whole, would have a beneficial impact of stabilizing the prices and, more importantly, delivering that product at below the average cost of the utility. I think that is the utility’s perspective. I know that was ours, and in our discussions with the commission, I think that was theirs as well, but I will let Mr. Ponn finalize that as well.
Mr. Ponn:
I think if you look at section 21, subsections 2, 3, and 4, there are a number of provisions there which provide some protection for the utility and for its customers. Essentially, if one of these eligible customers were to go out and enter into a contract, they would offer 10 percent of it to the utility, who would then, as part of the application process by the customer, decide whether they thought it was an attractive resource. The commission would have the right and ability to determine whether it was an attractive resource, and only if the utility wanted it and the commission found it to be in the public interest, would the right for 10 percent of that contract be assigned to the utility, and something akin to a resource planning decision.
Chairman Townsend:
Let me ask you this. If the parties involved in this are comfortable with that protection, what are the advantages and disadvantages of only letting a customer that we are literally trying to throw off the system, and we are keeping 20 percent of them, but we are throwing 80 percent of them off? What is the advantage and disadvantage there, from a mechanical point of view? How does that work?
Mr. Ponn:
From the utility’s perspective this was not a provision of the “Repower Nevada” plan that we particularly sponsored or championed. Candidly, it adds a complication and a wrinkle to the application of the program. However, I think the intent of this section was to show that there would be some sharing of the benefits should large customers be able to go out as proposed by the “Repower Nevada” plan. If they can go out and find more attractive resources than the average resource of the utility, then there would be a burden for them to share.
Chairman Townsend:
I could probably debate both sides of that. But I do not understand the 80 percent where we are going to throw somebody off, but we are going to hold on to 20 percent of them. What advantage is that to the remaining customer?
Mr. Whittemore:
I think you have correctly identified the analysis. If you are looking at the customer’s benefit, the remaining customer’s benefit, there is none. It should be 100 percent. You hit it right on the nose. Because if, in fact, you are going to get 10 percent, you want to maximize the amount of demand, which is being removed from the system. The analysis went something like this on the Assembly side: It said, “How do we make sure that all eligible customers have an equal chance of trying to get off the system?” What they were trying to do was come up with a process by which customers could not take 100 percent of their load off, but could take 80 percent, thereby leaving that 20 percent for the remaining eligible customers. It is a balance. It is a question, “Do you want to protect the remaining customers or do you want to give some additional benefit to other eligible customers?” Quite frankly, I don’t think you can go wrong if you say 100 percent. You are just maximizing the benefit to the remaining customers. If you say 80 percent, you are saying, in effect, to other eligible customers, you have the ability to participate in this plan as well. That is the sort of balance point that you have reached.
Chairman Townsend:
Having said that, then when we look at what is your eligible customer definition, it says, “A non-governmental commercial or industrial-end user customer that has an annual load of 1 megawatt or more.” Then it says, “A governmental entity, including, without limitation, a governmental entity providing educational or health care services.” Then it says, “Performs its function using one or more facilities which are operated under a common budget or common control.” Now, does that mean a city? It says a governmental entity with an annual load of 1 megawatt or more. I am not talking about a city of residential customers; I am talking about the government side of the actual city. Can they leave if they are 1 megawatt or more under this?
Mr. Ponn:
That is my interpretation, that if a municipality had accounts in the city’s name or the municipality’s name, and the sum of those accounts was an average 1‑megawatt load, then they could leave. Not aggregate the residential customers within the city boundaries, but only the accounts of the city.
Mr. Whittemore:
The limitation you have, identified in the definition is under common budget and control. In other words, if you had five separate locations, you had a public service location, a public safety location, a governmental services, a city council, they all had a time-of-use meter, they were all specialized accounts, you could aggregate those. If they were more than 1 megawatt, they would be eligible immediately under the program to potentially save benefits. Now, the other piece here is, that would not be subjected to or be required to acquire more than 10 percent. That 10 percent provision does not apply to them, because there is no reason. You would be burdening the very municipalities and customers that you didn’t want to have to do so.
Chairman Townsend:
That applies only to the commercial individuals.
Mr. Whittemore:
That is correct, Mr. Chairman.
Chairman Townsend:
Having said that, in looking at the public purpose, which is to allow tax payer funded entities to try to lower their cost burden, one of the obvious ones, because we lump them together over here in this other room, is UNLV (University of Nevada, Las Vegas), and the community college, and the school district. Now, has anybody identified that size? They are not going to aggregate, because they are not under common control, and they aren’t under a common budget, but does anybody have the size of that group?
Mr. Whittemore:
For the record, the contemplation under the bill is that the school district, as one entity, common control budget, could aggregate all the schools themselves. And, there again, general administration services, and everything else, and the university could.
Chairman Townsend:
How big is the school district in terms of megawatt usage, base load?
Rose E. McKinney-James, Lobbyist, Clark County School District:
As I understand we have about 300 to 400 megawatts. That would include both the schools, which are about 286 at this point, and all the other facilities that the school district has.
Chairman Townsend:
Is this something you are immediately looking at doing, or is this just, we want to have the opportunity if it arises?
Ms. McKinney-James:
It is principally the later. We would like to have that opportunity.
Chairman Townsend:
The school district is a much bigger load than any of us thought. Now, the university and community college: Mr. Ponn, do you have a sense of their load?
Mr. Ponn:
I would be more comfortable if we did not use the word “aggregate.” If you totalize the load of the university or the school district or the community colleges, I think they would all qualify.
Chairman Townsend:
The university, I mean, she is talking about 300 to 400 megawatts, which is a pretty flexible number for base load. Do you have any sense of what UNLV is?
Mr. Ponn:
I do not have that information with me, but I know it exceeds a megawatt, and so eligibility would be there.
Chairman Townsend:
Do we have any sense if the community college is under one budget? Is not it under the university umbrella?
Mr. Whittemore:
The reason why we drafted common control and budget was, specifically, to allow the totalization of those specific entities to create the ability to became an eligible customer. That is why the select committee through Mr. Powers’ work and our development of language, it was designed to be as broad as possible to allow Ms. McKinney-James’ clients to totalize the Clark County School District load, the university system to totalize their load in three different areas; the University of Nevada Reno system, the UNLV system, and then the community college system, again, in the specific service territories.
Mr. Ponn:
I would add one thing, Mr. Chairman. I think the intent of this section, by looking at the governmental entities under common budget and control, was to, in some way, impart some public benefit to this first step in allowing large customers to leave. It was a substitute for some other scheme like residential aggregation.
Chairman Townsend:
I think your point is well taken, and let me tell you why I am asking the question. If we are base load in Nevada Power’s service territory, approximately 2400 megawatt, maybe that is changed. I do not know what it is. What is it going to use today? Is that close?
Mr. Ponn:
Our peak is around 44 to 47 megawatts, so, 24 megawatts is probably close.
Chairman Townsend:
Even if it is 2500 megawatts, what I am trying to get at is who are the likely individuals, and they do not need to be by name, I am just talking about size, that would happen. Then once we identify that, she’s 300 to 400 megawatts, you add the university, and maybe it is another, 50 megawatts. Then you add those large users that run down the “Strip,” and there it may be 350 megawatts. Then you have some other large industrial people. Now we are at 1000 megawatts. So, now we have gotten rid of all of that problem.
Now, we have the benefit of retaining, and actually under Mr. Whittemore’s analysis, we are going to gain an additional amount of lower use. We are going to gain some actually low cost load. Now the amount of peak problem drops, which is the main concern in southern Nevada coming up here in a couple of months. So, if you take 1000 megawatts off your base load, that should help you with your peak demand, almost to that level. Will that not provide a tremendous amount of reliability for the system if we manage to figure out how to get rid of the larger users?
Mr. Ponn:
Maybe to just clarify, our largest customer, Nevada Power, has a peak demand of 127 megawatts. What we are talking about is a total of those customers above 1 megawatts, 185 customers with 1135 megawatts of peak demand, and in Sierra Pacific’s territory, it is 125 customers with 634 megawatts of demand. To the question, because we are a net importer, and because we are buying a significant portion of our energy, this could become not only on peak, but for the duration of the low curve, some advantage to do this.
Senator Carlton:
Mr. Ponn, would you repeat those numbers, I did not get them all.
Mr. Ponn:
At Nevada Power we expect the total customers that have loads above 1 megawatt is 185 customers, with a total load, on peak, of 1135 megawatts. It is out of a system peak of mid-40s megawatts; 4400 megawatts is the latest I have seen. At Sierra Pacific it is 125 customers with a peak of 634 megawatts out of a system of 1600 megawatts.
Mr. Whittemore:
With respect to the issue of whether or not there is an incremental benefit from having these customers removed, I think it is important that the total load, if it is over 1000 megawatts in southern Nevada, many of the large industrial users would potentially be given the choice to leave would be those that have demands, which are relatively constant throughout the 24-hour period, and on a 365-day year basis. As you know, the loads, particularly of the members of the Nevada Resort Association, are very consistent and constant in southern Nevada area. So, any time you remove that demand, it really does free up the capacity and reliability of the incumbent utility to serve the remaining customers. Especially, again, as the bill is written, it requires new resource being brought into the state.
Mr. Adler:
We have talked about this a little bit, on this 10 percent set-aside, and we do not see it as a major benefit, because it is not really targeted towards poor people. It does not say that. People who are at the 150 percent of poverty level receive this money. It is just thrown into a pool, and it is not even certain whether it is going to show up. I think you need to wonder whether it is worth all the trouble of drafting this into the bill for the benefits you get. If you really want to help poor people, again, I think you should go back to A.B. 349, the way this committee passed it, not the way it got amended on the Senate floor. But, I think it would be a lot better idea to just delete this section and put that language back in, to be quite frank. Because this is too complicated for the amount of benefit that is going to trickle down. It does not really distinguish between, quite frankly, giving the benefit to the little old lady, proverbially, in the mobile home in Las Vegas, or the little old lady who is a multi-millionaire in Summerland getting the same benefit.
Mr. Whittemore:
That is clearly not the intent of the legislation. The legislation indicates it is for the smallest residential customers, with direction to the commission to establish the rules under which they would receive the benefit. I think there is clearly a huge misunderstanding if people believe this 10 percent benefit would be spread equally across the remaining customer classes. In fact, it is the exact opposite. It says the smallest residential customers.
Mr. Ponn:
Just so the record is perfectly clear, perhaps I should read the applicable section. It says in section 21, subsection 4, paragraph (b) of A.B. 661, in part:
To the extent practicable, the commission shall take actions to ensure that the electric utility uses the energy, capacity and ancillary services acquired pursuant to each such contract only for the benefit of the remaining customers of the electric utility that are not eligible customers, with a preference for the remaining customers of the electric utility that are residential customers with small loads.
Mr. Adler:
Again, that does not have an income provision. I mean, that could be 100 percent of poverty or that could be 3000 percent above the poverty level, the way that reads. It is not a targeted benefit.
Mr. Whittemore:
The intent was, in fact, to deliver the benefit to those households beneath 400 megawatts. The lowest level utilization, I think, was 450 megawatts when we looked at the rate design, and we have absolutely no objection to clarifying this language when we set a preference to the small residential customers. If you want to make it conditioned upon certain income levels, we have no objection. The idea was to give the commission the greatest degree of discretion to get to those individuals who needed it most.
Chairman Townsend:
Let me ask Mr. Adler, would you be satisfied, given the flexibility here, with a Letter of Intent from the Legislature to the PUCN on that?
Mr. Adler:
I would rather have A.B. 349 back instead of this, to be quite honest, because it is a defined benefit that people know they are going to be receiving every month to assist them with their bills, and it adds weatherization money.
Chairman Townsend:
If I get this out of here quick enough, you might get A.B. 349, unless there are appeals on this.
Mr. Adler:
If we are going to use the 10 percent, I think some of the language the committee developed earlier, dealing with low income people, should be geared towards 150 percent of poverty level. That determination can be made by the welfare division fairly easily, and they can transmit that information to the PUCN. But, I think that should be included here, if we are going to have this have an impact.
Chairman Townsend:
Is that not more of a rate design issue?
Mr. Whittemore:
That is why it was written the way it was, saying the smallest residential customers. Knowing that rate design issues were going to be done with respect to these first-rate cases, and everything else. And again, the whole point was we did not want to make it so specific that we called into question whether or not it was going to be at the 100 percent of poverty level, 150 percent, or a particular megawatt level. The smallest residential customer is a preference, and make sure the commission was aware of that. That was the whole intent.
Chairman Townsend:
I think there are a couple of issues we never need to lose sight of, reliability, reliability, reliability. After we have said reliability again, then we can figure out how we are going to spread the benefits of what is remaining available, because an awful lot of this is not in our control. And that is what I think we can never lose sight of. You know, when the Californians turn all their air-conditioners on, it affects the entire western grid. It does not matter what we do in this room.
Mr. Soderberg, let me go back to this issue, if we can resolve this flexibility issue. I think Mr. Whittemore has given us a balancing test on the 80 percent of the load for eligible customers. Do you have an ability as a commission to differentiate, because it sounds like, number 1, there is going to be a burden on the business, if they are only to go looking for 80 percent of their load. Then there is a burden on you to differentiate between that. Then there is a burden on the company, and I could be wrong, but I am just trying to figure it out. I understand the benefit balance test that Mr. Whittemore has made. I just want to make sure I am understanding the 80 percent from your perspective.
Mr. Soderberg:
The 80 percent rule grafted into this provision, as Mr. Whittemore explains it, is an attempt to allow more of the 1-megawatt customers to be able to come in the door. We do not know what the number is, but we know at some point, when loads start shutting off, it becomes harder and harder to demonstrate there will be no harm to the existing customers. The logic that was explained on the Assembly side and here today is, if we somehow cut back the amount of megawatts going for each customer, more customers would be able to qualify, and that could be true.
Chairman Townsend:
And the price goes up?
Mr. Soderberg:
Conceivably.
The other factor that may limit some of these customers from qualifying is, it will be harder for each customer to prove that there’s no impact on existing customers by only having 80 percent of their load. Each customer has a different load profile, and the question becomes, what is the optimum 80 percent to say “bye bye” to, and the optimum 20 percent to keep being provided by the incumbent. I would assume if I were a power plant wanting to contract, I would attempt to contract with one of these large customers for everything but the super peak, so I could keep that myself, and put it out on the open market. When it comes to us, we may not be able to make the determination that there is no impact on remaining customers. And, it is on a case by case basis. This 80 percent rule may work in favor of a lot of large customers. It may work against particular ones, and we would not know until we see them.
Mr. Whittemore:
If I might remind the committee, the “Repower Nevada” portion is sections 1 through 26, and then section 119 of the bill dealing with the modifications to A.B. 369 to make sure that the utility can pledge assets, and hypothecate debt for financing purposes.
Chairman Townsend:
With regard to the merger language, we are thinking that consensus will be found in the mid-afternoon timeframe.
Anyone else regarding the “Repower Nevada” language? For or against, amended, new sections? Mr. Young has reminded me we have to have this bill out of the Senate on Thursday. So my suggestion is the following: If we do not have consensus language by this afternoon, we are going to go with what is presented here or whatever the committee wants, and get it into conference and fix it there. If you are willing to take that chance, then feel free to drag your feet. If you would prefer to have it solid, then I suggest you get it together now. Because, if you think we are holding this bill up for the “telco” (telecommunicatons) merger industry, you are wrong. Either that, or we will take it all out and let it be the way it is. I think that is only fair to the committee who spent far more time on these issues than they wished to.
Michael A. Pitlock, Lobbyist, Shell Energy LLC:
We did not intend to discuss that document specifically. We just wanted to make a few brief comments concerning the proposal we made last Friday. I guess I now need to use the word “totalization,” instead of “aggregation.” Our proposal is to totalize the low-income load in the form of a pilot program. In light of the action of the Senate last evening with respect to A.B. 349, we think it is more critical than ever the Welfare Division have some tools to deal with the problems of the low-income ratepayers. We believe, in light of that action, that our proposal to totalize the low-income load makes even more sense. I have also had some discussions, this morning, with Linda Ritter from the City of Elko, and she expressed a great deal of interest in the small county pilot program language that we also presented on Friday.
Thomas Kinnane, Lobbyist, Shell Energy LLC:
In addition, if I may, briefly, on the next to the last page of the packet that was handed out this morning by Mr. Young, we had some changes to the “Repower Nevada” language that eliminated the time-of-use meter requirements. In light of what was discussed earlier about taking 100 percent of the eligible customers load versus 80 percent, the time-of-use meter requirement, I am sorry, 80 percent vs. 100 percent. The time-of-use meter requirement is going to require that additional meters be purchased, since there is a requirement that only suppliers provide energy at any one meter. Therefore, this is an additional cost any eligible customer would be required to incur in order to take only a part of its load from a competitive supplier of energy. That applies equally to the school systems. Many of the schools are not equipped with time-of-use meters, and were they to aggregate, it is our understanding, under the language of “Repower Nevada,” many of those schools, in order to participate in an aggregated group, would also have to purchase these additional time-of-use meters in order that they be qualified to be aggregated or totalized.
Senator Amodei:
I see Chairman Soderberg is gone, so Mr. Pitlock, you were involved on the other side of this issue over the previous two sessions. In A.B. 369, we repealed all the statutory stuff that was associated with deregulation. Now we have in A.B. 661 a proposal to move forward, whatever nomenclature you want for 1 megawatt and larger customers, and you have an amendment talking about totalizing or aggregating, or whatever you want to call it, for residential people. Could you briefly describe how that is different from what was repealed in terms of the procedure by which this would go forward, what you are proposing, and the difference between if you go forward now? Does the commission make all the rules, and as opposed to what was repealed in A.B. 369, because I’m having a hard time, having voted to repeal the previous two-sessions worth of work on deregulation 2 months ago, with figuring how we’re going to go forward, in either a large or small customer context, with that repeal.
Mr. Pitlock:
There is a great deal of difference between simply opening up the markets in a way that would allow individual customers to be marketed to by a whole host of alternative sellers, to what we are proposing here and, quite frankly, what the large users are proposing as well. What is being proposed right now is really a system of bilateral contracts, where the commission will be placed in a position of on a case-by-case basis, approving or disapproving these individual bilateral contracts, as opposed to an open market where alternative sellers in an unregulated environment would be able to market their services to individual end users. Because of that difference, because all we are talking about is the approval, basically, of bilateral contracts, the level of regulatory, or the level of regulations, and the level of regulatory complexity, is reduced dramatically. I believe it is a very small step towards testing what the market is really like, but doing it in a controlled manner, because each one of the individual contracts will be reviewed and approved by the commission. Again, to contrast that to a completely open market, where an alternative seller is marketing his product to an end user, there would be no regulatory oversight of that relationship between the alternative seller and the end user. So, what we have done is, we have put into the mix that regulatory oversight that would not be there in an open market.
William E. Isaeff, Lobbyist, City of Sparks:
I am representing the Truckee Meadows Water Authority. We are offering a proposed amendment to the bill (Exhibit D), which would actually not amend any section of the bill per se, but put a section into the bill to make clear that nothing in this legislation is intended to affect or be applied to the pending transaction of the sale of Sierra Pacific water company to the Truckee Meadows Water Authority, which sale is expected now to close on June 11, 12 days from today. There is language in the first reprint of A.B. 661, section 60, which our attorney said caused us concern. This could have an indirect effect of bringing this legislation to bear on the proposed sale of the water business of Sierra Pacific.
Chairman Townsend:
Since no one can agree on what that is going to be, and we process “Repower Nevada” without section 60 in it, would you like to participate in the debate for the wordsmithing of the merger language?
Mr. Isaeff:
I do not think so. All I want to make sure is if section 60 is gone, there is no language that leaves any implication that this particular transaction, which is all we are focusing on. It is the same transaction which you previously exempted from A.B. 369, because there were hydro-electric facilities involved in that transaction, as there are in the water business, and as there are here at this time. So, our total goal here is to make sure this does not adversely impact the 12-day old sale from now that will take place at the water business to the Truckee Meadows Water Authority. And, the proposed language, which was in our written handout on Friday, is an attempt to make clear that nothing in this statute is to be interpreted or applied to this particular transaction. And the transaction, as you see, is explained with the specificity which you approved in A.B. 369, except that here we do include the fact that there are water services involved. But these include assets of a hydroelectric plant of less than 15 megawatts located on the Truckee River. Since the bill is in such flux at the present time, we felt it incumbent that we still continue to seek clarification language. In the end you may rewrite this whole thing by Thursday to make that unnecessary, but we did want to put on the record the need that, if the language or something similar to the language in section 60 were to remain in the bill, this proposed amendment would be very critical to the successful conclusion of this proposed sale.
Chairman Townsend:
Then, committee, perhaps what we should do is, if we process this bill this morning, without any reference to section 60, in other words, we remove that from the bill, that we, in working with the parties for a conference amendment on merger language, include, in fact, Mr. Isaeff’s reference to the transaction that is pending.
Mr. Isaeff:
Thank you, that would be most helpful, Senator. Yes, I think that would accomplish our purpose in the same way.
Chairman Townsend:
A lot of work went into that, and now we do not want to interrupt it. We just want to make sure we get as clean a provision out of this as we can, and that might take a little work.
Michael Hillerby, Representing, Office of the Governor:
There are some sections of the bill I do not think we have heard discussed by the committee. If it is your intention that those are not to be a part of the final bill this committee passes out, I will be very brief. They are sections dealing with expansion of the PUC and administration of the Public Utilities Commission of Nevada, several sections dealing with the task force on renewables.
Chairman Townsend:
Is there a reason you want to go into all of that?
Mr. Michael Hillerby:
If you are telling me they are not going to be in the bill, I will shut up and get out of the way. If you need any encouragement, I will be happy to give that.
Chairman Townsend:
The committee has wrestled with almost every issue that has been in this bill, one way or the other, at great length. I think at that point, the only thing not well defined when we processed A.B. 369 was, in fact, the “Repower Nevada” language. It would be the intention to take a motion that would only deal with sections 18 through 26, and 125, and 119. I believe they would include the references Mr. Lee made. I do not know whether you were here for the presentation, but it had to do with the term “without limitation” on line 39 being placed after such agreements on page 4, and then on page 5, under line 5, “use or consume by each party for their own purposes,” so there is no misunderstanding about their ability to sell any excess they produced on the wholesale market. Do any of those give the administration any heartburn, or is there any suggestion relative to those?
Mr. Michael Hillerby:
No suggestion from us. Ours were on the other sections of the bill dealing with task force, and moving the energy office and PUCN.
Chairman Townsend:
We were focused on a bill coming back that had dealt only with this, and the other stuff came as kind of ancillary services, and we have not decided whether we regulate those or not, yet. But, right now we are going to deal with this. Those others are large debates this committee has been through, and I think it is important that we get our focus on the value to the remaining customers under a straining market to get rid of some large users. I think it is the real focus, if that is all right with you.
Fred J. Schmidt, Lobbyist, Southern Nevada Water Authority:
I just want to make sure you include on your list of things not to drop, section 121, which is a fix of an inadvertent mistake that occurred in the drafting of A.B. 369. Mr. Powers can explain it to you, or I would be happy to, and it is agreeable to all the parties who participated in and presented to you, A.B. 369.
Chairman Townsend:
This is transitory language to deal with A.B. 369. There was a problem there?
Mr. Schmidt:
That is correct.
Chairman Townsend:
Mr. Powers, this looks like your work.
Mr. Powers:
Yes, Mr. Chairman, the correction is on page 49, beginning on line 9. And the correction is to clearly identify the revenues specified in that paragraph (c) are the revenues for the specific period, March 1, 2001, to March 31, 2001, inclusive.
Chairman Townsend:
This was, as I understand it, an inadvertent language drop that occurred, that was agreed to by all the parties, that should not have been dropped. Is that a fair assessment? I do not want to put words in anybody’s mouth.
Mr. Schmidt:
I do not think there was any real intent on any party not to have the language stated this way in the first place. It was inadvertent it was related the way it was. It affects about $15 million in revenues for consumers statewide; so we wanted to make sure the correction was done.
Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club:
I would like to bring to your attention the portion of A.B. 661 dealing with net‑metering. Of the many bills that had net-metering lifting the caps, this is the only remaining language lifting the caps, both on the pilot program and the applied kilowatt-hours of 20. I would like to recommend you keep that in this bill.
Chairman Townsend:
What was the section again?
Mr. Powers:
Mr. Chairman, it begins on page 30. The sections dealing with net-metering. Sections 63, 64, and 65 deal with net-metering.
Chairman Townsend:
Mr. Soderberg, is there anything preventing you from opening a docket on net‑metering, and finding out if there are benefits to all customer classes or specific customer classes?
Mr. Soderberg:
Off the top of my head, I do not see any statutory authority for us to expand or contract the program over the limitations that are in the existing law. So if there was a desire to expand the program in any way, whether it is what is in the proposed bill or in some other fashion, we think we would have to have statutory authority to do that.
Chairman Townsend:
I do not necessarily disagree with you, Mr. Johnson. I am just trying to find the best way to do it. I have found a great deal of the time with this technical stuff, if we get too specific, it creates a hardship on the parties involved, including the regulatory groups. Sometimes flexibility is best left to a docket from which regulation could be drafted.
Mr. Johnson:
There are some sections dealing with the explicit language. I think what we would be looking for is just simply lifting off the caps, and the other issues, I think, could be left to the Public Utilities Commission.
Mr. Ponn:
The company supports passage of this bill with sections 1 through 26, and 119, and we concur with Mr. Schmidt’s proposal that section 125 should be included. Beyond that, if additional amendments are proposed, we would appreciate an opportunity to respond to those. We do have concerns about net-metering among other issues that might be put into this proposal.
Terry K. Graves, Lobbyist, Nevada Independent Electric Coalition:
Section 17 is a section relating to contract sanctity. This issue has been debated at length in the last two legislative sessions. It was part of S.B. 438 (of the Sixty-Ninth Session). Assembly Bill 369, which deleted all the deregulation language, also took that section. It was reinstalled on the Assembly side by the committee. I think it is appropriate it remain in the statute. It serves purchased power agreements, fuel purchase agreements, labor contracts, as well as renewable contracts, so it is just language sanctifying contract language. I would urge the committee to also retain it.
Chairman Townsend:
I believe Mr. Ponn made reference in his support for sections 1 through 26. So, you are in sections 1 through 26, is that correct, Mr. Ponn? Plus the additional ones in the remaining 100s?
Mr. Ponn:
The section 119 and the section 121.
Ernest K. Nielson, Lobbyist, Washoe County Senior Law Project:
If you are considering what sections to delete or not, I would request you consider retaining section 44, which gives the commission authority to develop rules, fair rules, that prevent turn-offs of electricity during weather or temperature extremes. It also gives the commission authority to develop rules which govern how those end users who are not customers, i.e., people who live in master-metered apartments and in mobile home parks, how they are treated by a utility when a termination of the customer, i.e., the landlord or mobile home park owner, has their electricity terminated. So, we request retaining that section, because it simply gives authority to the commission to develop some rules, which I think are protections the customers need.
The second request is to really consider the task force on conservation and renewables, because this is the only place in this whole legislature where there is any effort to develop programming for conservation, and as most of you know, conservation is a very inexpensive way to get new capacity.
Mr. Ponn:
Again, to preserve the record with regard to Mr. Nielson’s proposals, if the committee were to expand the scope of what is to be passed, we have some issues with section 44, we would like an opportunity to discuss.
Chairman Townsend:
Committee, if the motion includes anything other than “Repower Nevada,” then the parties will all be given an opportunity to respond to those. Is that fair?”
The hearing was recessed at 10:32 a.m.
The hearing was reconvened at 4:56 p.m.
Chairman Townsend:
We have two things before we get to A.B. 661. We have A.B. 133, which the Assembly committee did not concur with this committee’s Amendment No. 1044. Therefore, we should not recede, and go to conference to resolve the issue.
ASSEMBLY BILL 133: Makes various changes concerning construction, constructional defects and common-interest communities. (BDR 3-667)
SENATOR SHAFFER MOVED TO NOT RECEDE ON A.B. 133.
SENATOR AMODEI SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
Now Senator Care’s (Senator Terry John Care, Clark County Senatorial District No. 7) bill S.B. 216 on pool construction. Mr. Barengo, Mr. Hillerby and Ms. Grein have sent us Amendments No. 993 and 1114. I have been through them. We are all familiar with how the committee feels about this, and how our friends and consumers, particularly, in southern Nevada face a tough time. We are looking to you to help a little bit. Do you have a sense of the amendments?
SENATE BILL 216: Makes various changes pertaining to contractors who engage in repair, restoration, improvement or construction of residential pools and spas. (BDR 52-1037)
Fred L. Hillerby, Lobbyist, Nevada State Contractors’ Board:
Yes, we are very familiar with how this committee feels; we sat through those hearings and listened to the plight of all the people in southern Nevada. We reviewed these amendments and are comfortable that we are still in front of this committee and urge to do concur with the Assembly amendments to this bill.
SENATOR CARLTON MOVED TO CONCUR WITH AMENDMENT NUMBER 993 AND AMENDMENT NUMBER 1114 ON S.B. 216.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION WAS UNANIMOUS.
*****
Chairman Townsend:
All right, committee, let us go back and work on A.B. 661. Committee, turn to section 60 of the bill. I have two versions of proposed language. Could you tell me which is the operative one?
ASSEMBLY BILL 661: Revises and repeals various provisions concerning utilities and energy. (BDR 58-1128)
Mr. Reaser:
The mechanism we would like to use to discuss is the yeoman efforts of Mr. Powers, which is the multi-page document that looks like an amendment that was prepared by LCB (Legislative Counsel Bureau) (Exhibit C). The only changes to the language I am aware of are two technical words that did not get in at line 11, on page 1, between the words “affect” and “customers,” the word “retail.” And, again, on line 17, between the words “affect” and “customers,” the word “retail.” I believe, with those changes, the members of the industry, both telecommunications and energy, are in agreement with the language of this proposed amendment, which we think addresses the various issues we started discussing with you this morning.
Mr. Craigie:
The primary reason we are working so hard on this language is for the telcos (telecommunications), and for those of us that are multi-national companies. The 10 percent language contained here, that says, without referencing it, just the principle of, we do not want to have the State of Nevada involved in all of these mergers unless there is at least 10 percent of the business activity of the company here that is affected by the merger. So if SBC (Communications Inc.) or Sprint, or some entity whose headquarters is, in our case, in Kansas City, and they purchase a company in Tennessee, we do not want that ending up in the state. That is the reason we have worked so hard on this language. All the parties generally agree with that principle and direction. Frankly, all the people at this table have worked hard and sincerely to try and come to a conclusion. We are somewhat apart, but we are in substantial agreement on all the issues, except for one piece.
Senator O'Connell:
Then this is a replacement for the present section 60?
Mr. Reaser:
That would be correct.
Ms. Drakulich:
To echo the comments of Mr. Reaser, everyone did work hard on this. My understanding, however, with respect to the amendment, section 59.5 is actually in addition to section 60. And then, section 60 would be amended as indicated on page 2, line 20, through the end of the bill. So, section 59.5 is actually new.
Mr. Reaser:
I apologize, that is correct, I had forgotten. The Legislative Counsel Bureau had a different approach, and we do not have a problem with that approach.
Mr. Hay:
We have several objections to the amendment the way it is drafted. I will run through them briefly. In subsection 2, page 1, line 15, the way this is stated it actually requires either the commission staff or my to office make a showing that the proposed transaction will materially affect retail customers before the commission may order that an acquiring entity or entities file an application. We think it reverses the standard that should be applied, and that materially is not the correct standard, in any event. We believe, obviously, our staff, and the commission staff, is going to use discretion on bringing petitions on these matters to the commission’s attention. So, the way this is drafted, it really establishes an uphill burden of proof, even to get the commission to order that an application should be filed, and, perhaps, the chairman can speak to that in more detail.
The other major substantive change is on page 2, line 17, where the existing statute is amended with new language which does not appear, thus far, in the session. Some other form of consideration besides 25 percent of common stock could trigger this exemption. We believe it opens a loophole that is unnecessary and inappropriate, and as you know, the language in the original statute was fairly carefully negotiated. Those are our major concerns, and we do oppose the amendment as it is drafted.
Chairman Townsend:
The current language in section 60, who had the primary objections to that?
Mr. Soderberg:
I was not aware that anybody had objections to what is labeled as section 60. The effort that was conducted since you recessed was an attempt to satisfy the concerns articulated by you, that even with a statute amended, there may be some instances where somebody could evade the statute by constructing a transaction. Yet, there would be some level of impact on Nevada consumers, and the commission should selectively assert jurisdiction. The example, of course, was the Sierra Pacific, Portland General merger, where the statute did not encompass that transaction, yet there was a feeling there was a material effect, excuse me, not a material effect, any effect on consumers. Mr. Hay brought forward some language to attach to section 60, and, I think, in our discussions out in the hallway, we felt it might be better that it be an optional situation. Whereas people would bring that to the commission, the commission decides, as opposed to reviewing every single transaction without some sort of pre-review.
Ms. Drakulich:
If I might address Mr. Hay's comments; first let me direct your attention to page 2, lines 17 and 18. What this does is, it simply adds latitude in terms of the construction of the options, rather available in the transaction itself. It does not change the 25 percent value that is stated in section (c), subsection 1, just above that in lines 14 and 15. And, the 25 percent standard is the language presently in the law in Nevada Revised Statutes (NRS) 704.329, which you see in section 60. That is also part of this amendment. There is section (c), subsection 2, on lines 17 and 18, referred to by Mr. Hay, continues with the 25 percent standard. It just allows the utility in the State of Nevada, whether it is electric, telecom, or other, to use some other form of consideration besides the common stock. It does not change the value.
With respect to the terms, materially, we did not take this lightly; we wrestled with this, this afternoon and this morning, to come up with a standard. What we were looking for was a standard that financially had some meaning both in courts of law with respect to financial transactions, and materially is a word that does. From that perspective, what we were trying to do is bring before the Public Utilities Commission those transactions that they should really pay attention to, because there would be some material effect on consumers.
Mr. Soderberg:
We have reviewed this in conjunction with the discussions we had out in the hall. We have two, I won’t call them clarifications, but there are two items in here that we think, in light of the discussion that went on with the committee this morning, we should point out to you. On the first page, in section 59.5, subsection 1, paragraph (b), starting on page 6 [sic] [page 1 of Exhibit C], there is qualifying language in here we feel somebody could, possibly, construct a transaction to somehow exempt itself out of the catch-all provision. Where paragraph (b) currently reads; “An entity which is incorporated or organized under the laws of this state, which maintains its principal place of business in this state and which hold a controlling interest in a public utility doing business in this state.” We wonder if we could just delete that whole qualifier from the word “is” to the word “and” in lines 6 and 7, and then it would just read; “An entity which holds a controlling interest in a public utility in this state.” Therefore, we would not have something occur a year or 2 years from now where somebody was able to construct a transaction by using some holding company that is not organized under the laws of this state, or does not maintain its principle place of business here, therefore, somehow is exempt from the catchall language that was attempted to catch everybody.
Secondly, on page 4, is an item that was part of the original language purposed by the telcos this morning. On line 5, we have a paragraph (b). We do not really have a proposed edit, but we question, and we apologize for questioning it this evening instead of this morning. We do question why we would have a calendar quarter qualifier in that clause. There is the ability of people to manipulate that. Various utility businesses have different levels of income depending on which quarter. If it is the intent to encompass everybody, so we could at least take a look at it to see if it is important before we move forward, we would not want somebody to be able to manipulate their filing to be right after their lowest quarter for whatever reason, for seasonal adjustments in whatever business they are in, and, therefore, we have an, aha, this does not apply, because the last quarter we did not meet the 10 percent threshold.
Chairman Townsend:
What is the purpose of the proposers?
Mr. Craigie:
First of all, that language came out on the Assembly side. But, let me say that one of the reasons we thought it might be logical is that, with all of the changes and purchases and shifts in some of these large companies when they are in a buying mode, that was the most recent. We went with it, because it was what was put in there over on that side. Add a calendar year would be fine with us.
Mr. Reaser:
We concur. We did exactly that.
Chairman Townsend:
I think you would want some flexibility at the commission level to analyze it, based on its total impact on the consumers of this state, as well as the company, and not just isolate it to a particular quarter. Our friends at Sierra Pacific Resources have fluctuated rather dramatically, which is a substantive change to its history from where they have been. It might jeopardize them were that to be analyzed at the wrong quarter. I am not saying they would manipulate it, just that if all of a sudden this transaction came about, it might put the regulatory mechanism in a spot it does not want to be by looking at the bigger picture.
You know, there is a tendency as we get too far down the road, to want to, statutorily, be a little restrictive. And, in the days prior, when these were fairly stagnant industries, you could make a mistake in law, and it probably did not have too big an impact. But things change so dramatically in the telco industry, and now in the energy field, I would think now is a particularly good time to be a little flexible. We do not want any of the companies who are now serving our population, some of whom might be based out of state, to be in a position of having a parameter that may not work for them in the true marketplace, that could actually benefit a customer over time. So, I would be a little reluctant to be too restrictive, and yet we want to make sure we have access to the information necessary to protect the long-term interest of consumers large and small in this state. I think a little flexibility at this time might be beneficial.
Mr. Reaser:
One of the comments by Chairman Soderberg on page 1, lines 6 through 7, the qualifiers he was concerned about there, I just note, and for him also, that we have these qualifiers because this is the simple instance where that is an in‑state utility going out of state to acquire something. This was to address the point discussed this morning, of a fear there might be leakage in the statute there. That is why we have these nexus requirements that it be an in-state utility going out of state. We think those qualifiers are, probably, relevant for that reason.
Chairman Townsend:
You are probably the last on telecommunications legal issues I am going to argue with, but to me it looks like lawyer’s language that makes it clear when it does not necessarily need to be. That is just my reaction to it. And, sitting next to a lawyer who chairs the commission, he says it affects that in-state going out of state, and where your recommendation is to have to read an entity which holds a controlling interest in a public utility doing business in this state enters into a transaction to acquire a public utility doing business outside this state.
Mr. Soderberg:
I understand Mr. Reaser’s explanation, and this is one of those items we do not have a strong opinion one way or the other, but we did want to point out the language we have highlighted, potentially, could be used to pull another transaction out of the statute that, in retrospect, we might not want to have done so. Because this whole section 59.5, is permissive and not mandatory upon the commission, I would, at this late hour, hope we would err on overexpansion. Because, in a permissive situation we can always take a look at the petitions before us, and decide we should not exert jurisdiction here, as opposed to other portions of the statute where we have no choice.
Mr. Craigie:
I know there is extraordinary pressure on A.B. 661 to move it forward, and it has to move forward in some form. I know this committee is worn to the bone, and, probably, sick and tired of all of these issues. These issues are within a very, very small range of being reasonable for everybody. Where the real issue falls apart, I am probably overstating some people’s position, but it falls apart on lines 11, and line 17 of the first page, where it is materially effect. This language, and the ability for us to get out from underneath having to do a bunch of extraneous merger cases at the PUCN, is very important. There is a genuine difference of opinion among the parties on the consumer advocate, and the staff in this plan to have the ability to come before the commission and say, “Look at this one. This is one we have to look at.” Either one or both can come to the commission and say, “We need to.” And, the companies have a position that says, okay, if you are going to do the review, they should at least say it is going to have a material substantial serious impact on consumers. Others here have said, if the staff of the consumer ever come and say, let us do it, then they ought to open the case, and they ought to do it. Now, it is not a small difference, but it is a deep core difference. Whichever way this goes, we are here supporting the materially, along with the other companies that are in this coalition. But, I would ask the committee, as weary as we are, to suck it up for a moment and just make a call, and either move it with or without it, because there are so many other standards in here that are really important to us all, that let us just make a call, and move on. That is what I would suggest.
Chairman Townsend:
Thank you for giving me that softball. Committee, the recommendation I would make, because this is a very serious issue, and one, I think, we all respect the parties at the table, and the parties that are affected who aren’t at the table, is to leave this while they continue to work for the conference committee on language that could be agreed to; and if they cannot, then we will make a decision.
What I now suggest is we deal with the following issues in A.B. 661. Committee, the following issues, and please correct me, anybody in the audience. What I believe, committee, and I want you to turn to Mr. Schmidt’s language, which is section 121. That is on page 49. I believe, unless I am mistaken, section 121 is on page 49, it is the language capturing a certain amount of revenue that was left out when we did the complexities of the A.B. 369, and that money was agreed to by all the parties that would then be captured. Mr. Schmidt, you wanted to make sure that was in there, and agreeable to all the parties.
Also, something to bring to your attention, was on section 18, page 4, was the language apparently agreed to by the parties dealing with these agreements on line 40, where it would say, “such agreements, without limitation, giving flexibility to all the parties to find solution to the issue of putting together creative solutions to creating more generation for the State of Nevada.” Page 5, line 5 is to clarify the issue of whatever excess generation comes out of those relationships, would be allowed to be sold on the wholesale level.
What we would do, committee, is we would amend and do pass A.B. 661. We would amend and do pass A.B. 661 to include the following: The “Repower Nevada” provisions, which are sections 1 through 26, section 119, section 121. So, it would be section 1through 26, section 119, section 121. We would also add the capturing of the additional money in section 121, and then we would also amend the language in section 18.
Mr. Powers:
Just for quick clarification, section 125 is included as part of that. Sections 119, and 125, are part of the “Repower Nevada” provisions, and sections 1 through 26, and then section 121 is the clarification of A.B. 369.
Chairman Townsend:
That is right, so it would be sections 1 through 26, sections 119, 121, 125, and there would be clarifying language in section 18.
Mr. Powers:
And, there are additional conflicts that need to be resolved within rural bills.
Chairman Townsend:
We cannot go through a session without those, since we have already passed that bill and a few other bills. And, committee, we would leave the merger language, and ask the parties to work out something they could bring to a likely conference committee and resolve it at that point.
Senator O'Connell:
Mr. Soderberg, I know you are very familiar with the language the chairman has suggested we put in the motion. In your understanding of this language, are the protections in there that need to be in there for the residents, especially in southern Nevada, where we are going to be willing to allow the larger users to actually opt out? Is that going to put an undue burden on the residents?
Mr. Soderberg:
We believe so. The drafters of “Repower Nevada” did consult with me, personally, as well as individuals within the agency, on how this could be structured in such a way that would create the burden on the applicant to prove to us that there would be no harm to residents. They have placed that burden on themselves by proposing an amendment that creates that type of situation. So, we feel very comfortable that this language gives us the ability to analyze, in detail, the impact of every transaction that would come before us, and the ability to protect the captive customers within an incumbent utility service area.
Senator O'Connell:
Mr. Chairman, I would ask that his answer to my question be verbatim in the minutes.
Chairman Townsend:
Yes. And these will be verbatim minutes, anyway, and I would like his remarks pulled out for the Senate floor, also. I am going to need those tomorrow.
Senator Carlton:
I would just like someone out there to make me a little more comfortable with the omission of section 44 dealing with turn-off issues in the cold and the heat, when we have low income people and elderly people. I just want to make sure there is something in place right now that protects those people, and that this section is, actually, not needed.
Chairman Townsend:
Section 44, committee, is on page 17. To just read the first paragraph; “For the purposes of protecting the health of residential customers who receive gas, water or electricity from public utilities, the commission shall adopt regulations that:” And then it goes down the issue.
Senator Carlton:
If we have current standards now, and this section is not needed, I would like to hear about it.
Chairman Townsend:
And also, in answer to her question, if you feel you have statutory authority to do something like this now.
Mr. Soderberg:
We have viewed section 44 as a mandatory provision on something we already have the power to do. I think many people would feel the current regulations do not go far enough, and that is why this section was proposed before the Assembly energy committee. I cannot clearly tell you that, yes, this will happen, but I can tell you we do believe we have the ability to do so. It has been a topic of discussion for over a year now, among the various dockets, most notably Commissioner McIntire’s (Richard McIntire, Commissioner, PUCN) dockets on reliability and consumer protection standards. I think this exercise will be undertaken in any event.
Judy L. Stokey, Lobbyist, Sierra Pacific Power Company, and Nevada Power Company:
I had talked to Senator Carlton about this issue, and I want to assure her that, yes, the commission does have the authority to do this. The consumer bill of rights was put into place that they regulate. We do everything we can to work with the customers, if they are having a problem with their bills. If it is a deadbeat that does not pay their bills, then they should be turned off at a certain period of time. But, if it is somebody who has a problem paying their bills because they are excessive, then we work with them as best we can.
SENATOR AMODEI MOVED TO AMEND WITH THE PROPOSED AMENDMENT ATTACHED TO EXHIBIT C AND DO PASS A.B. 661 AS AMENDED.
SENATOR O’CONNELL SECONDED THE MOTION.
Senator Amodei:
It is with some mixed emotions that I make the motion. But, I think, overall, if this piece of legislation does not move, then there are many things that do not happen. There are many things that could happen in a conference context, and I do not make the motion ignoring the concerns about totalization or aggregation, or whatever that is now going to be called, because I think it is important. However, I have a hard time throwing that back into the mix right now, after being asked to throw it out of the mix 2 months ago. In discussions with some of the regulatory people, I think this is a good thing to let this go for a couple of years, and see how the big folks do. I think in terms of the market, if that goes smoothly, then we can go on line with the other stuff. The one thing I have learned, having worked in this area in 1997, 1999, and now is, apparently the slower you go, the better people like it. And, being asked to repeal all that stuff 2 months ago, and then turn around in the space of 8 weeks and crank it all back up in one form or another, does not strike me as slow. I also think, in response to some of Senator Carlton’s concerns, if this piece of legislation moves forward in some form it will work for customers who may need some help with their bills. With that in mind, and looking forward to a robust conference season, that is why I made the motion.
Mr. Powers:
Just a bit of clarification. So then, section 60, with regard to mergers and acquisitions, is coming out in the amendment or staying in as it exists?
Chairman Townsend:
Coming out. We are not dealing with that. We will give them another chance. They have worked very hard, and I respect the parties.
All right, on the motion.
THE MOTION CARRIED UNANIMOUSLY.
*****
There being no further business, the meeting was adjourned at 5:41 p.m.
Laura Adler,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: