MINUTES OF THE
SENATE Committee on Commerce and Labor
February 20, 2001
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Tuesday, February 20, 2001, in Room 2135 of the Legislative Building, Carson City, 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
Silvia Motta, Committee Secretary
OTHERS PRESENT:
Marybel Batjer, Chief of Staff, Office of the Governor
Rota Rosaschi, Chief, Benefits and Support, Welfare Division, Department of Human Resources
Ernest K. Nielsen, Lobbyist, Washoe County Senior Law Project
Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada
Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada
Ernest Adler, Lobbyist, Nevada Housing Coalition
Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General
Charles (Chas) L. Horsey III, Administrator, Housing Division, Department of Business and Industry
Craig Davis, Manager, Weatherization Program, Housing Division, Department of Business and Industry
Janet M. Burud, Resident Agent, World Energy Resources Corporation
Rudy Conrad, President, World Energy Resources Corporation, Lawrence, Kansas
William R. Bennett, Director of Sales, E 3 Corporation
J. B. Blanchard, President, Energy Resource Group of Morristown, New Jersey
Marion Barritt, President, Sunrise Sustainable Resources Group
James M. Brandmueller, Administrator, Nevada State Energy Office, Department of Business and Industry
Chairman Townsend opened today’s meeting by presenting a number of bill draft requests (BDRs) for committee introduction.
BILL DRAFT REQUEST 57-943: Provides privilege of confidentiality for certain information obtained during insurance compliance audits. (Later introduced as Senate Bill 213.)
Chairman Townsend then introduced Bill Draft Request 58-540, noting it revises provisions governing the establishment of rates of certain utilities; authorizes release of certain accident reports under certain circumstances; revises provisions governing application for changes to railroad crossings; it changes the dates for the calculation and payment of assessments by railroads; revises provisions governing the adoption of water conservation and (incentive) plans by utilities; revises provisions governing the provision of utility services to mobile home parks and company towns to include services from alternative sellers; provides for the acquisition of utility services by mobile home parks from alternative sellers.
BILL DRAFT REQUEST 58-540: Makes various changes concerning the regulation of utilities. (Later introduced as Senate Bill 210.)
BILL DRAFT REQUEST 57-127: Repeals provisions that require policy of individual health insurance to include certain coverage and benefits. (Later introduced as Senate Bill 212.)
BILL DRAFT REQUEST 53-616: Makes various changes to provisions governing workers’ compensation benefits. (Later Introduced as Senate Bill 209.)
BILL DRAFT REQUEST 58-633: Expands authority of Colorado River commission to provide electric services to political subdivisions. (Later introduced as Senate Bill 211.)
SENATOR RHOADS MOVED FOR COMMITTEE INTRODUCTION OF BDR 57-943, BDR 58-540, BDR 57-127, BDR 53-616, AND BDR 58-633.
SENATOR SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O’CONNELL ABSTAINED.)
* * * * *
Chairman Townsend announced the committee will hear issues regarding solutions for energy conservation, demand-side management and low-income residents.
Marybel Batjer, Chief of Staff, Office of the Governor, stated:
Governor Kenny C. Guinn had talked of the importance of the Low Income Home Energy Assistance program (LIHEA) in his State of the State address. The Governor has included in his budget a request for an addition of $5 million for the LIHEA program. The $5 million the Governor is requesting will be in addition to $3.2 million the federal government currently funds. The Governor has proposed to increase the existing program. Essentially, the existing program funds about 37 percent of the families’ energy cost of utility bills; the program is covering approximately 9000 households in Nevada. We are seeing an increase currently, and for those who are applying, the Governor proposes to continue with the [additional] $5 million assisting the people that qualify.
Those families currently qualifying for the program are at 150 percent of the federal poverty level, which is $12,525 for a single person, $16,875 for a household of two, and $21,225 for a family of three. . . . The Governor does want to extend the period of application. Currently, the families apply between September and April. The Governor is very concerned that this summer [of 2001] we will be facing some serious increases in utility bills, so he has asked the department to increase the period of application. . . . We are also going to expedite the application process. We do realize this program is extremely important. The state has not funded it previously. The Governor is very concerned that we reach out to as many households in Nevada [as possible] and assist them in this very important time of need.
Senator O'Connell inquired about the total cost and the amount covered by the federal government in the past year. Ms. Batjer replied: “Approximately $2.3 million, and currently the federal government is supporting the program with about $3.2 million.” Senator O'Connell inquired how the Governor arrived at the $5-million figure. Ms. Batjer explained:
The Governor looked at the current program and realized the federal government had funded it, and that we needed to put some dollars and some efforts toward it because of the crisis situation, [especially] when he looked at the number of households that currently were being served [at] $9000 [each], and realized we had a little bit of data showing we already have an increase of 25 percent in applications.
Rota Rosaschi, Chief, Benefits and Support, Welfare Division, Department of Human Resources, said:
It is our desire to serve a greater number of low-income families. In order to expedite the program, we may need to hire some contract staff, but that would not be more than 1 to 3 percent of the $5 million. It would help to expedite the process to help more families more quickly [for a] fixed period as opposed to ongoing.
Chairman Townsend commented:
A great many times in government they need to look to that, because I know in the private sector, [it] is what we do if you need some instant help. You do not put somebody there who stays forever, because the goal is that the money you are going to allocate gets to the people who need it. Is it possible, before we leave here in June, we can get an overview of how many people are applying for the program, like calls, requests, complaints, concerns, so we have [an idea of] the number of people in need of assistance who may contact your office?
Ms. Batjer added, “The Governor is equally concerned and [is] trying to monitor, almost on a weekly basis, how many applications and telephone calls the department is receiving, so we have some sense of the traffic and the need.” Ms. Batjer offered to submit updates. In addition to Chairman Townsend’s request, Senator Carlton asked, “Could you also let us know how many persons you have to deny that are just above those thresholds, who may be looking for help but may not fall within the guidelines?”
Chairman Townsend said he recognized it was a very important statistic “because most of those people are probably working Nevadans who are going from paycheck to paycheck. We are trying to figure out the best way to handle that issue.”
Ernest K. Nielsen, Lobbyist, Washoe County Senior Law Project, introduced Mr. John Sasser, who will be working for his organization and will be able to answer questions and provide information. Mr. Nielsen referred to two handouts, a background of how low-income programs have developed over the last two decades in the country, and his recommendations referencing, basically, needs, funding, and program design, Exhibit C and Exhibit D, respectively. Mr. Nielsen stated:
I think it is important, in looking at the low-income area, there are some basic ideas that we have to examine. One of them is, regardless of the Governor’s $5 million, we need some long-term and permanent solution for both energy assistance and the weatherization side; at least the Governor’s committee has recommended that we do this together, between electricity and gas, so that it is not a disaggregated system. The federal funds are inadequate by themselves, and I am hoping that through this committee, you would help structure some cohesiveness between the weatherization and the LIHEA programs that is effective and administratively efficient.
One of the things that is real important for you to know about the LIHEA program [is] the State of Nevada is severely penalized because the formula by which the federal government allocates those funds is heavily biased towards “heating degree days” as opposed to a “cooling degree day.” In other words, states like Vermont and Montana get [more assistance] . . . the amount of need we have because of Las Vegas is not really counted in the formula by which the federal government allocates these funds.
Mr. Nielsen referred to his statistical handout (Exhibit D), noting the base funding under the LIHEA program for each of the states in 2000:
You can see for example, Idaho received $6 million, where our base funding was [less] . . . You can see on page 3a, which is the allocation that the [United States] Department of Health and Human Services uses to allocate to the states, Nevada has the second-lowest allocation of all the states, next to Hawaii. I think that is significant because we are trying to bootstrap a number of needs, especially in the warmer climates, based on the LIHEA program. I think the Governor’s $5 million is very welcome.
Another point with respect to need is, since 1990, we have lost two-thirds of our buying power with both the LIHEA program and the weatherization program. In other words, per capita, per low-income . . . we are getting about one-third of the dollars that we were getting back in 1990. So there has been a survey delusion of the federal dollars . . . based on our increase in population and a reduction of about one-third of federal funding for both of the programs in the last 10 years.
Chairman Townsend iterated, “So, we are penalized because we are not a cold climate.” Mr. Nielsen concurred, then added, “And because most of our population needs cooling assistance, in other words, assistance to help them cool their internal space during the hot Las Vegas summers.” Chairman Townsend asked, “This is based on cold only?” Mr. Nielsen said, “Correct.” Chairman Townsend continued, “So it is politically correct to freeze to death, but it is not politically correct to burn up.” Mr. Nielsen said: “You can thank the Northeast members of Congress for that.”
Chairman Townsend continued, “There are actually one or two back there, who understand there are states and cities west of Chicago.”
Senator Rhoads asked, “How come there is no triple set-aside [funding] in Nevada, when most of the other western states have it?” Mr. Nielsen replied he would have to refer that question to the welfare department. Chairman Townsend inquired, “Is Mississippi a . . . does it not get cold there?” There was general discussion in the room.
Mr. Nielsen continued, referring to Exhibit D:
The third area . . . how much do we really need in the state? I think one measure that people have used around the country to define need is looking at the relative energy burden that low-income people have, in other words, the percentage of gross income that is paid for energy. In Texas, they did an analysis of what it would cost to bring all people who are below 150 percent of poverty [federal poverty level] up to no less than two times the energy burden, in comparison to the energy burden of a middle-income family; they [Texas] found they would need about $147 million a year to provide or just get down to the two-times energy burden. In other words, if the energy burden of a middle-income family was 10 percent, that type of dollar amount would bring the percentage of income that a low-income family paid down to 20 percent. . . . I am working with a national group to try to develop some specific Nevada figures, and I am assuming you would like to get those figures to be able to put some concrete numbers on our need. I will pursue that.
I know the weatherization program is administered by the division of housing. They are doing about 175 homes in the state, per year, and by their figures . . . there are about 128,000 homes need weatherization. It is significant when you consider a weatherized home, based on the national survey, will reduce the energy need or burden by about 20 percent. It is a very important long-term solution for the state, in my opinion.
Mr. Nielsen continued, referring to his handout (Exhibit D):
Issue number 1, mill assessments by which kWh [kilowatt-hours] sold in the state would be [assessed] . . . so that everyone will pay. The Governor’s committee put [it to] two votes . . . and everyone said we should consider that as a funding source. Another vote, which had a simple majority, 8-6 vote, said we should use the funding source. In my recommendations, I think I would urge that there are other funding sources . . . I would suggest we have a bar at which we target the amount of dollars for this program, and that, essentially, the mill assessment can fill “the cup,” arbitrarily say, up to the $15 million level, and that [amount] is reduced by, for example, dollars that come in through savings on state building retrofits or any other sources we come up with.
I would also suggest the Legislature develop a trust fund that would put some objective priorities in administrative requirements [for] the use of the money so you achieve administrative efficiency and programmatic efficiency. I think one of the things in a state like ours, where we have a very few dollars coming from the federal government, our experience has been that our programs are not as effective as they could be, basically, because of their size.
Chairman Townsend asked how soon the state would receive the federal money, “because it is one thing to look for a funding source and another [to define] what our target is going to be.” Mr. Nielsen replied he could put 40 percent of his energies on that task. Chairman Townsend stated, “In order for us to try to craft a policy that may be beneficial, we need to know how close we are.”
Mr. Nielsen mentioned:
In the funding list is the rate design, which you can do in two different ways: one is internally to the rate design [itself] and the other way is [to] explicitly subsidize the rates so that you buy down rates for certain people. With respect to the internal rate-design piece, I still will suggest that you are going to need a funding source to pay for weatherization, regardless [of] whether you get down to all the need on the energy-assistance side. I think it is real important to emphasize weatherization, especially when you have a great design like that, you are not going to be giving correct price signals between what people are charged and true costs to the system, especially at peak.
I have attached to my handout what other jurisdictions are doing, and I should just note for you that I believe it is only 4 out of the 25 jurisdictions that have rate structure statutes, [and] do not use a system benefits charge, which is the term commonly applied to a mill assessment like this. We should also point out, 1 mill would be one-tenth of a cent on each kilowatt-hour [and] would raise, in this state, $25 million. And I am not suggesting $25 million, but that is how much we would raise, [and] that would cost the average residential customer, who uses 650 kWh per month, approximately 65 cents a month.
Chairman Townsend inquired:
Given the rising cost of energy, you are accumulating more money through mill tax already [to be] . . . used for various purposes, mostly [for] regulation of the utilities. . . . I know you are going to come [up] with a drop in your mill assessment in order to accommodate that kind of burdening money source. How can it be measured? There may be [a way] without raising the mill tax, or there may be a way to capture excess money for this purpose.
Neill Dimmick, Director of Regulatory Operations, Public Utilities Commission of Nevada, offered:
[The] mill assessment . . . as I understand our budget request, has been reduced to cover our needs, [but] obviously there are several plays, depending on when competition comes in, and whether or not to lose revenues, they drop out of your coverage because it is no longer a regulated break-through. Although, there are bills to cover that have been proposed.
Chairman Townsend asked Mr. Dimmick, “How much did you drop in your request, and have you presented that to the finance committee?” Mr. Dimmick said, “I do not follow it on a day-to-day basis . . . [however we] can check on that and bring it back tomorrow.”
Chairman Townsend stated:
We would like to see where you would have been if you had not made that request, because we may want to consider “unrequesting” that. If you are talking for every mill, you are talking about $25 million. If it is money that has been already assessed, maybe that is a possibility.
Mr. Dimmick said, “I would suspect the better way to do it is have it specifically identify what it is going to be directed for, and count on having something, maybe, available as a surplus.”
Chairman Townsend continued:
[And] start building up some capital. I think this committee is still singed by the Exxon or Chevron settlement, in which we were given a pot of money and required to spend it, as opposed to putting it in a trust fund, where we could have it for the citizens forever. That, to me, is irresponsible; so I am trying to look at building up a fund that could be helpful.
Mr. Dimmick continued:
[The] public utility commission only assesses utilities under their jurisdiction. There are numerous entities that do provide utility service and have customers at secret systems, as I understand it, that are outside [the] normal regulated utility. So, having an assessment that applies, in general, above and beyond just regulated entities, probably is a more appropriate and equitable means of doing it, as opposed to only laying it on those utilities that provide services and kWh that are regulated by the commission.
Mr. Nielsen made reference to page 5 of Exhibit C, regarding a survey done in Texas, which describes the willingness of rate-payers to pay money towards lateral goals, including weatherization for seniors, and so forth. Mr. Nielsen added, “I am trying to achieve some similar-type of survey in this state.” Chairman Townsend returned to Exhibit D, weatherization, noting, “It is important the group we are trying to serve here be given assistance, but is it not equally important that we provide weatherization to them, so that they are not wasting electricity?”
Mr. Nielsen responded:
Absolutely, I think the Governor’s electric energy policy committee [Nevada Electric Energy Policy Committee] saw it was very important we focus on weatherization. It [weatherization] reduces the amount of longer-term energy [a] system needs, but it basically betters the family [in] that some other benefits [accrue], like economic development in the state in terms of new industries, and so forth. I have included information about program design that is there for your information, because when you have a program, it could be designed in a lot of different ways. The most significant thing I should mention, however, [is the] program effectiveness could be enhanced if the energy-assistance side is delivered at the local level. Right now, we deliver our energy-assistance funds through the state centralized process, which means you cannot really integrate that process into local case management existing programs. And that is important [because] some of the problems [include] people who need [help] . . . in showing their expenditures. They do not have a good sense of how to get the arrearages done [reduced] so one of the goals, I think, of good programming is to reduce arrearages with respect to payment.
Senator Carlton inquired, with respect to reducing the arrearages, “Do the utilities turn people’s electricity off even if they are trying to make payments, or what types of stipulations are there?”
Mr. Nielsen indicated:
Right now, there are rules called the “Consumer Bill of Rights” that describe when terminations can occur. They put into place the deferred-payment plan, so if customers get behind in their bills, they can work with the utility to execute an agreement by which they retire the arrearage over a 3-month period. That is something that has worked pretty well. Although I have to say, in the south, because of the large volume, it has not worked as well as it has in the north. I believe that could be improved. One of the things you may want to look at is do you want to have a “no turn-off” rule because people’s bills are high for certain time periods, for example, in Las Vegas in the summertime. That is something that certainly you could direct the public utility commission to look at and develop a rule around. And, it is something I would suggest may be important, if we do not get the number of dollars we actually need. Then people [would] have large bills they cannot pay.
Senator Carlton indicated she would like to have more information regarding how low-income accommodations have been handled by other utilities. “I know we have . . . a life-line for the telephone, I think the [natural] gas [providers] do something similar to that during the cold weather,” she said.
Mr. Nielsen agreed to provide the information. He then continued, referencing page 12 of Exhibit D:
Recommendations of the Governor’s committee, including three additional proceeding pages attached to page 12, describe the two plans that were considered, [and] how votes were taken. I think it is important to know, there is no question [that] it was unanimous support for the fact that Nevada should fund low-income weatherization and energy-assistance programs, [and] that we needed a source of funds to do that or maybe multiple sources of funds. We all agree [these funds] should be put into a trust . . . [that] describes the rules and how the [funds are] expended and that [the] consumer advocate be involved with oversight on the trust. We did not say the two agencies specifically needed to be involved, there was a strong desire to include the involvement in how this fund would be submitted by the two agencies that now administer the federal program, the Welfare Division [Department of Human Resources] and Housing Division [Department of Business and Industry].
As I mentioned before, the [Nevada Electric Energy Policy] committee certainly recommended prioritization of weatherization [with] . . . the need for energy assistance, and that we should include the working poor as part of the formula.
My recommendations pretty much follow . . . the same. I think it is somewhat of a two-step process, you do need to look at developing a legislative language . . . [that would] form the substance of the direction you want low-income programs for energy relief to go, and quite possibly, leave to later assigning this job to a committee of some sort. Some of the details are program-designed. I think the program design is going to be very difficult to get our hands around in a 120-day session; I think it is better that it be done at the executive committee level. By that, I mean there are a lot of particulars that go into designing programs beyond just simply paying people money or weatherizing people’s homes. I think it needs careful studying and coordination, especially given the fact that you are working with two divisions and two different departments. I think that is something the Legislature needs to look at and help direct.
In conclusion, Mr. Nielsen said he was “simply suggesting, as a beginning point, a $50 million target for energy programs for the poor.” There was general discussion between Mr. Nielsen and Chairman Townsend on the importance of the seniors’ fixed income issue, described on page 1 of Exhibit D.
Chairman Townsend further said:
It becomes a vital issue, so we need to find a source as quickly as possible. If we possibly capture that excess the public utility commission has decided to turn back, maybe that is the start of the fund. Then looking at the mill assessment as an ongoing way to capture additional money is now something we need to explore. One of the things this committee, because of the nature of the background of all the people present, is interested in . . . is trying to use programs that are currently in place and adding funds to them, rather then trying to reinvent something or come up with something that requires more work hours and more people. Lets try to get money to people in need; there might have to be, obviously, some technical committee that helps do that.
Janet L. Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada, testified:
[The] PLAN [Progressive Leadership Alliance of Nevada] has targeted this as one of their key five issues because we feel it affects so many low-income and middle-income families. We support the mill assessment, or as Mr. Nielsen calls it, “the systems benefit charge.” I told him he needs a new name; people do not understand it. There was another term he had in some of his sheets he gave us; it was called “a public-good charge.” I kind of like that because it does make sense. If people are going to be paying 65 cents per month, if we do the mill assessment, it is a reasonable amount to ask people to give for a “public-good” charge.
The issue of weatherization concerns us. Of course the number we are reaching now is miniscule to the need. We feel that could be a benefit in the long run . . . if this public-good charge can be used for both weatherization and assistance for low-income families. We applaud the Governor for the $5-million request, it is a one-shot appropriation that kind of concerns us, because there will be years before we have more energy which will bring the prices down, hopefully it will next summer and the summer after that. We will need this money; so [a] one-shot $5 million [appropriation] won’t really cover the need. . . . We do support this and urge you to include it in your package.
Chairman Townsend asked Mr. Nielsen:
How much are they going to reduce the mill assessment? . . . Unless I misunderstood the testimony, I think the Governor is well aware this was almost an emergency fund for “spikes” that could happen in the coming summer. We have not had the coldest winter. It could be a lot colder in the North and although people who need immediate assistance in the colder communities, particularly out in Elko, where . . . it gets really cold . . . at night, seriously cold, I think this was kind of “Let’s have money to protect those folks while the Legislature works with all the parties and comes up with a longer-term solution.” . . . Then, we need to talk about how you want to break out the dollars for weatherization versus assistance.
Ernest Adler, Lobbyist, Nevada Housing Coalition, stated:
We do support the programs Mr. Nielsen has outlined. Just to add a few points to his presentation, I have seen some preliminary data on population growth and Nevada has the fastest growing poverty [level] population in America, it has the fastest growing, working-poverty population in America. While most states have reduced the growth of their poverty population percentages, ours has increased over the last 10 years. The number of people that are moving into this group that may need assistance in Nevada has grown by leaps and bounds. I think that is something everyone needs to think of when we are looking at the situation.
The price of electricity for the poor population, in terms of housing affordability, is really critical because when these people apply . . . through HUD [United States Department of Housing and Urban Development] or in the rural counties through the Department of Agriculture or something such as that, they have to do a budget. Part of that budget is their energy expense and what they pay for electricity or natural gas, whether or not they qualify for a house. That is another factor we all need to consider when we are thinking about affordable housing. In terms of the mill assessment, I am not sure . . . if you use weatherization but, I would like to also include in that the Las Vegas area, which LIHEA obviously does not consider, especially North Las Vegas [and] some of these areas where you have older homes with older air-conditioning units. If you had a program to replace those units in those homes and weatherize those homes, you probably could reduce electrical usage by at least 50 percent during the summer months. And to me, that is a much bigger benefit than subsidizing their power bills. . . . I appreciate what the Governor is doing, but in terms of 10 years out, I think we would be much better off weatherizing and replacing those old units, [and] perhaps the same thing with some of the old heating units. But, if we are going to do that, you do need a mill assessment.
I know California now has gotten [to] where they are replacing these old units wholesale. That is like buying a life insurance policy after you’ve got cancer. It is very expensive, but we can get ahead of that.
Chairman Townsend concurred, then asked Mr. Adler, “For every dollar we might provide, how much of it goes to weatherization and how much to low-income assistance? And then, based on weatherization, how do we prioritize those who need it?”
Mr. Adler proceeded:
These numbers are too low in terms of family income. I think when you are talking about something like subsidizing replacement of an air conditioner unit, you may be looking at different numbers, and maybe the Housing Division can give us a better idea. But, these seem a little bit low, because that, overall, benefits the whole community. It is not just the individual ratepayer; it reduces overall demand within the community. . . . We are looking at mill assessment and what it is going to cost the ratepayer. I think if the mill assessment is used properly, for weatherization, replacement of old units, and so forth, you may actually not need to go through the rate structure and subsidize as many low-income people.
In a way, you may be able to use the money that you’re going to use at the rate structure [to] subsidize them [low-income families] to weatherize their homes, to put in new systems and reduce demand; and, thereby, the dollars may end up being the same. . . . I think it is very likely, if you get the same cost-saving they are showing in other states, that it may actually not cost more to go through a mill assessment; it may be more cost-effective.
Chairman Townsend referred to Mr. Nielsen’s proposal on page 5, under “Existing Tax,” (Exhibit D) quoting:
”One option would be to allocate a portion of the state’s share of sales tax from equipment sales for the building of merchant plants that would be built after 2000. The state has not yet budgeted for such flow of funds.” In other words, if you could allocate a number off of the sales tax and put that in, and since you know it is only going to be expended once, put that into the trust fund, probably, for weatherization, because it is a one-time expenditure and you are going to one-time expend it for that one person who has the old air conditioner that is not efficient, etcetera.
Mr. Adler agreed that may work, “You could do . . . a hundred North Las Vegas homes, theoretically, with that ‘chunk’ of money. That would be an ongoing cost-savings, in terms of those people and certainly in terms of energy consumption. . . .
Chairman Townsend agreed, then said, “An economist will be needed, because we are going to have to apply that weatherization number long-term. . . . I think your point of the subsidization goes on forever, if we can cut that usage down.”
Mr. Adler pointed out:
Mr. Nielsen’s remarks are well taken, too. The $5 million is wonderful and I think everybody appreciates the Governor’s efforts, but you know that when we “dip” into [during] this bad budget years, when it happens the $5 million may not be there, but the weatherized house and the new systems will always be there, and we can always be helping those people.
Chairman Townsend said, “That is why I am looking at this as a potential one-time source, because it is money we do not currently have now built into any budget. It might be [feasible], since we are only going to capture it once; that may be the better way.“ Mr. Adler added, “And also, if we redo those houses and they are resold in some of these poor parts of town, it makes it easier for those people to qualify to buy that house, if it is an energy-efficient house.”
Senator O'Connell requested information on the fastest growing population of working poor. Mr. Adler informed her he could provide a handout from the “legal services board” that “is a projection, I do not think it is a final number . . . I think what is going to happen is, if we do not do anything, that population is going to be in real trouble if these rates keep going up.” She asked if he had any idea where they are working, if in the hotel industry? Mr. Adler said he believes he will be able to get those numbers. Senator O'Connell then asked the method that was used to arrive at the numbers. Mr. Adler replied, “I think it is the new census numbers; I think it is fairly accurate.”
Joseph L. Johnson, Lobbyist, Toiyabe Chapter, Sierra Club, concurred with previous testimony. He said, “We would also like to indicate our strong support for the development of a separate trust fund to fund these activities.” He then referred to his written statement, Exhibit E, voicing the need for support of low-income assistance programs, recognizing investment in energy efficiency “is certainly beneficial and should naturally follow, because it is a means by which we permanently protect the system.”
He testified:
I think Chairman Townsend’s comments on the sales tax for generating plants is certainly a source of funds, because those are essentially one-shot. . . . We anticipate there will be significant numbers of fairly large capital projects ongoing and [they] could generate sufficient funds to have a reasonable trust fund develop. We also support a mill charge.
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, testified:
As you are aware, both in front of the Governor’s energy policy committee and in some conversations with legislators, we have provided a concept for some authorizing legislation that would allow the Public Utilities Commission [of Nevada (PUCN)] to implement a change in rate design for natural gas and electric customers, which is essentially designed so that the bottom tier of energy that a household consumes would be priced at a lower rate than the upper tiers. That would provide several advantages: One, stability for those customers who are truly low-usage customers and low-income customers; it also provides [a] strong incentive to conserve energy, if the first 250 to 400 kWh of electricity or [the] first 50 to 60 thermos of natural gas . . . [are] charged at a lower rate.
In our approach to these issues that have been before you today, we have, basically, three primary concerns: one, in light of the rapidly escalating bills that, really, all Nevada consumers are currently facing . . . we needed to have as many options on the table to draft legislation that we have proposed would enable the PUC [PUCN] to do a rate design similar to the one I described. It would be certainly the result of them taking testimony to determine what the appropriate threshold levels are. . . . We also believe in light of the rapidly escalating bills . . . Nevada residential consumers and others are facing, that we do need to have a permanent funding mechanism, whether the mill tags or some other structure, so that, [during] this very critical period, those truly disadvantaged Nevada families who have trouble coping with their energy bills . . . have the ability for more robust, direct assistance.
As one of the prior panelists testified, if we are only weatherizing less than 200 units a year in the state . . . that is literally less than a drop in the bucket; and we also need to have a more robust and prioritized program for weatherization. We believe the rate-design element fits in with those other two; it is essentially a way of providing assistance during this really unique time in our state’s history that does not have a direct cost to the state budget, but can help those low-income and average residential consumers . . . cope with energy prices.
Chairman Townsend asked Mr. Hay whether “the issues that we discussed this morning are independent from your rate-design proposal.” Mr. Hay said the issues were totally independent, although complementary, and involved a . . . “different analytical approach to deal with what we think is a problem we are going to need more than one strategy on.” Chairman Townsend said he wondered if Mr. Hay had discussed any of these matters with the PUCN.
Mr. Hay indicated:
We have not had any formal discussions. We have had some very informal discussions on whether or not that sort of rate design could be implemented without authorizing legislation. We believe the safer approach is to pass the authorizing legislation. . . . It would be up to our office, the PUC[N] and other interested parties to see whether we want to move forward on that front, but having that ability in our statutes is helpful.
Chairman Townsend noted, “Rather than debate it here, just provide the enabling possibility?” Mr. Hay agreed, “That is our suggestion.” Chairman Townsend asked whether there are jurisdictions that currently have something that would be helpful.
Mr. Hay pointed out there are a few. He explained:
I do not have a list with me, and I know California has adopted a similar rate-design proposal. I believe a couple of the northeastern states have, as well. In light of the unique circumstances we are facing, we are not even necessarily suggesting this should be a permanent part of our rate design, but at least to have that option on the table so you can build some stability into the bottom quantity that any homeowner is going to use, encourages conservation and allows truly low-usage or low-income homeowners to have a bit of assistance is not a direct economic subsidy at this time.
Charles (Chas) L. Horsey III, Administrator, Housing Division, Department of Business and Industry, stated he has been serving as administrator since 1986. He introduced a resident expert on the weatherization program, Craig Davis.
Mr. Horsey shared:
There have been some positive developments, the state has not been asleep at the switch as Senator Amodei is aware. Our tax credit program is very competitive . . . in the production of affordable housing. Because it is very competitive, last year we began building into the plan we utilized, preference points for developers who utilize energy-efficient equipment and structures. Yes, they did complain about it because it added to the cost of the structures, but energy efficiency from the outset is an economic alternative [better] than even retrofitting or weatherization.
In addition, I recently advised HUD that we were giving priority to our immensely successful, single-family program on new construction, which, in addition, has energy-efficient components for those new homes. In other words, when we have competing applications for loans from our programs, we will give preference to those homes that have been built with energy-efficient standards. It is a start. We are looking at other things.
Chairman Townsend asked:
Why would you consider anybody else? Why would you not just eliminate those who are not going to build an energy-efficient home for someone who needs help? It seems contradictory for us to loan somebody money to build a low-income house for someone who has a level of income that cannot afford an increase in energy rates. . . . There are plenty of other things to build in this state.
Mr. Horsey replied:
For a number of years, as you know, the growth especially in southern Nevada was so intense that our primary purpose, as a lending institution, was to make sure there were units of some sort to accommodate the new people. We now have had the opportunity to work with developers for a number of years. . . . As we speak today, we are looking at language to amend chapter 319 [of Nevada Revised Statutes (NRS)], wherefore, the low-income housing trust fund, which Mr. Nielsen helped create in 1993, we think, would be a source that could be used to offset utility bills. It is not [of] the same permanency the weatherization program is, but we think, if the situation is so desperate that we are looking for any source of funding, that we can. We believe our amended language will be ready any day now.
Chairman Townsend rephrased his questions, “The logic in allowing someone to build low-income housing that is not energy-efficient escapes almost anyone. If we have to turn around and subsidize the payment of their utility bills, I am missing something.”
Mr. Horsey clarified:
The amended language we are talking about for chapter 319 [of NRS] would be available for both new homes and rental units, regardless of who provided the financing. In other words, it would not be limited to just the units that we have financed. . . . It is the local governments, in the building departments that set the standards on energy efficiency. We have provided an incentive . . . because we are one of the few sources that can finance some of them on a permanent basis, but we cannot require them to do anything.
Chairman Townsend reiterated:
Why would you loan to anybody who is not going to build anything . . . energy-efficient in today’s world? And I would hope that you go back to whomever you answer to and start to rethink. And maybe we need to give you the authority to do that, because the public is going to pay for this, one way or the other. So let’s not waste the money. Do you know what it sounds like? A guy is working his tail-bone off in the middle of Las Vegas when it is 118 degrees and he’s getting sunburned, and the solution is give him a black shirt, because then he won’t get a sunburn; now he is going to die because he has too much heat . . . it makes absolutely no sense at all. I hope you would rethink that.
Mr. Horsey maintained:
All I can tell you is the Housing Division was created as a financial institution, which we, indeed, have. Today, approximately 35,000 Nevada families live in a home or an apartment that we have financed, but [over which] we have no regulatory authority whatsoever; we have developed these incentives because the demand for our money is more intense now than it ever has been.
Chairman Townsend insisted, “Well, how about that [it be] intended only for energy-efficient housing for low-income people? Would that be helpful to you?” Mr. Horsey declared, “Those are the paths we have taken.”
Senator O'Connell requested Mr. Horsey to tell the committee approximately what kind of an increase is needed to make sure when a house is built, that it is energy-efficient. Mr. Horsey indicated, “I do not have any data at this time.” Senator O'Connell also asked, “Do you have access to that information?” Mr. Horsey conceded he would talk with the Nevada State Energy Office’s David E. McNeil (Energy Program Specialist) to see if any information is available, noting he “will also check with the building departments of the various cities to see if that information is available.”
Chairman Townsend mentioned Senator O'Connell would be getting a bill that would result from the commerce and labor committee’s efforts from last session that has to with building codes. He advised Mr. Horsey it would be in his best interest to attend that meeting, due to the controversy on the building code issues.
Senator Shaffer commented, “The state adopts the model codes like the Uniform Building Code [for] plumbing and electrical. I think the state could be more stringent, but not less stringent, in the model codes.”
Mr. Horsey added:
We are no different than Wells Fargo or one of the mortgage companies. We are there to provide the mortgages and we have not been given any more regulatory authority than Wells Fargo has on homes they finance. Our clout is the incentives we can develop in these programs that are competitive.
Regarding to the weatherization program, at the request of Mr. Nielsen and others, the Housing Division who took on the program from welfare two sessions ago; then Mr. Davis came on board, not only as a resident expert on the weatherization program, but with a tremendous amount of knowledge in construction itself. The 175 homes you mentioned, when the weatherization program came to us, the funding the part you have been in the range of $700,000 and it is now in the range of $500,000 from the federal government. Of those numbers, approximately 120 of the homes weatherize each year are done so in Clark County, and the other 50 homes are in other parts of the state. I am sure you want to know more about the weatherization program.
Craig Davis, Manager, Weatherization Program, Housing Division, Department of Business and Industry, spoke about the weatherization recipients’ qualifications:
As far as the income eligibility, we operate at 150 percent of the [Department of Health and Human Services] national poverty guidelines. If folks are on Supplemental Security Income (SSI) or federal Aid to Dependent Children (ADC), they are automatically eligible. . . . We transfer the federal Department of Energy funds to local service providers. We have the help center of southern Nevada in the Las Vegas area, which receives about 70 percent of the available program funds. And then 30 percent is made available to a community services agency up in Washoe County. Those people do the application . . . do the outreach for the program, and they schedule the energy audits. And when we go out and do an energy audit, we use a computerized energy audit [program] . . . which will prioritize the cost-effectiveness of the measures we install.
. . . Typical things we do under our program are things like attic insulation [and] duct sealing; we replace exterior windows, doors; we are allowed to do lighting retrofits. Recently, the Department of Energy has allowed us to do replacement of refrigerators, HVAC (heating, ventilation and air conditioning) replacement, and repairs, depending on the cost-effectiveness.
In our energy audit, it will prioritize not just the cost-effectiveness, but we operate on a 3 to 4-year cost payback. In other words, the government receives a payback in energy savings over their investment in about 3 to 4 years. The average cost of weatherizing a home varies from, it’s site-specific . . . $400 to $2400. We do receive about $142,000 of federal housing trust funds [to] . . . augment our existing budget.
Chairman Townsend requested more detail. Mr. Davis explained:
As far as our funds from the federal government this year, we will get about $550,000 . . . April 1 of this year, then $142,000 from the housing trust funds [National Affordable Housing, chapter 130, United States Code], which is transferred to weatherization. . . . [We have] scheduled about 175 homes this coming year. With the housing trust funds, we look at, certainly, health and safety as our primary concerns. Second, regarding housing rehabilitation in general, would be building code compliance . . . but especially with regard to low-income [housing], we feel energy-efficiency should be the third investment [priority]. Because truly, [a] utility bill is simply an extension of your mortgage payment or your rent; they are one and the same. But, if you can reduce one . . .
I feel sorry for the people that are on a fixed income. Those that are seniors, [and] those that are disabled, they have no ability to increase their earning capacity; rate increases are crippling them. Each month when I do the data input from the clients that we service, I look at some of these folks that are on Social Security averaging $450 or maybe $700 a month. You or I cannot really relate to the fears that [they] have in trying to meet these energy costs.
Chairman Townsend inquired about weatherization, “Do you go in and weatherize something you may have already loaned money on to build, or is it [for] anybody who qualifies under the standards?” Mr. Davis said, “Any resident who qualifies is entitled to the service; however, as of 1989, we are not allowed to go back and re-weatherize. Once we weatherize a residence, under the Department of Business and Industry rules and regulations, we are not allowed to go back on any work done after 1989.” Chairman Townsend asked, “What was the public purpose of that?” Mr. Davis replied, “In our case, [it was because] there [are] so many people we have not gotten to on a first-time basis . . . there is a legitimate need out there.”
Chairman Townsend noted, “If we just do simple math in regard to your 175 units, it does not exactly say that we are moving at lightning speed . . . They have housing developments in southern Nevada that are larger than 175 units.” Mr. Davis agreed.
Chairman Townsend continued, “If you had all the money in the world, at what speed could you move in southern Nevada, in the hot months? Can you move at one a day or two a day? How quickly?” Mr. Davis further explained, “One of the limiting factors is going to be the training of the service providers, the folks of southern Nevada’s community service agency.” Chairman Townsend asked, “If they are licensed contractors . . . [do they] need additional help?” Mr. Davis stated, “Being licensed contractors does not qualify them to do an energy audit; [that] is the problem. We do blower door testing to [check] the air and filtration rates of the home, we do duct sealing testing.” Chairman Townsend inquired, “Why would you want the contractor to do the audit?”
Mr. Davis responded:
I am saying we need to have [energy audit] people in the state. We do not have those folks in the state, right now, who are able to do the energy audit component, because it [an energy audit] is specific. It is not the same as doing just general construction practices. . . . There is a training center over in Stockton, California, designed to train people to do the energy audits. We will have to do some recruiting. . . . The training center has a basic weatherization [class and] an advanced class . . . at least once a month; it is fairly intensive.
Chairman Townsend asked, “So at the end of the month, they are ready to go do an energy audit that could be beneficial?” Mr. Davis said yes. Chairman Townsend also asked if Mr. Davis’ organization had people ready to go for the training. Mr. Davis said he did not know.
Mr. Horsey offered, “There has not been enough business in the state to entice people from the private sector to take the courses and go into that line of business.”
Senator O'Connell asked, currently, how many capable auditors are available to do these audits.
Mr. Davis said:
Three of the auditors are in Las Vegas, and then the community service agency up in Washoe County contracts out with another private contractor to do their work. I know that does not give you an exact number, but like I said, we have had limited funds for so many years we really have not looked at increasing the number of [home] units because there was no real certainty of funding.
Senator Carlton inquired if there were any instance, where the auditor has to walk away from a home saying, “There is not a lot we can do for it if the home is that old.”
Mr. Davis noted it is health concerns that would cause an energy auditor to walk away. He further stated:
We do not want to expose our people . . . if you go underneath a home and there is plumbing leakage, sewage. . . . Oftentimes, even though the mobile homes are in disrepair, we understand these folks really don’t have an alternative, so we do the best we can. We are probably going to relocate [them]. Many of the clients we help do not want to live in some public assistance senior complex or whatnot. They are going to be there forever, typically, so we do whatever we can. But usually, if it is a walk away, it is not so much the construction, but it would be a health and safety concern.
Senator Carlton also asked:
In the case of some of the older block-style homes in Southern Nevada . . . I have had some of those residents tell me they have been told that there is not a lot that can be done for that particular type of house, that they are just not [energy] efficient, and it does not matter how much money you put into it, energy bills are still going to be fairly high . . . can something be done?
Mr. Davis said:
Generally, there is nothing that can be done until you test the duct leakage or look at the insulation, the windows, [and] the efficiency of the HVAC equipment. Yes, we can do something for most everyone. Oftentimes mobile homes present the greatest opportunity for energy savings.
Senator Carlton inquired whether Mr. Davis’s organization keeps statistics on the types of homes like the block structure vs. mobile homes vs. stick-type homes built 20 years ago vs. stick-types built 10 years ago, and whether differentiating characteristics have been identified. Mr. Davis stated, “We do keep records on single-family [homes]; and single-families, one through four units per building vs. mobile homes; and then, 5 units or more being in an apartment complex.”
Chairman Townsend remarked:
I think both houses and the Governor would like a little more expedited kind of thing. And, if we have to send a group of people to get weatherization training, that is what we have to do. Summer is going to be here before we know it; then we have to train people for our colder climates, too.
Charles Horsey pointed out:
We do not have data, but I think it would be available, generally speaking, on the number of units in the state that might be candidates for weatherization. But we do not have specific data on whether that breaks down to single-family homes or apartment units, [and] on the apartment side, who would benefit from the weatherization. Obviously, the intent would probably be [to benefit] the residents who live there, but on the other hand, we do not always have [all] the information. Maybe it would be the owner of the property that might benefit, and that is a policy decision that you would have to consider.
Chairman Townsend said, “If we had fixed-income people or seniors living in an apartment, or working families that are [living] just on a subsistence level, the benefit has to go to them. But, I do not know how we would do that. We would have to figure the way. . . . We have several persons from out-of-town, today, that have come to talk specifically about low-reduction systems design and installation.”
Janet M. Burud, Resident Agent, World Energy Resources Corporation, introduced J. B. Blanchard of Energy Resource Group of Morristown, New Jersey, and Rudy Conrad, President of World Energy Resources Corporation’s Lawrence, Kansas, office.
Ms. Burud stated:
There is a new technology that has been in testing applications in the eastern part of the United States for a number of years that has recently been patented, which has broad applications in the residential and commercial areas. . . . Mr. Bennett [William R. Bennett] with E3 Corporation is an energy services and solutions provider who is familiar with the application in Nevada.
Rudy Conrad, President, World Energy Resources Corporation, Lawrence, Kansas, related:
E3 Custom Solutions is our general contractor in the state of Nevada, providing demand-side management programs and financial programs. Mr. Blanchard is the representative from the inventor and the manufacturer of the product that we would like to demonstrate and talk about today. I am a subcontractor for e-three. I install lighting retrofit programs along with this new product we are introducing now.
Chairman Townsend inquired if this product could be used in the legislative building. He inquired, “Is it something we might put in this building as soon as next week, then measure over the next couple of months?” Mr. Conrad said, “Yes. Right now, Mr. Bennett could address a beta site we are setting up.”
William R. Bennett, Director of Sales, E3 Corporation, explained:
We are setting up field data collection devices in casinos as the primary sites. We will also be doing it in office buildings and older buildings with the old rooftop air-conditioning units. Then we will set up a control [sites] . . . with this device, just to figure out where we can maximize performance. If all goes well when incorporated into our package of solutions that we give to large commercial customers, it would just be one of our standard solutions.
Chairman Townsend established:
We listen to this all the time and have heard it for 20 years, but the other committee members have not had the benefit. . . . Sometimes we are visual people, I think you have to see it and get the “stats” to make it work. We certainly have some older state buildings that could be retrofitted in a manner that might be beneficial.
Mr. Bennett replied, “It fits nicely, too, because E3 is one of the only two state-approved contractors to do energy retrofitting for state buildings.”
J. B. Blanchard, President, Energy Resource Group, Morristown, New Jersey, specified:
The device was designed, invented, and patented by a gentleman who came out of the nuclear energy industry sometime back. It is a real cutting-edge, energy demand-management solutions provider, always has been. He essentially invented this device, anticipating it would fund some research in many more problem-solving alternative-energy solutions, but he struggled for about 15 years to really do something with the product. . . . The utilities, who were his primary focus . . . were not ready for these devices, yet.
The product is relatively widely distributed through high-volume, cold storage industries we have contracts with, like the Anheuser-Busch cold storage facilities all over the country. The product, specifically, is attached to a compressor, which is part of a refrigeration or air-conditioning system. It also works on resistive heating systems. The best application, therefore, would be a heat pump, which has a cooling compressor and a resistive heating circuit that work simultaneously in opposition to each other. The product introduces a timing cycle into the compressor’s run function.
Ordinarily, air-conditioning and refrigeration are controlled only by the thermostat; the thermostat calls for cool, the entire system runs flat out until the temperature requirement has been satisfied. That could, in some cases like some of the large hotel complexes in Las Vegas, be days, weeks. It tends to be a flat-out situation. The device intercepts the thermostat’s call for temperature and introduces an on-off compressor run cycle, without interrupting the rest of the airflow, which is critical to achieving chilling. It is not a timing device. There are a lot of readily available and inexpensive timers out there that have the propensity for failure. And, in the case of timer failure, the entire system shuts down. Then you do not have any chilling. That creates a very big problem in the cold storage industry, where they are taking care of things like produce, and [also] the hotel industry.
Chairman Townsend asked, “How long does it take to do a building like the legislative building?” Mr. Blanchard indicated it is a matter of a 10-minute installation process per compressor. He indicated “It would depend on how many compressors there are in this facility.” Chairman Townsend suggested Mr. Blanchard meet with the building maintenance personnel.
Mr. Blanchard continued:
It is a hands-off product, unlike a lot of subsidizing programs where you are continually trying to make sure you get the best energy cost. The device is installed one time, and per compressor. . . . It has been in the field for 18 years without replacement in some of the initial applications. It is currently warranted at 5 years, but as we did higher-volume testing and field performance, we could probably extend those warranties.
Mr. Conrad explained:
“Generally speaking, in a 2-year payback, in most markets the worst case scenario we are seeing is in many of the cold storage [businesses]. Many applications like cold storage are 24 [hours per day], 7 [days a week], 365 [days a year]. Those applications [have] . . . 8-to 12-month payback periods, where we have HVAC, [which] is a little less for demand, that extends it [pay-back period] out to about 2 years. . . . The range runs the gamut from a couple of hundred dollars for a residential air-conditioning system, all the way out to several thousand dollars for the high-end commercial [units] . . . depending on the size of the unit. There are also different complexities on different models . . . the high-end commercial programmable device is complex because the high-end cold storage industry tends to require much more stringent control of temperature and humidity fluctuations. . . . Those are all FDA-mandated (Food and Drug Administration).
Chairman Townsend inquired, “What size unit would that [high-end device] handle?” Mr. Conrad indicated it would run up to a 50- or 75-ton chilling system. He then continued, “The only areas that we don’t currently address are reciprocal and ammonia-based, multi-hundred-tonnage rooftop units, which tend to be smaller in number.”
Chairman Townsend said he wondered whether they [the devices] would be as efficient in the older buildings or older equipment. Mr. Conrad noted the devices worked well with older systems. (There was general discussion in the room.) Chairman Townsend asked, “Is this for lighting or only for HVAC?” Mr. Blanchard replied, “[It is for] cooling compressor systems, strictly for cooling, chilling, and resistive heating systems. Whenever you are affecting temperature fluctuation, and you want to do it cost-effectively, is where the device has an application.”
Senator Shaffer inquired, “If you have a compressor that starts and stops, the longevity of that compressor is tremendously shortened . . . especially with a load. It’s very “taxing.” And, are we going to spend more money replacing compressors than . . . [we are] saving on the utility side and power side . . . ?”
Mr. Blanchard replied:
You are absolutely right, under what is called “duty cycling conditions,” where there is a real short cycle time between compressor start-up and shutdown, you end up in vapor-lock situations and you cause something called “slugging” that can basically destroy a compressor. Aside from that, duty cycling, which can occur with a thermostat on a regular basis, is one of the reasons a lot of refrigeration and air-conditioning contractors have very lucrative maintenance programs.
We actually optimize the compressors’ run sequences. Heat is the second biggest enemy to compressor systems. And when they are running flat-out for multiple hours, particularly in their typical locations, which are on rooftops . . . we would never let it run for less than 3 minutes, which is acknowledged by compressor manufacturers to be the optimal short-run cycle time. We’ll shut it down after 4 minutes of run time, when the most effective compression of the cooling gases has occurred. After that, you would have pretty dramatic drop-off in the efficiency of the compression cycle. We essentially let the compressor rest, let the cooling fluids move through the rest of the chilling cycle. Then the air continues to circulate, so you still have the benefit of chilling, and we actually pick up a benefit by letting the chilling cycle rest.
Ordinarily, when a system is running flat-out, if a compressor compresses continually, you end up freezing up the coin coils, which air is moving over. Any frost build-up on a coin coil acts as an insulator and reduces the effectiveness of the air mass moving over the coil; most cooling and air-conditioning systems will have a resistive heating component in them so they can go into a defrost cycle, generally on a daily basis. We can bypass that defrost cycle because we are, every 5 or 10 minutes, in a cycle pulling the frost back off the coil so we maintain the maximum cooling effectiveness of the coils. We run energy only during the maximum compression effectiveness of the compressor, and we end up extending the life expectancy of the compressor systems, while reducing the amount of flat-out wear and tear and booming heat out of the system.
Senator O'Connell asked, “Does it have any kind of a protection for when the electricity goes completely out, or [for] sudden stops and starts . . . ?”
Mr. Blanchard responded:
Yes, it does. It intercepts the thermostat’s signal and starts itself [from] the “off” mode, so whatever the program rest period, which is predetermined during the installation and can be modified during run time, whatever that program rest cycle was, that is how the system starts. Air starts circulating through the system . . . then the compressor kicks in. This is called the “soft start.” In the event of a power failure or brownout power drop-off, the system will reinitiate with that soft start every time, and you actually pick up an added benefit in that you do not have hammering-in, rush surge that exists in most situations.
You have also led to another point, a specific design of the inventor has not yet been realized in any commercial applications. The device does not draw any power, [and] does not require any communications cable, [or] any low voltage; however, it does respond to a signal which can be generated by the utility by very simply backing off on their power frequency. Sixty megahertz is the standard delivery cycle of electricity. . . . The device will respond to a very small frequency change, which only the utility can initiate. It will then put itself into an extended conservation mode. The intent of the inventor, originally, was to have a device that a utility would adopt specifically as a demand-management device to permit them to avoid rolling brownouts and/or blackouts. That would depend on a fairly dramatic distribution of watts and lots of devices in the infrastructure. But once it is in the infrastructure, it then becomes a controllable demand-management device through that simple control.
Senator Shaffer asked whether the device required any UL (Underwriters Laboratories Incorporated) approval and what the utility companies think of the device.
Mr. Blanchard explained:
We have relationships with a number of utilities on the East Coast, [including] Baltimore Gas and Electric [Company], [and] a Pennsylvania electric company. Baltimore Gas and Electric did a pilot program. They bought several thousand devices, [and] distributed them to their commercial customers. They gave us lots and lots of reams of endorsements on the product’s performance. Then, 4 or 5 years ago, as many utilities did, they simply abandoned their demand-management programs.
There were many rebate and subsidy programs that were in place, which were fueling intelligent-demand-management programs, that all have dried up.
Senator Rhoads inquired about frequency of maintenance. Mr. Blanchard stated, “It does not require any maintenance. If it fails, we replace it. . . . The system reverts to its original design operation. That is a distinction from a timer system, it does not shut operations down, it reverts back to a thermostat-controlled hammer compressor system.”
Mr. Conrad added:
This particular commercial device does have adjustments available to optimize the effectiveness of the program based on the time of year. If a facility has a regular maintenance schedule, typically maintenance people come out at least twice a year, spring and fall. During that time, part of our education process is to help them optimize the settings that are adjustable right on the face of that. On our residential product, there are no adjustments. It is a standard factory setting that works, let’s say, the mean for the entire year; that way we avoid any added cost for a residential owner.
Mr. Blanchard added:
That happens to be a 20 percent load reduction. It is the pre-set factory.
Mr. Blanchard added it is the preset, factory setting.
Chairman Townsend remarked:
[If] we have a new building and an old building, and [then] if we can find an old state building in the complex, and do the same [test] with an old and new building in southern Nevada that [between] Senators Shaffer, O'Connell, Carlton, and Schneider, maybe can . . . find out if this thing [device] is beneficial and where we are with this kind of product. We are not the technical committee, but we understand a lot of things, especially when it comes to paying utility bills.
Mr. Conrad asked the committee what type of agency would be actually conducting the test and what would be acceptable, [one such as] the E3 testing system, or would you [the committee] be designing your own test?” Chairman Townsend said, “One thing you won’t find is this committee designing anything. We prefer to use the mechanisms that are currently in place. We do not need to reinvent anything. If that is what E3 does . . . their testimony is acceptable.”
Mr. Conrad referred to a document discussing World Energy Resources Corporation’s patents (Exhibit F. Original is on file in the Research Library):
There is a use patent and a product patent. I would like to call attention to the two different ones [patents] because the use patent is the one that allows the crisis mode or the high-conservation mode to be triggered by the line-frequency changes. This is unique, and, basically, there is not another product out there that can respond to a crisis like this product will.
Chairman Townsend requested Mr. Bennett provide the committee with additional information as soon as it becomes available, saying, “It is easier to relate to our own buildings as opposed to things they [world Energy Resource Corporation] may have done in other jurisdictions.”
Marion Barritt, President, Sunrise Sustainable Resources Group, indicated her organization is a nonprofit group in Nevada, made up of 350 members with a mailing list of 780 people. All are merely members of the general public who are interested in sustainability as it relates specifically to Nevada.
Ms. Barritt continued:
Sustainability is leaving the world in at least as good a shape for our next generation as it is now. . . . What we are dealing with right now, as far as sustainability, of course, is related to energy. We see that as a major problem for now and for the future of Nevada. Our group promotes sustainability through educational programs. We have held some legislative programs here to talk about alternative energy utilization: solar, wind, biomass, geothermal, with talks about conservation and weatherization. We do some work in the low-income areas [for] people who cannot afford, for instance, right now, to pay their energy bills. My group would support ‘our’ assistance benefit charge. I believe you have discussed that today, and whether that would be a mill assessment or whatever this committee would decide. We would like those funds to provide for educational programs related to energy conservation; for example, I have a brochure [Forum 2001 Solar Energy: The Power to Choose (Exhibit G. Original is on file in the Research Library)] that talks about the most energy-efficient appliances available in the country. This brochure is updated every year. I think making this available to people in the state and publicizing it would be a good idea.
In my own home, some of you know me, I have the first “net metered” home in the state of Nevada, and I do produce my own electricity. I do it through utilizing solar on my roof. I have sun-slates in my roof producing the electricity, feed it to the power grid, Sierra Pacific . . . and then they return it to me in the evening, so they give me credit for what I produce. I did this 3½ years ago. My bill for the last 3 years has averaged between about $85 and $95 for my electricity for my home, per year.
Senator Schneider said, “About a year ago . . . on the Discovery Channel, I saw you come in on an airplane and land in your backyard or somewhere.” Ms. Barritt noted, “I probably landed at the Douglas County Airport.” Senator Schneider continued, “And she has a straw-bale home . . . .”
Ms. Barritt explained:
No, [that is] my friend Constance Alexander, who is a librarian. My home is a super-well-insulated tract house in Chichester [Estates] in Gardnerville. It is a very simple home; it is 1500 square feet [in size], and I did every energy-efficient thing that I could possibly do to it, within by budget. And that is what I would like to suggest, getting the word out to everybody of what is possible. This newspaper article [Exhibit H] that came out of The Record Courier about 2 weeks ago, talks about what is possible and what is available. Right now, just going down to Home Depot, you can buy very energy-efficient lighting, but the majority of people don’t know about this. I get many [phone] calls [from people saying] we have no place here in our state, no organization that is promoting this. The power companies, for them it is a very small area, right now, so I understand why they do not pay much attention to either the “net metering,” where you are creating your own electricity, or to the energy conservation.
What I would really like to see is an ongoing group of people within our government that is tasked with promoting this, figuring out where to find the funds, [and] getting the information out to the general public.
Senator Rhoads asked, “Are you familiar with the last testifier on this issue?” Ms. Barritt said, “I am familiar with the company, a little bit. I do know what they have been doing. And yes . . . I heard you are willing to set up a test case with one building.” Senator Rhoads pointed out, “It is not in your manual, though, this particular savings device.”
Ms. Barritt replied:
It is something that, yes, I believe you could do and it would save; and I have been actually talking with, for instance, John Ascuaga’s Nugget [casino] about utilizing some of those things . . . [that] could save them a lot of money. You walk around casinos in our state, as a prime example, not just our government buildings, but also, the casinos where we are using an awful lot of energy that does not have to be used. Next year, Sunrise [Sustainable Resources Group] is hosting the American Solar Energy Society Convention, along with the American Institute of Architects, and the American Society of Mechanical Engineers. This year it is in Washington, D.C., in April. Though it will attract 2000 people there, we are expecting about 1500 delegates, and we are also going to have a public energy fair on the Saturday and Sunday preceding the convention. It will be in the Victorian Square Plaza [Sparks]. We are using John Ascuaga’s Nugget as our hotel.
The reason I am mentioning this is that it is the public energy fair. I am receiving sponsorship funds to put on everything, free. We will have a lot of workshops to teach people how to get involved in utilizing everything from solar, to building a straw-bale house, to putting a small simple device on the side of your house with a little solar panel you can buy at Home Depot to turn on your outside lights, completely independent, not plugged in at all.
Senator Schneider noted:
I think this kind of thing brings up a good point, what we have been discussing all morning. There is a lot people can do themselves, by going to Home Depot. Mr. Chairman, I think we should get some PUCs [public utility experts] going in southern Nevada, through maybe the Housing Division or someone, PSAs (public service announcements), whatever they are calling them. Alert the people, [and provide] some education as to what they can do to prepare for the summer. Because I know you can probably save, on some of these bills over the summer, hundreds of dollars by just spending a few bucks, because I know my house, I mean the weather stripping around my back door, and kinds of things like that are old, I know it leaks. We could probably take a lot off that peak load if people would know how.
Ms. Barritt maintained:
I think it is a key point, they do not know. I was also going to suggest that, [as] in other states that have tried doing this, offering incentive programs so you can shift the energy load from the peak period. It is a matter of knowledge; people need to know. One of our problems is your bill is averaged out, so you do not see what the true cost of electricity is, for instance, during the peak hours. Now, if we actually, as consumers, had to pay the cost, if we had our television turned on at 3 o’clock, or our dryer turned on at 3 o’clock in the afternoon, and we realized electricity is costing us or the utility companies a lot more money, then perhaps we would turn the dryer on at 7 o’clock at night instead, or maybe not watch the television until late in the evening. That is education. It does not cost a lot of money, except for getting the word out to people.
Chairman Townsend asked Ms. Barritt to inform the committee of the outcome of the Washington [D.C.] convention. Ms. Barritt agreed to also inform the committee about the 2002 event, which will be held at John Ascuaga’s Nugget in June 2002.
Chairman Townsend continued, agreeing, as well, to keep Ms. Barritt informed of Senator Schneider’s important message about PSAs. Ms. Barritt concurred, “If we can help during the PSAs, we will be happy to.”
Mr. Johnson addressed the issue of education for energy conservation:
We presently have state programs, both, in the University of Nevada [Cooperative] Extension Program, and [in] the Nevada [State] Energy Office, but these are low-funded areas; and this would certainly be an area that increased funding could allow [for] the development of the PSAs and other educational information on a timely basis.
Chairman Townsend noted:
It is important and your statements are well received. If we start now, maybe we will have some impact. Just some small adjustments can be very helpful to people. . . . The point is, incrementally, every time you do something constructive for yourself, you are going to end up with a positive result that is rather large at the end of the month.
James M. Brandmueller, Administrator, Nevada State Energy Office, Department of Business and Industry, responded to Senator Schneider’s comments:
The Governor has directed the energy office, the PUC[N] and several agencies to work in conjunction with Sierra Pacific Resources in developing a complete PSA program that could be put on, not at 4 a.m., but somehow so that we can regulate this to get it on when people are going to see it, to be able to address those energy-saving matters they can do. In addition, our office has sent out, in the last 4 months, about 1500 brochures, similar to what Ms. Barritt had, to the libraries and schools, [and] just about anybody we can get to, providing a good deal of public comment; and I know later in the week, the Governor will be making an announcement concerning the energy conservation plan, [of] which you may be aware; he has already stated it will be out for the entire state, not just state agencies, but for the entire organization, by the end of April 2001.
Chairman Townsend adjourned the meeting at 10:23 a.m.
RESPECTFULLY SUBMITTED:
Silvia Motta,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: