MINUTES OF THE

SENATE Committee on Government Affairs

 

Seventy-First Session

February 19, 2001

 

 

The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 2:02 p.m., on Monday, February 19, 2001, in Room 2149 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 Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

 

GUEST LEGISLATORS PRESENT:

 

Senator Randolph J. Townsend, Washoe County Senatorial District No. 4

 

STAFF MEMBERS PRESENT:

 

Kimberly Marsh Guinasso, Committee Counsel

Juliann K. Jenson, Committee Policy Analyst

Julie Burdette, Committee Secretary

Sherry Rodriguez, Committee Secretary

 

OTHERS PRESENT:

 

Jon B. Wellinghoff, Lobbyist, Vulcan Power

James N. Gardner, President, Gardner Engineering Inc.

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

Alan Glover, Clerk/Recorder, Carson City

Renee Lacey, Chief Deputy Secretary of State, Office of the Secretary of State

Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO)

Marvin Leavitt, Lobbyist, City of Las Vegas

Thomas J. Grady, Lobbyist, Executive Director, Nevada League of Cities and Municipalities

Mary Henderson, Lobbyist, City of Reno

Jeannine Coward, Assistant State Controller, Office of the State Controller

 

 

Chairman O’Connell:

Ladies and gentlemen we will open our work session.  Senator Townsend please come up and address Senate Bill (S.B.) 22. 

 

SENATE BILL 22:  Revises provisions relating to retrofitting of governmental         buildings for energy efficiency.  (BDR 28-288)

 

Chairman O’Connell:

Committee if you will remember this is an issue that we were not quite sure what they were trying to get at on the third page of the bill.  The gentleman who came to testify was only here to testify on the first section of the bill that would have increased the amount of money.  If I can direct everybody’s attention to the third page and the first section, we are looking at language beginning on line 13 and continuing through line 28.

 

Senator Randolph J. Townsend, Washoe County Senatorial District No. 4:

With me today is Jon Wellinghoff of the Law Firm of Beckley Singleton, and Jim Gardner from Gardner Engineering Incorporated, from whom you have previously heard.  I apologize, Senator Rawson had some key legislation and I could not get here last time.

 

I want to clear up any issues particularly with regard to the question that you have, and we will go to line 13 on page 3.  “The department board, commission, agency or other entity of the state whose building or portion of a building has been retrofitted pursuant to this section, may use . . .”  Again, this is an opportunity to give the kind of language necessary, not mandating anybody to do anything, but they may use an amount of money equal to the savings that they would realize by the entity because of such retrofitting to purchase electricity from renewable energy systems.

 

Trying to jump-start the renewable industry here, particularly our wind and geothermal resources, this could give a needed boost if that group decided to use it.  That would be entirely up to them to use that retrofitting savings in a matter that would benefit the state.  Not just because renewables are, in fact, clean and beneficial to the community, but because in the case of SAI Geothermal, the second largest producer of geothermal in the country, there is now a tax benefit for all renewables.  There was previously for wind and now there is a bill that will hopefully expand that to all renewables. 

 

This was merely an attempt to provide additional revenue that would come from savings if they choose to purchase renewable resource energy.

 

Chairman O’Connell:

I guess part of our question was whether or not it could only be used for renewable energy?  Or, if it could be used, for instance, we were talking about light bulbs or something that perhaps might not fall into that category?  Or, if the language was intended specifically for renewables?

 

Jon B. Wellinghoff, Lobbyist, Vulcan Power:

It was the intent under subsection 13, that by defining energy efficiency for renewables to allow the savings to be used for both.  You are suggesting it could be used for not only renewables, but, yes, the savings should also be able to be used for more energy efficiency as well.

 

That was the intent.  I admit that the language in subsection 13 may not be very clear and that is my fault, not the Legislative Counsel Bureau’s fault.  I think it is more my inability to explain myself clearly on that provision, but that was the intent, certainly to allow this board, agency, commission, or other entity to take the savings and use it for a number of purposes.  All of which are permissive, they do not have to use it for those at all.  I think now the savings would simply revert back to the General Fund.  What we are allowing them to do here is to use them instead for either purchasing renewables to help them balance out their power, have the diversity of power and have a hedge against natural gas which I think is very important because we have rates going up astronomically here in Nevada.  They’re going to continue to go up.  There is really no end in sight over the next couple of years.  The only way I think our school districts and our county and state government buildings are going to be able to stabilize those rates is to diversify their fuel sources and look to renewables as well as gas-fired generation.  If they can purchase more energy efficiency and save even more, they should be able to use the savings for that as well.  You are correct,  Madam Chairman.

 

Chairman O’Connell:

Thank you, Mr. Wellinghoff, I appreciate you clearing that up for us.

 

Senator Neal:

In subsection 13, line 18, it says, “for the purpose of this section, all electricity that is saved...”  All energy that is saved, are these individuals going to be doing something, which has not been done?  Being able to conserve all electricity?

 

Senator Townsend:

Are you talking about saving?

 

Senator Neal:

All electricity that is saved.

 

Senator Townsend:

Yes.

 

Senator Neal:

You cannot save electricity.  You have to use it when it is in the line.

 

Senator Townsend:

Well, I think that is a presumption that if you retrofit someone you are going to use less of the commodity.

 

Senator Neal:

You are saying commodity,  you are talking about the cost savings here?  That is what you have reference to, I presume.  Not all electricity that is saved, you are talking about the cost of electricity that is saved?  You cannot save electricity, if you can then you guys must be the wealthiest people in the country right now.

 

Senator Townsend:

I see your distinction Senator, perhaps when we drafted this bill, the term “all revenue that is saved as a result of the installation” by a provider of electricity of a measure that is designed.  Would that be more comfortable?

 

Senator Neal:

Yes.

 

Senator Townsend:

Point well taken.

 

Senator Care:

The question that I had the last time, maybe I can ask Mr. Wellinghoff if he could answer this.  How would you calculate the amount saved?  Here is my hypothetical, you retrofit and you save $100 for a 12-month period, now let us say in the following 12 months the price of energy doubles, have you just saved double the amount of money that you saved the previous 12 months or is that a constant figure?  Do you see what I mean?

 

Mr. Wellinghoff:

Yes, Senator, it is usually determined based upon a projection what our savings are going to be over some future period of time.  I can let Mr. Gardner speak to this as well because he is in the business of doing this on a daily basis and I am not.  But, it is usually done on a projected basis as to what the escalation in rates are going to be.  Based upon that escalation then you project what your savings are over the period of time that you are amortizing the cost of the installation of the energy-efficiency measure.  So yes, you may save $100 today but it may cost you $300 to save that $100.  So, then you look at over what period of time am I going to recover that $300?  It might be 3, 5 years in the future depending upon how long it takes to do that.

 

You typically do some projection of what your savings are going to be based upon what are known escalation, best estimated escalation rates for electricity.  Oftentimes those escalation rates may not be accurate.  Like now we are in an unprecedented period, so in essence we are saving more than we would have projected because we did not know rates were going to go up 27 percent in 6 months.  Which in essence they have gone up that much for UNR (University of Nevada, Reno).  So, UNR has saved much more than they originally projected when they put those energy-efficiency measures in place  some 3, 4, 5 years ago, actually I think it has been over a 10-year period.

 

Again, Mr. Gardner can tell you exactly what period he has put in these measures for UNR.  They have actually saved much more than they projected based upon the fact that their rates have gone up much more than they assumed.

 

 

Senator Care:

So, that would entitle them to spend more because they saved, maybe it was an unforeseeable amount, but much more than expected.  The way the bill is written they can go ahead and in essence maybe even spend more than they had originally projected.

 

Mr. Wellinghoff:

The way the bill is written, it intends that you would determine how much they can spend from a point in time when they actually make the expenditures and project the savings.  It would not be 5 years out in the future.  They say, “oh we actually saved this much more so we can spend this much more.”  It would be at the time they put in the measures that day, or the period of time, the months that they put them in.  Our projections of savings are this much based upon what known estimates of fuel escalations are going to be and electric escalations are going to be.  So, therefore we can spend this much.

 

You may have to go back and do some “true up” and in doing the “true up” you may be over or under by some amount.  It should be possible to get within some reasonable range to determine what the amount of the expenditure should be.

 

Chairman O’Connell:

Mr. Gardner, you wanted to add to or expand on that definition?

 

James N. Gardner, President, Gardner Engineering Inc.:

Yes, Senator Care, I would think that you might look at this as a cost avoidance towards future expenditures.  In other words, if you are spending your $100 now and it is going to go up to $200, the percent savings that you have will escalate with it.  The thing is, you can look at a cost avoidance, you are not going to put more dollars in your pocket, but you are going to keep from spending more.  Does that make sense?

 

Senator Raggio:

Mr. Wellinghoff or Senator Townsend, your explanation on page 3 is helpful, but last meeting when we discussed this, we had a couple of people come up here who saw something extremely sinister in this language.  Subsection 13, and their testimony was that they saw in here some unwarranted benefit for the utilities?  I did not see it, but I am asking you, is that the purpose of that?  We had a couple up here who really said this is an unwarranted benefit for utilities.  I do not know how you read that into it, but I listened carefully and I do not understand it.

 

Senator Townsend:

First of all, right now Senator, they can use all the help they can get.  If there is a benefit here I would like to know about it.

 

Senator Raggio:

After hearing your explanation how the language got in here, I feel comfortable that that was not the intent or the purpose, nor is it the effect. 

 

Mr. Wellinghoff:

I will be the first to admit that there needs to be some redrafting of subsection 13.  But, the clear intent was to simply allow for the entity to take the savings, and credit that against being able to save more energy from doing more energy efficiency that they were not initially able to do.

 

Senator Raggio:

What is the purpose of the language that says, “shall be deemed to have been generated and derived from renewable energy resources”?  What is the purpose?

 

Mr. Wellinghoff:

The purpose of that is to simply allow them to do what, in essence, allowing them to do what is in subsection 12, and that is, to use that money if they want to for efficiency.  By defining efficiency as a renewable, it is not the best way to do it,  it is a very confusing way to do it.  It needs to be straightened out.  We would be glad to bring back an amendment to this committee to do that.

 

Senator Raggio:

I think Mr. Johnson, are you not the one who said you read it that way?

 

Joseph Johnson, Lobbyist, Sierra Club Toiyabe chapter:

Yes sir.

 

Senator Raggio:

Do you still see that in the language after hearing this explanation?

 

Mr. Johnson:

I brought up the point, it was something I had not noticed before at the hearing, and it was indeed just the sentence that you mentioned.  The last part of section 13, “shall be deemed to have been generated and derived from renewable energy resources.”  I thought that perhaps this would relate and give the benefit against the portfolio standard.

 

Senator Raggio:

Well, you said the language benefits the power companies, I wrote it down here.  Do you still think that is the case after hearing this explanation?

 

Mr. Johnson:

I do not believe that was the intent of what was here and I think that is true and it was just perhaps an interpretation.

 

Senator Raggio:

I wanted to clear that up because I did not get that from the explanation here.

 

Mr. Johnson:

I understand, and I think from my standpoint I was relating to the ending of the sentence and disregarding for the purposes of this section, I was applying it to a different portion of the law.

 

Senator Neal:

Mr. Wellinghoff, you have been in this field for quite some time, as consumer advocate at one time.  I am somewhat curious about that language in subsection 13.  When you talk about electricity, which you would be talking about a power company, in this state it would be Sierra Pacific Power Company or Sierra Pacific Resources.  And a measure that is designed to make the use of energy more efficient shall be deemed to have generated and derived from renewable energy resources.  Now, when Senator raised that question, my mind flashed back to the “QF (Qualifying Facility) contracts.”  Are you familiar with those?

 

Mr. Wellinghoff:

Yes, I am.

 

 

 

Senator Neal:

Under those particular contracts the power company is required, is it not, to purchase energy from those sources?

 

Mr. Wellinghoff:

That is correct.

 

Senator Neal:

So, if we have this particular language, could it be said then,  if you had this in the public building and with this renewable energy resources, it would be getting the power company off the hook, would it not,  in terms of renewable resources?

 

Mr. Wellinghoff:

It is certainly not our intent Senator Neal to do that.  In fact, I think the language “a provider of electricity” could be taken out of subsection 13 entirely and it would not, in any way, affect what the intent was.  The intent again was to simply give the entity in subsection 12 the ability to either use the extra savings for purchasing new renewables or for purchasing additional energy efficiency.  It really had not intended to affect or relate to the electric provider in any way.

 

Senator Neal:

If the language remains!  Did someone want to say something?

 

Senator Townsend:

No, I think you have a legitimate question, Senator, but I think also that Mr. Wellinghoff’s recommendation makes the sentence much clearer relative to the intent, if you remove “provider of electricity.”  So, it would be the result of the installation that is designed to make the use of energy more efficient.  If you simply got rid of that entire term, you have clarified the language.

 

Senator Neal:

What if we just remove subsection 13 altogether?

 

 

 

Mr. Wellinghoff:

Yes, you could do that and the only effect there would be that, then the savings could not be used for additional energy efficiency.  And if you want to do that,  we need to put back in some language that would do that.

I think removing subsection 13 altogether, it would not substantially affect the bill.

 

Senator Neal:

Well, if we are talking about state buildings, are we not? 

 

Mr. Wellinghoff:

Correct.

 

Senator Neal:

And, if we are going to retrofit state buildings to the point where the lighting or heating of those buildings is going to cause the reduction in cost of that heating, then that could go back to the General Fund for other things, could it not?

 

Mr. Wellinghoff:

Yes.

 

Senator Townsend:

That is what it would do now.

 

Senator Neal:

Yes, I understand that.  So, why would it be necessary to go into the renewable portion here if that is the case?  Could some decision be made in the future as a result of trying this out and see whether or not it works, then you make decisions later.

 

Senator Townsend:

Let me clarify for Mr. Wellinghoff.  Senator Neal now sits on the finance committee, so he has a different point of view than he might have had were he sitting on commerce and labor.  It is only fair that the witnesses be fully apprised.

 

The answer to your question is yes, it could be eliminated, it would not affect the essence of the bill.  The goal was to continue that efficiency because, given a limited amount of dollars, you would not be able to retrofit in totality each building.  Whereas you might if you provided a blower test and found out that you had tremendous leakage in a building that might cost you “X,” perhaps energy efficient lighting would be half of “X.”  So, you might choose to only do the lighting first and hopefully the savings there would help you get through to the leakage area. 

 

That was the intent; but certainly the removal would not damage the essence of the bill.

 

Senator Porter:

Possibly, this was addressed before and went by me.  In reading the bill, it is specific to electricity in savings retrofitted to help electricity.  Why not natural gas?  Why not other resources other than those listed?

 

Senator Townsend:

The general issue of the problem we face in Nevada is through electricity.  You get a benefit for natural gas because that is to what the vast majority of the cost associated with the rising cost are attributable.  As a result, were you to simply plug in gas, I do not know whether, in fact, those savings would be equal, I would have to ask the experts here, but the amount of capacity available in the West has become a problem for many reasons that we have heard in other committees.  It is a dry hydro year.  There is tremendous system demand through California and their growth, our own growth, and the lack of power plants that were built.

 

Senator Porter:

Why do we not encourage the use of natural gas then while we are at this, to reduce some of that demand on the capacity?

 

Senator Townsend:

The real issue with natural gas is, every time a legislature picks an individual source, then you drive the demand of that up, and automatically you affect the capacity cost.

 

Senator Porter:

I think that is what we are doing with electricity though.  We are targeting one particular energy source.  Why not broaden it to include natural gas?  I think Mr. Gardner provided for us some projections at the last meeting with some savings for natural gas, possibly.

 

Senator Townsend:

I believe, unless I am mistaken, because I do not have it in front on me, but the generic nature of the bill would affect natural gas also, but you could be specific if you wanted to name that in there.

 

Senator Porter:

Well, I guess it was just noticeably absent, which is why I asked the question, since the language is specific to electricity.  Again, this is certainly not a field of my expertise.  It would seem that we should be encouraging alternate energy and maybe we could provide some incentive at the same time for natural gas.

 

Chairman O’Connell:

Let me just ask, and I am not sure, Mr. Wellinghoff you probably know this as well as anybody.  The definition of renewables, would you mind sharing that with us?

 

Mr. Wellinghoff:

Certainly, the definition of renewables as contained in this bill is simply the definition that is contained in Nevada Revised Statutes (NRS) 704.989 which is the renewable portfolio standard that was passed by this Legislature in 1997.  So, we have not done anything to this bill that is with respect to the definition of renewables, that is new, nor is it any different from what is already contained in the existing legislation. 

 

Senator O’Connell, if I could answer, in part, Senator Porter’s question with respect to natural gas.  First of all, the bill as it stands even without the language that is proposed in the amendment does allow for the saving of natural gas.  So we are not in any way restricting the savings to be just electric within the bill.  The bill as it exists now provides for the saving of energy, it is just a matter of increasing the amount of money that can be committed to be executed in contracts from the current $5 million to $10 million, then allowing for part of those savings to be used at the discretion of the entity for purchasing renewables or doing additional efficiency.

 

The additional efficiency that could be done could be efficiency for saving natural gas or saving electricity and the language of the statue as it now exists, does not restrict that.

 

 

Senator Porter:

Excuse me, but, if I read correctly, the definition of renewable, it means: wind, solar, geothermal, biomass energy resources in this state that are naturally regenerated.

 

Mr. Wellinghoff:

That is correct.

 

Senator Porter:

Does that include natural gas?

 

Mr. Wellinghoff:

No it does not, but that only relates to the purchase of energy not the savings.  The renewable definition only relates to the permissive ability of the entity to purchase renewables, in essence, electricity from renewables, to run the facility from the incremental savings if they so desire.  It has nothing to do with the savings itself in the facility which can come from electricity or natural gas.  Energy of any type, any type of energy used in the building whether it was from electricity, natural gas, it could be from fuel oil, could be saved under the provisions of the bill as the statute now stands or the amendments that are proposed, up to $50 million.

 

Senator Porter:

Then why do we not include that language in subsection 13, then it would say natural gas?  Why just say electricity? 

 

Mr. Wellinghoff:

Again, I was proposing in subsection 13 that we take out the word electricity, that we do not need it in there.  We take out the “provider of electricity,” I do not think that adds anything to it.  All we are trying to do there is encourage the

savings.

 

Senator Porter:

But, it does under subsection 14, paragraph (b), it refers to electricity.  So, you are saying we could take that out, also?

 

Mr. Wellinghoff:

Again, that part relates to the purchase of electricity incrementally with the savings.  It does not relate to the energy-efficiency savings which could be from natural gas or electricity within the building, as it exists.

 

We are simply trying to encourage with those savings some use of those savings to hedge against alternative sources.

 

Senator Porter:

Excuse me, I am sorry for interrupting, but, as a thought comes, as I read this you are being very specific, this has to do with the purchase of electricity.  Why not the purchase of natural gas, also?

 

Mr. Wellinghoff:

Because, we are not trying to encourage the purchase of natural gas.

 

Senator Porter:

Why not?

 

Mr. Wellinghoff:

Because we do not need to.  There is going to be 40,000 megawatts of new gas plants built in the Western United States.  Ninety-eight percent of those will be fueled by natural gas.  In fact, if we encourage the use of natural gas, natural gas prices will go up, because demand will obviously go up and supply is lessened.  So, by encouraging the use of natural gas we simply exasperate our problem.

 

Senator Porter:

Again, I do not claim to be an expert, but it seems to me, at least in Southern Nevada, we should be encouraging a balanced use of power, encouraging the use of natural gas, especially in residential units.  Again, it may be different for government, that may be for another day to argue, but we are not only looking at Northern Nevada, we are looking at the full state.  Are we not looking to use balanced power in Southern Nevada?          

 

Mr. Wellinghoff:

I live in Henderson, Senator, so I am familiar with the situation there.  Yes, we should be using balanced power in our homes to the extent as a gas water heater is more efficient than an electric water heater and more appropriate use of the fuel because the end-use delivery of natural gas to heat water makes more sense than using electricity coming from a central plant many miles away.

 

That makes sense, I am not saying that we should discourage that in any sense.  All I am saying is that the majority of our future electricity is going to be fueled by natural gas.  So, what I am suggesting is that state executives need to start looking at diversifying their fuel portfolio with respect to electricity and that right now is going to be primarily coming from gas.  I do not think we should encourage that, we should be encouraging diversity with indigenous resources which are both geothermal, and wind, and solar.  If we can do that I think that is going to stabilize our prices in the future.  So, that is why I am suggesting that renewable resources of solar, wind, and geothermal be looked at, it is just permissive, as possible alternatives to the future gas-fired electric generation.

 

Senator Raggio:

I am going to ask again about the extension of the amount of contracts that raise the cap, because I raised the issue last time, if we are going to process the measure, the impact it has on our debt limit.  I do not know when we are going to discuss that but I did not want to lose sight of that issue.

 

Then, I think there was some suggestion, as well, on amendments.  One was to  lengthen the time from the date, make that a more flexible date.  I just wanted to raise those issues.

 

Chairman O’Connell:

If everybody will open their notebooks, the information is in your notebook with the suggested amendments (Exhibit C.).

 

Senator Neal:

I would like to again ask the question of Mr. Wellinghoff to take advantage of his expertise here since he was formerly a consumer person involved with the power plants.

 

Mr. Wellinghoff, I asked you a question earlier, concerning the “QF” (Qualifying Facility) contracts and I know that this has been kind of a contentious issue with the power company in which they have not be able to settle, even with the lawsuit or the “global settlement” as they call it.  The QF has not signed off on that to my understanding.  Are you familiar with that?

Mr. Wellinghoff:

Not really Senator, no.  I am sorry I have not been involved in those discussions.

 

Senator Neal:

You have not been involved in those discussions?

 

Mr. Wellinghoff:

No sir, I have not.

 

Senator Neal:

But, you are familiar with “PURPA” (Public Utility Regulatory Policies Act of 1978) that was signed by Congress, which allowed for the QF in the contractual relationship between the power companies?

 

Mr. Wellinghoff:

Yes Senator, I am.

 

Senator Neal:

Now, if you have an outstanding contract, QF contract, with the power company and it has not been resolved and the QF contract deals with renewable energy, are we not, by the language in subsection 13, putting the state in a position whereby it would be paying the cost of those contracts?

 

Mr. Wellinghoff:

It is certainly not my intent to do that.  In fact that was the furthest thing from my mind when I drafted subsection 13 and conveyed that language to the Legislative Counsel Bureau, so if there is any way that can be read in there, that is certainly not anything that I had intended to do.

 

Subsection 13 was intended to allow the entity to simply take part of the savings and purchase additional energy efficiency.  It really did not have anything to with renewables other than trying to figure out how you were going to, in the context of the statute, define energy efficiency in a way that it would fall into the permissive allowance in subsection 12, that allows an entity to take part of the savings and do something other than put it back into the General Fund.

 

So, no Senator, it was not the intent, and I really do not see the language that would, in essence, put us in the situation that would affect those existing QF contracts in any way whatsoever.

 

Senator Neal:

What you are saying by the language there, the provider of electricity of a measure that is designed to make the use of energy more efficient, shall be deemed to have been generated and derived from renewable energy resources.  Those are QF contracts.

 

Mr. Wellinghoff:

No, Senator, all I am saying is in subsection 13 you want to look at efficiency under this provision, the same as renewable in that an entity can buy more efficiency in addition to buying renewables.  That is all it says, that is all it is intended to say.

 

Senator Neal:

Is that all?

 

Mr. Wellinghoff:

Yes, and if it does not we need to rewrite it to say that, that is all.

 

Senator Townsend:

The answer may be simplified because the chairman of finance has asked a legitimate question about the cap being increased.  If there is confusion about subsection 13,  if 13 is removed then you have a revenue source from those savings that  perhaps can offset the raising of that debt limit on the cap.  There may be a need to adjust that to accommodate that. 

 

I think Mr. Wellinghoff’s and our purpose is a well stated one. I am not sure it can be accommodated because we do have a debt-limit issue here and if we have to deal with the increase in the cap, and we need a source to do that, then the issue of buying additional savings perhaps has to be for another time as you previously articulated.

 

Senator O’Donnell:

As I understand the bill, you are trying to take money that is there for retrofit and allow that same dollar amount to be used for renewable resources, is that correct?

Mr. Wellinghoff:

No, that is not correct.  What we are trying to do is take the savings, not the money that is used to do the retrofit, that is two different pots of money.  There is the $50 million that is going to be used, in essence, to limit the contracts that will be used to actually do the savings, do the retrofits, the capital costs of putting in these light bulbs, and chillers, and other things.  Then there will be the savings that will be the electric costs avoided, that you do not have to pay.

 

What we are saying, from the electric costs avoided that you do not have to pay, an entity or state executive can decide to use part of that money if they want to, to buy part of their electricity from renewables; or, to use part of that money to buy more efficiency that they did not get to buy in the first round.  That is all that is intended by subsections 12, 13, and 14.

 

Senator O’Donnell:

I look at it from a businessman’s standpoint.  If I have a building that would qualify for a retrofit and my retrofit is $1 million, and that is going to allow me to save $200,000 a year on my electrical bill, what you are saying, I could take the $200,000 I would have saved and go spend it on something else.

 

Mr. Wellinghoff:

No, I am saying you can take some portion of the $200,000 because, in essence, the way you  really get the $1 million that you put into the building is that you will finance it over time.  It may only get you $100,000 a year, but you have $200,000 in savings, so I am saying you can take your net savings, which is the $100,000, and you can do what you want to with it. 

 

Right now it will go back into the General Fund.  Instead of going to the General Fund, you may want to say “wait a minute, I want to hedge future fuel prices of my electricity by buying some renewables.”  So, I will take that $100,000, or maybe I will only take $50,000 or $25,000 of it, and I will take that portion and I will use that to hedge against future natural gas increases, cause my electric bill to go up, by buying some portion of my electricity from renewables.  That is what I am saying.

 

Senator O’Donnell:

Are you representing a renewable company?

 

Mr. Wellinghoff:

Yes, I represent a renewable company by the name of Vulcan Power.  They are a major geothermal developer in the Western United States, in Oregon, Washington,  Nevada, California, New Mexico and Arizona.

 

Senator O’Donnell:

It is my belief that if we can generate the savings and we can start these renewable resources, it is a good idea, it is a good thing to do.  However, I just could not see the connection between doing the retrofit and then taking the same amount of money that you are saving and use that for renewable, why would you do the retrofit in the first place?  It just does not pay, but if you are saying take part of the retrofit money, still allowing the incentive to go ahead and do the retrofit and do the savings, then take that part and use it as dollars we can use for renewable, then what that does is it gives the incentive for the renewable resources and then the renewable resources can get off the ground and start generating power.

 

Mr. Wellinghoff:

That is correct, again it can use $0 or any amount of the net savings under the bill, it can be decided how much is appropriate and again if they think buying that renewable is a good deal to hedge against future electric prices from fossil fuel increases, they can go ahead.  If they think they need to instead put the money towards more energy efficiency and save even more, that is another option.  If they do not do either of those two things then it all goes back in the General Fund.  These are sort of the options as the bill lays them out.

 

Chairman O’Connell:

Any further questions from the committee?  Ms. Guinasso would you like to give Senator Raggio the answer to his question?

 

Kimberly Marsh Guinasso, Committee Counsel, Legal Division, Legislative Counsel Bureau:

Thank you, Madam Chairman, looking into the types of projects that are typically done in retrofitting projects, it looks like the share of them would not be able to be the subject of a valid non-appropriations clause because they are basically fixtures to the building; to take them out would be impractical, at best. 

 

So, for the most part, what you are looking at in terms of the $5 million to the $50 million that would be, for the most part, counted against the debt limit. 

Senator Raggio:

It would be counted?

 

Ms. Guinasso:

Yes, Senator.

 

Senator Raggio:

That is what I anticipated.  Very frankly, the status of our capital improvement programs are such that we cannot afford to set aside $50 million against the debt limit, and still do all the capital improvement projects that we are anticipating.  Actually it does not count until we actually do it, but, the fact of life is that if you give them that authority and then they go ahead and do it that pushes you up beyond the debt limit, then you have a problem with your other projects.

 

Mr. Wellinghoff:

I do not know if your counsel has looked into this, but I did review this issue once with respect to the debt limit.  I do not know if there has been any consideration given to the fact that the Nevada State Constitution has an exemption for the preservation of natural resources.

 

Senator Raggio:

Well, it does, that is an exception, but I am not sure this qualifies to that.

 

Mr. Wellinghoff:

That would be a legal interpretation that your counsel would have to provide.

 

Senator Raggio:

I am assuming that you looked into that aspect of it under the Nevada State Constitution, if it is a preservation of natural resources.  I am not sure that this qualifies, that is why I asked the question.

 

Mr. Wellinghoff:

It would be my legal opinion that anytime you are saving energy, in fact, you are preserving natural resources because that is, in essence, what you are doing.  You are reducing the amount of fossil fuel that is being burnt, you are reducing the amount of natural resource that is being consumed.

 

You are reducing air pollution and reducing these other aspects that, in fact, are preservation of natural resources.

 

Senator Raggio:

There is, however, a limit, also, even though it is exempt under natural resources conservation, where you reach a point where you are debt rating, even though it is an exempt under that situation.

 

Mr. Wellinghoff:

That is external to this date.

 

Senator Raggio:

I think we need to get that answer as well.  Whether it could qualify, and it may be that the bill could be processed with something less than a $50 million cap.  I think that it poses a problem.

 

Senator Townsend:

Madam Chairman, if I may, traditionally this has been an issue that has been debated between the incumbent utility and those who are interested in reducing usage.  There was always the argument of what to do with the savings.  The problem in today’s world is our incumbent utility is not in a financial position, possibly, to do this, even if we returned all of the savings to them and we agreed to do that.  We may not be in the best position to do that.

 

That is why we thought, given the amount of energy savings we save under Mr. Gardner’s scenario, that he has already experienced, we would look at it from a State point of view.  Otherwise, we would probably simply do it through the incumbent utility.  Being very sensitive to their current economic condition, we wanted to look at it in this manner because, as we go forward with capital improvement projects, we want to make sure that number one, we do them energy efficiently, and number two, if there are State facilities that are not appropriately efficient, we want to address those.

 

Even if you did $50 million, you could not do all these projects at once.  It would be appropriate at whatever level you would decide that you manage those in an order of priority that the appropriate group would have control over.

 

 

 

Senator O’Donnell:

Mr. Wellinghoff, if there was a state agency that said, “I want to buy my power from source B instead of the incumbent source A,” what kind of impediments would there be to do that?

 

Mr. Wellinghoff:

Well Senator, that would depend upon how this session deals with the current restructuring legislation and how that finally comes out.  Currently, under our current law, a state entity would have to go through the utility and design a special tariff, so there would have to be some cooperation and collaboration with the utility.  In fact there are federal agencies in the state of Nevada right now that are looking to buy some renewable power, because federal agencies are under a mandate to buy a certain percentage of their total power from renewables.  So, to that, absent us having deregulation in place, we would have to have those federal agencies go to the incumbent utility and design a special tariff for that particular agency so they could buy their renewable power through the utility company, because the utility company is their retail provider.

 

But, to the extent that we had competitive retail providers, it would be possible then through a competitive retail provider to go to them and say they want certain renewables, and it is being done in other states.  Pennsylvania is probably the best example, I do not want to use California for an example of anything in here, but Pennsylvania has been somewhat successful in their deregulation activities to date.  There are a number of both residential and commercial entities in Pennsylvania buying wind energy and other renewables through competitive providers there.

 

Senator O’Donnell:

Let me see if I could just turn this whole thing upside down, and look at it a whole different way.  What if Senator Townsend and his committee came up with some kind of way in which a state agency could buy metered power through an alternative source, that was actually cheaper than the quote/unquote incumbent power plant, and that savings would equate to $250,000.  Now if you are saying $250,000, if I spend $10 million in retrofit I can save $250,000 a year?  In over a period of 10 years I am going to make, maybe that is a bad example, but if I spend $10 million or I spend $1 million to save $250,000.  If you take the $250,000 that can serve as a heck of a lot more debt per year.  So, the actual savings by buying cheaper power instead of going retrofit, you could actually save in the long term, using debt service analogy, you could save a lot more money.

 

So, why would you not say there would not be any incentive to do a retrofit?  The cheaper the power, the less incentive there is to do a retrofit.  Do you agree?

 

Mr. Wellinghoff:

That is correct.

 

Senator O’Donnell:

OK, so if you do not have to do the retrofit, if you do not have to spend the $1 million, that is really a lot of savings, plus, you are buying cheaper power.

 

Mr. Wellinghoff:

If in fact, and I think the premise of your assumption, Senator, is that you can go out and buy cheaper power than the incumbent.  I do not think that is feasible in today’s world.  What I see right now is California, right as we speak, California is attempting to enter into tens of thousands of megawatts of contracts.

 

They wanted, Governor Gray Davis of California wanted the average price of those contracts to be 5.5 cents per energy unit.  Their first round of auctions, they were able to get 39 bidders, the average price was 6.9 cents, and that price did not include peaking power.

 

They only signed up 1000 megawatts out of that first round of auctions, to my understanding.  So they are quite a bit short of the tens of thousands of megawatts that they needed.  If we look at what our prices are here today and our retail prices and what that price of energy equates to and then you put in the transmission distribution costs, I cannot fathom that we can go out and purchase energy substantially cheaper than we are acquiring right now. 

 

In fact, according to our incumbent utilities, they are selling this energy cheaper than they are buying it.

 

Senator Titus:

I just wonder if anybody, before I got here, addressed the concern I had with subsection 13?  Did you all do that?

Answered in the background:

Yes.

 

Senator Titus:

 I will get the information then.  Thank you.

 

Senator Neal:

Mr. Wellinghoff, I guess you do not have to answer this question but I am curious since I do know that you are kind of an expert in this particular field dealing with electricity and power and all.  Does your company represent Enron Corporation or Dynegy Incorporated in this state?

 

Mr. Wellinghoff:

No.  Our firm does not represent either of those firms.

 

Senator Neal:

What about Reliant Energy?

 

Mr. Wellinghoff:

No, we do not represent Reliant Energy.

 

Senator Porter:

When we come back for another draft of this bill, I would like to make it very clear that even in subsection 11 of section 2, while we are talking about that the “amount of money equal to the savings realized by the entity because of such retrofitting to purchase electricity.”  It says very specifically, that the savings can only go to electricity.  I am not sure that that is my wish to see that this is only for electricity and same in the title and the explanation of the bill.

 

So, when we bring this back, I would like to make sure it is broader than just electric.

 

Chairman O’Connell:

Ms. Guinasso, do you feel that you have enough information to perhaps give us some proposed language for an amendment?

 

Ms. Guinasso:

Yes.

 

Chairman O’Connell:

If you could include in that information, the question that Senator Raggio had on the constitutionality and whether or not this would fall into the exemption?

 

Ms. Guinasso:

I did think about that argument.  I think that it is not something that has been addressed by the court before, so it would be an argument that could be made.  But, I do not know that I could guarantee one way or another, that that particular argument being successful in terms of the debt limit being concerned.

 

Chairman O’Connell:

We certainly need to address the information, and if we could just do the three different proposed amendments so that as we are voting on the bill we can just go down the amendment one by one to see what all we want to include.

 

Chairman O’Connell closed the hearing on S.B. 22, and opened discussion on S.B. 27.

 

SENATE BILL 27:  Establishes minimum size for print on sample ballots.          (BDR 24-504)

 

Chairman O’Connell:

The next bill up is Senate Bill 27.  I know Alan Glover, Clerk/Recorder, Carson City, wants to bring our attention to an area that perhaps we did not address initially.

 

Mr. Glover:

I would like to start off by apologizing to Senator Wiener who is not here, but I think there has been a breakdown in communications with her.  We have, after your last meeting, discovered a problem in here and I do not think it was conveyed to Senator Wiener, and for that, I feel very bad.  We are working to correct that problem, but our concern is in the first part, and it has to do with your proposed amendments (Exhibit D), each application to register to vote must be in at least 12-point type.  If you go to 12-point type for the application, you might end up with at least a two-page voter application form, which could have the opposite effect from what you want, in that it might discourage people from registering to vote because they would have a rather cumbersome form.

 

As we were sitting here earlier, I got to thinking too, it might also affect Senator Raggio and the finance committee, because the largest producer of voter registration applications is the State of Nevada, i.e., DMV/PS (Department of Motor Vehicles and Public Safety).  So, your costs for going from one page to two pages could go up and I do not think we thought about that.

 

The idea is very good.  Our suggestion might be that you simply include language in the statute that requires a “check this box if you want to receive your sample ballot in larger type.”  Just leave that language alone and then leave it up to the secretary of state, as they design these forms, to fit it in somewhere.  If any of you have ever designed forms, you know how difficult it is to get all that information on one sheet.  They have just rewritten those and it is very tight, to get everything that is required by law onto that form, but, I think that is a good idea.  So, encourage them to do their best to make it as bold, or prominent, or whatever else.  As clerks, we will do everything that we can to make sure that those people, if we see that on the voter registration application, get the larger sample ballot.

 

It is in our interest to have that information early, because if you send it out on their sample ballot, you have already mailed one sample ballot, now you need to mail them another.  If we could see it on their voter registration application we would simply mark that and put it into the computer, saying to these people we want to send a new form.

 

The other thing to think about is, unlike voting where it is one person and one form you are punching out little holes or you are circling or “X”ing or whatever you are doing, a lot of times voter registration applications are filled out by a second party.  The voter does not have to do those themselves so if there is a problem with initially seeing everything they can get some help through the deputy registrar, through the clerk’s office, through DMV/PS or somebody else.  I do not think it is quite as critical, but if you would consider those, I think it could help the bill quite a bit.

 

And, other than that, we think it is a fine bill and we can certainly work with it.

 

Chairman O’Connell:

Ms. Guinasso, can you tell me why this is not an unfunded mandate?

 

 

Ms. Guinasso:

That was at the origination of the bill.  It was originally a different font size that was in question.  We were given information, I am afraid I do not remember exactly who it was, one of the registrar of voters I believe, who said that it should not result in an increased cost to the local government.  Although,  I do believe now it would be a cost to the local government.

 

Chairman O’Connell:

Well, I noticed that it identifies that the bill does have a fiscal note and is a cost.  I just wondered if it would qualify as an unfunded mandate.

 

Ms. Guinasso:

I think maybe the reason has to be clear that it would not be more than, I believe the figure is $2000, and I am afraid I do not have that in my head right at the moment.  I think there was some question as to whether that would result in an unfunded mandate.

 

Chairman O’Connell:

Senator Neal did you have a question?

 

Senator Neal:

Yes.  I was troubled by the question that you asked as to whether or not this was an unfunded mandate.  We are here talking about voters, aiding them, who are our bosses.  I fail to see whether or not this could be an unfunded mandate, when it is aiding our bosses, to better give us direction.

 

Chairman O’Connell:

Which law does not matter, it does just say if there is a fiscal note that is requiring more from local government, then it qualifies.  That is why I posed the question.

 

Committee, what is your feeling on how you want to do this?  The rest of the amendment has been agreed to, is that not true Mr. Glover?

 

Mr. Glover:

Yes.

 

 

 

Senator Neal:

Madam Chairman, if I may, I understood Mr. Glover’s comment that we would now send out an application and in the application the person would check whether or not they want to receive a ballot in 12-point type.  Is that what I understand you to be saying?

 

Mr. Glover:

No, Senator.  We would be sending the sample ballot out to them.

 

Senator Neal:

OK, the sample ballot.

 

Mr. Glover:

If they have an application, whether they got it at DMV/PS, whether they got it from a field deputy registrar, they came into the office, they picked it up at the current generating company plant or however we refer to them now, Sierra Pacific Power Company or Nevada Power Company.  Then, if they check that box that they would like their sample ballot in larger type, we would know immediately and it would really help us.

 

Senator Neal:

But, the sample ballot would be automatically in 12-point type?

 

Mr. Glover:

Yes, correct.  We have no problem with that.

 

Senator Neal:

But, it is the application?

 

Mr. Glover:

It is the application.

 

Senator Neal:

OK, I do not have any problem with that, Madam Chairman.  I guess we can have a motion to include that.

 

I would move that the suggestion of Mr. Glover to have the application whereby the person who wanted to receive their absentee ballot in 12-point type or their voting information in similar type would have to check off this box in the application form.  So, I guess we are actually talking about a couple of documents here.  The first one would be the application that a person might pick up and want to send in to the registrar of voters to send out this additional material. 

 

            SENATOR NEAL MOVED TO AMEND AND DO PASS AS AMENDED         S.B. 27.

 

            SENATOR TITUS SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman O’Connell:

Senate Bill [S.B.] 38 addresses the Airport Authority of Washoe County.  If you will remember, this is the bill that would provide some cleanup language regarding the appointments of the airport authority board.

 

SENATE BILL 38:  Revises provisions governing Airport Authority of Washoe             County. (BDR S-775)

 

Senator Neal:

Oh yes, I recall.  Senator Raggio’s law-firm bill.

 

Senator Raggio:

Which I disclosed, and I will disclose again.

 

Let me speak to that, since Senator Neal has raised the question.  I did indicate the law firm of Jones Vargas.  John  Sande is representing them on this bill.  I see no particular conflict on this measure.  I think that it just allows them to review financial records, but I make the disclosure.

 

            SENATOR PORTER MOVED TO DO PASS S.B. 38.

 

            SENATOR O’DONNELL SECONDED THE MOTION.

 

 

 

            THE MOTION CARRIED UNANIMOUSLY.

 

                                                            *****

 

Chairman O’Connell:

Senate Bill (S.B.) 46 is the request by the Secretary of State.

 

senate bill 46:  Increases maximum fee Secretary of State may charge for            providing special services.  (BDR 18-262)

 

(Proposedamendment to Senate Bill No. 46 (Exhibit E) was handed out to the committee members.)

 

Senator Raggio:

I can speak to this bill, as it is before us, it would allow the Secretary of State to charge fees not to exceed $500.  His testimony was that he did not intend to use that amount, except for a very limited purpose, for what was termed immediate response.  I think it should be put in here specifically, that the $500 limit would be for immediate response.  I would oppose, at this point, any amendment to increase the amount of $2 million which is specified in the bill.  He did speak to that, but we are looking into it in the Senate Finance Committee.  So, I do not think that needs to be taken up here.  I think he specifically said 2-hour service on this.

 

Renee Lacey, Chief Deputy Secretary of State, Office of the Secretary of State:

Do you want me to specify the 2-hour service?

 

Chairman O’Connell:

Well, the 2-hour service would be an amendment that would be offered to the bill.

 

Ms. Lacey:

Two hours or less, was actually our intention.  We would like to be able to provide counter service as well.  The service we intend to provide for the $500 fee would be 2-hour service, or less.  So, if somebody wanted to come to the counter, and we had the ability to provide service, immediate service, we would like the ability to provide it.  The $500 fee would be intended, or up to $500 fee, for the 2-hour service.

 

            SENATOR RAGGIO MOVED TO AMEND AND DO PASS AS AMENDED         S.B. 46.

 

            SENATOR O’DONNELL SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman O’Connell:

Senate Bill (S.B.) 60 is next.  Marvin Leavitt, I believe you had some suggested amendments to this bill?  If the committee will remember, this bill specifically pertains to a user fee, what they are calling a user fee, on an impact.  It is a building permit. 

 

SENATE BILL 60:  Makes various changes concerning limitation on building             permit fees charged by local governments.  (BDR 31-232)

 

Senator Raggio:

May I ask a question?

 

Chairman O’Connell:

Certainly.

 

Senator Raggio:

We did not hear anything from any of the other counties.  Is someone here representing Washoe County?  Not here.  Any of the counties have any concern about this?  Mr. Hadfield, are you aware?

 

Chairman O’Connell:

Please come on up Mr. Hadfield.  Mr. Leavitt would you come up as well?

 

Senator Raggio:

Have you checked with Washoe County on this, for example?

 

Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO):

In response to Senator Raggio, I have not had any specific conversations with Washoe County on the measure.  I have not had any specific conversations on this since there was the discussion many months ago, relating to the enterprise fund.

 

Senator Raggio:

How about the City of Reno, any objection from the City of Reno?

 

Chairman O’Connell:

Ms. Henderson, I just need to ask if you are aware of the proposed amendments by the City of Las Vegas?  Mr. Leavitt do you have a copy of them there? 

 

Marvin Leavitt, Lobbyist, City of Las Vegas:

I have a copy of the bill.

 

Chairman O’Connell:

Let us help refresh your memory here and let Ms. Henderson see what amendments are suggested. 

 

Mr. Leavitt:

Madam Chairman, I had recommended, on page 2, line 3, that we replace the “current fiscal year” with “a 12-month period.”  You might remember that I am concerned about the current fiscal year, because it could be in some cases only 15 days remaining depending on what part of the year you are in.  Also on the “current liability,” on page 2, line 3, and “current asset” on page 1, line 18, the same thing relates to that.  Then on page 3, I had some concern about “at least 2 consecutive fiscal years” (line 22, page 3) is exactly what it means.  So, I suggest that to use the language at the end of the fiscal year, you know the date on which financial statements are normally drawn.  

 

Chairman O’Connell:

OK, Mr. Leavitt, I know you said the end of each fiscal year.  Would you have any problem with the close of each fiscal year?

 

Mr. Leavitt:

It is the same thing.

 

Chairman O’Connell:

So, there is no problem there.  Ms. Henderson, any problems with any of the amendments that are being offered?

 

Senator Raggio:

I think he suggested, I do not know if he mentioned it,  9 months.

 

Mr. Leavitt:

Yes, and then 9 months versus 6 months.  The 6 months gets into what I perceived to be the logic of the situation.

 

Senator Raggio:

There does not appear to be any objection.

 

            SENATOR RAGGIO MOVED TO AMEND AND DO PASS AS AMENDED         S.B. 60.

 

            SENATOR O’DONNELL SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman O’Connell:

The next one that we have up is Senate Bill (S.B.) 96.  This is Senator Townsend’s whistle-blower bill.  Ms. Guinasso were you able to come up with some language that we hope makes it a little clearer?

 

Ms. Guinasso:

Senator, yes, and there is an alternative amendment that I have prepared as well.  After we had the hearing we heard from a couple of the gentlemen that were very interested in the bill because of personal experience. 

 

One of the concerns raised was that currently the law does not clearly provide an identifiable person to whom the improper governmental action should be disclosed.  Just by way of throwing out an option, and certainly not with any recommendation attached to that,  I prepared this second version that you are now getting (Proposed Amendment [Second Version] to S.B. 96 [Exhibit F]),  which would identify the Commission on Ethics as the body to which the public officer or employee should disclose that improper governmental action. 

 

In the other version (Proposed Amendment to S.B. 96 [Exhibit G]), you will notice, also, a change to the definition of disclosure.  It originally said disclosure to “any person,” and I changed that to “an appropriate person.”  Again, because the issue is the disclosure should be made to someone who could do something about a problem, not just the person’s wife or something of that regard. 

 

If you would like, I could go through the two versions.

 

Chairman O’Connell:

If you would Ms. Guinasso.

 

Ms. Guinasso:

The first one is just titled “Proposed Amendment to S.B. 96” (Exhibit G).  What it is doing, is amending the bill as a whole.  If you just look at the amendment, that would be basically how the bill would now appear.  The first section changes the definition of “disclose” slightly, not terribly much.  I know that we had a concern about the good faith of the person disclosing.  I put that in the provisions rather than in the definition.  Again, as I have already said, “the making of any communication, not expressly prohibited by law, by a state officer or employee to any other person,” is the way it is written in the original bill.  I changed that to an “appropriate person.”  So the difference between this first subsection, the definition of disclosure, the only difference there that I made from the original bill, which refers to any other person, which we felt would be too broad, and so we tried to narrow that to refer to “an appropriate person.”  Because of the way the current statute is written, it is not terribly clear in terms of to whom the disclosure should be made.  

 

You will see in section 2 of the first proposed amendment (Exhibit G), I did try to put in a reasonable belief standard.  I believe one of the concerns raised was that unless improper governmental action is actually proven, then really the employee who is disclosing what he believes to be improper governmental action is not really protected. 

 

What I tried to do was put in that standard everywhere it would be relevant.  Again, in the original version subsection 2, it had been requested by the requester that that definition of what constitutes official authority or influence be removed.  There was quite a bit of concern relating to that during our hearing, so I put it back in. 

 

In section 3, rather than amending Nevada Revised Statutes (NRS) 281.631 to include the ability to appear before a hearings officer, language has now been changed so that it is clearly apparent in the original provision that provides for the appeal before the hearings officer, to be able to be requested for the reasons set forth in paragraphs (a) and (c) of subsection 1.  This is on page 3 of the first proposed amendment (Exhibit G).  If any reprisal or retaliatory action is taken, or if official authority or influence is used against the person who disclosed, the state officer, employer, the person who is affected adversely by that may file a written appeal with the hearing officer.

 

I was in hopes this would help clarify what was not apparent from the bill as originally drafted in terms of the changes that were actually being made.

 

On the fifth page, you will see again the reasonable belief standard being added to the line, “if such action is taken in whole or in part…”, because this refers to what constitutes retaliatory action, dismissal, transfer, negative employment decisions and so forth.  The wording becomes “if such action is taken, in whole or in part, because the state officer or employee disclosed information which he reasonably believed to be concerning improper government action.”  That again was part of the concern raised by the two gentlemen, which was in order to be taken seriously, in terms of what they were disclosing, it had to be proven the action was in fact improper governmental action, and not just that the person disclosing the information thought it to be improper governmental action.

 

Finally, in section 4, again kind of the flip side of that argument, there is currently the prohibition in NRS 281.651 that a person cannot use these provisions to harass another state officer or employee.  And, those provisions do not prohibit the initiation of proper disciplinary procedures of a person who discloses.  I took out ‘untruthful information’, because again that does not go to intent.  So, I added “information concerning improper governmental action, which he knows to be false, or for which he has a reckless disregard as to its truth or falsity.”  I was trying to go with the standard language we have and it is based on the liable and slander type of language.

 

The second proposed amendment (Exhibit F) does the same things, with the exception that it clarifies or rather inserts an entity to which the employee or the public officer may disclose the improper governmental action.  You will see in section 1, it amends NRS 281.465. It is the provision that gives the Commission on Ethics the authority to investigate and take appropriate action concerning violations of the chapter.  I included in that, “improper governmental action disclosed pursuant to NRS 281.621,” and then in that particular section, which appears as section 3 of the proposed amendment (Exhibit F), created the requirement so that the disclosure be made originally to the Commission on Ethics.  That was a best guess.

 

 

Senator Raggio:

Let me ask a question at this point.  Is this injecting the Ethics Commission into an area that it has not previously involved itself? 

 

Ms. Guinasso:

Yes, Senator.

 

Senator Raggio:

I would be very concerned about that.  I do not want to hang anything more on the Ethics Commission than we already have.  That would be my opinion on it.

 

Ms. Guinasso:

Senator, this was prepared, certainly not without any recommendation by our office.  We were just trying to think of a neutral entity that might appropriately be identified.  It would certainly not be difficult to change that or leave it the way it is, in terms of the first proposed amendment (Exhibit G).

 

Chairman O’Connell:

OK.  You have the two proposed amendments to hopefully clarify the language that we were having trouble with in S.B. 96.  Is there any feeling from the committee as to the language that Ms. Guinasso has proposed for us?  Do you prefer one amendment.  I am assuming it is the first (Exhibit G) over the second (Exhibit F)?

 

Senator Raggio:

I was just going to say, if that meets the objection, the first version, I would be satisfied with it if the rest of the committee is.

 

Chairman O’Connell:

I would just bring to the committee’s attention that at the bottom of page 4, dealing with the amendments for Senate Bill (S.B.) 96, you do have a request from the gentleman who sent us the letter (Exhibit H), that we might want to suggest or that he is suggesting, that we might want to consider, a provision for attorney’s fees and back pay.

 

Senator Neal:

If you file it in federal court, you would not have a problem.  If it is one of civil rights, it is automatic.

 

Senator Raggio:

I guess the question is, who is going to determine that?

 

Ms. Guinasso:

I believe it would be the hearing officer.

 

Senator Raggio:

The hearing office could do that?

 

Ms. Guinasso:

Yes, according to this proposed amendment.

 

Senator Raggio:

Would there be some limit?

 

Ms. Guinasso:

Not as written.

 

Senator Raggio:

Without this, is there any present authority for the hearing officer to do that,  without this language?

 

Ms. Guinasso:

Senator, I am afraid I am not sure.

 

Senator Neal:

Is this supposed to be an addition to, an amendment to, the whistle-blower statute?

 

Chairman O’Connell:

Chapter 281 of NRS?  Yes, Senator Neal, if you will remember, this is kind of an upside down to what we normally have in a whistle-blower situation.  This addresses the supervisor of a person who feels that the supervisor is acting inappropriately, as far as using his influence or her influence in a situation.  So, normally the person would be reporting to them, this gives them an avenue to bypass that supervisor and go directly to a hearing officer.  It is a provision that we have not currently covered.

 

 

Senator Raggio:

I guess I would ask the question, and maybe we could get the answer before our next meeting, whether or not the hearing officer presently has the authority  to award back pay for somebody. I do not know how back pay gets involved here.

 

Ms. Guinasso:

Excuse me, Senator, I do not know for sure, but it was told to me that pursuant to the regulation of the personnel commission, which governed this whole procedure, that it does not provide for back pay, nor for attorney’s fees.

 

That is what was presented to me by one of the gentlemen.  I can certainly ensure that that is correct, but I did not check on that before today.

 

Chairman O’Connell:

Senator Care, did you have a question?

 

Senator Care:

No, Madam Chairman, I was the one who raised the questions about reasonable belief, and the truth of the allegation to begin with, and those have been addressed in the amendment.  On this separate subject, the majority leader has asked to find out about this business of whether the hearing officer has the authority to do this.  I was simply thinking, if somebody feels he has been wronged, there is always the avenue of filing suit.  I do not know what the existing statute says about that, but we are only dealing here with the hearing officer making the determination whether this was done as a reprisal or retaliatory action. 

 

It just seems to me the issue of damages, back pay, attorney’s fees, is a separate matter.  If someone who has been wronged thinks he has a cause of action, I think there are other avenues for that.

 

 

 

Chairman O’Connell:

The gentleman whose issue we are dealing with here, that Senator Townsend is trying to address, I believe, has presently filed a suit and has actually filed two.  Evidently he has either been laid off from his job or he has been fired from his job or maybe he quit his job, I am not quite sure which.  He did contact  Ms. Guinasso directly and asked that this information, at least, be brought before the committee.  I just wanted to be sure that while you were looking into this,  you did see the gentleman’s request, and that we would at least look at that part.  The fact that he has been injured, he feels, and would like to see some recourse there for a person who has lost a job.  Did he lose his job, Ms. Guinasso, do we know that?

 

Ms. Guinasso:

Senator, he did not.  Excuse me, there are two different gentlemen involved, but the gentleman who sent me these proposed amendments, he was, I believe, at least on one occasion suspended without pay.  This was, according to the gentleman, a direct result of his raising concerns about certain things about the agency for which he works.

 

I believe there had been several different other things, according to him, that have also taken place.  The specific incident was the weeks’ suspension without pay, but I believe there has also been various negative employment decisions made against him concerning travel, continuing education, and those type of things.  But he does still maintain his employment.  He does say that he has, I think the figure he said, thus far incurred $50,000 in attorney’s fees trying to resolve the issue.

 

Chairman O’Connell:

OK, committee would you like to hold this and have Ms. Guinasso look into the matter, as far as what authority the present hearing officer has?

 

Senator Raggio:

I would like that, yes.

 

Chairman O’Connell:

Would everybody be in agreement with that?  OK, Ms. Guinasso if you could please check that out.

 

The next bill that you have before you is the one that we heard on Friday, February 16, 2001, that deals with the request that we have agendas put on the Web site, that we record public meetings, and that we request that there be someone in attendance who can answer questions when they are dealing with regulations.

 

SENATE BILL 121:  Makes various changes concerning recording of public    meetings and attendance of workshops.  (BDR 19-32)

 

Thomas J. Grady, Lobbyist, Executive Director, Nevada League of Cities and Municipalities:

Thank you, Madam Chairman.  After last Friday’s, February 16, 2001, hearing, and working with Assemblyman Lee, who is chairman of a subcommittee that addresses a very similar bill, Assembly Bill 60, Nevada Association of Counties (NACO), the league, and other interested parties are working on a proposed resolution with Mr. Lee, which he is reviewing now. 

 

ASSEMBLY BILL 60:  Requires public body to post notice of its meeting on the      Internet website, if any.  (BDR 18-674)

 

We hope to have the proposal within the next day or two.  He has his Assembly staff working on it and we would like to request that you hold this bill (S.B. 121) until you have had a chance to review his resolution and hopefully, this will meet all of our desires to get this done.  It is a fairly strong resolution, asking that a report actually be done by all parties. The report would come through NACO, the league, the school board, the state, so everyone would answer to the Seventy-second Legislature what has been done to accomplish this.  And, if it not accomplished, what is holding up getting it done, is it administrative, is it legislative, whatever reasons that could be addressed in a report to you at the next session.

 

Chairman O’Connell:

Mr. Grady, I realize the concern that Senator Raggio raised, about  perhaps some of the smaller groups not having the recording machines available or perhaps not having the wherewithal for the computers.  Now my major concern is that the people be able to have access to what is going on as far as the agendas are concerned, and certainly as far as having people at the meetings to be able to explain the resolutions or the regulations that they will possibly be living under.  I will certainly accommodate you in waiting for the resolution before we act on the bill.

 

Mr. Grady:

Thank you.

 

(The following was a brief discussion relating back to S.B. 96.)

 

 

 

Chairman O’Connell:

OK,  Ms. Guinasso you have some answers on attorney fees or something on S.B. 96.  OK,  she has some information going back to 1996.

 

Ms. Guinasso:

My apologies, Senator, I have been checking the NAC (Nevada Administrative Code) provisions governing this area.  There is no current provision for awarding for attorney’s fees, or back pay, or the types of relief that is set forth in the gentleman’s proposed amendment.

 

Chairman O’Connell:

Were you able to tell us what all the hearing officer has the ability to do now? 

 

Ms. Guinasso:

Basically, he has the ability to make the determination as to whether the conduct was improper.  Yes, correct.

 

Chairman O’Connell:

And then what is the next step, with the conduct?  What is found to be improper?

 

Ms. Guinasso:

I do not think that is clear from this statute.  What the gentleman ended up doing, which was going to court, was his remedy right now.  There seems to have been quite a stumbling block in terms of being able to take care of it at a lower administrative level.

 

 

 

Senator Raggio:

I have a further question.  What was the language requested about the gag order?  I think Mr. Gagnier raised the question.

 

Chairman O’Connell:

He just wanted that information included in the amendment if we amended the bill, that we also had to cover a gag order.

 

Ms. Guinasso:

Senator, I believe that was the intent of the definition of what it means to disclose.  The definition says if one discloses the information to another, even if he is disclosing it to another party and saying that it is not his employer’s position, then it is still a disclosure for the purposes of garnering the protection of the statute.  In other words, if the person makes the disclosure to an appropriate person, and says, “this is not my agency’s position, this is my own opinion.”  That was the way the agency was trying to say the employee was not conducting himself as a proper employee, that he was not giving forth the official opinion of the agency.  That is what was intended by the definition.

 

I could take that definition out, but I believe in terms of what constitutes disclosure of improper governmental action, if we define the term to include even those statements made when one does not represent that it is the agency’s official position, would encompass what is colloquially referring to as a gag order.

 

 

Senator Raggio:

The amendment (Exhibit G) that the gentleman suggested, I am wondering if the personnel, the division, or the department, or anyone has looked into it?  It seems reasonable, but on the other hand they may see some real problem that we are not recognizing here.  That is why I am hesitant to suggest we add that definition.

 

Someone should review the gentleman’s suggestion to determine whether or not we are adding something here that would be inappropriate or unreasonable.   Otherwise, I would think if the hearing officer finds that someone has violated this, and we make it a violation, then there ought to be something that the hearing officer can do about it to restore back pay, or some reasonable attorney’s fee.  I would like to get some input from the appropriate state agency.  Who would that be?

 

Ms. Guinasso:

It could affect the budgets of whatever agency that is the employer of the person, as well.

 

Senator Raggio:

We can ask the Department of Personnel or the Department of Administration to comment on this before we go ahead.  We may be overlooking something on the issue.

 

Chairman O’Connell:

Are the hearing officers from each agency, or are they from the personnel agency?

 

Ms. Guinasso:

I think they are from the Department of Administration.

 

Chairman O’Connell:

The Department of Administration.  I noticed the gentleman has asked that disclosure means, “without limitation, the reporting to any person either verbally or in writing.”  I would think it would have to be in writing.  I would not think that just verbally communicating would be substantial enough to have a hearing officer look at it.

 

Ms. Guinasso:

Senator, I believe currently you need to file a written appeal with the hearing officer in order to start the process.  However, the actual disclosure of the improper action, how it is made, the statute is silent at this point on that regard. In my proposed amendments I did not consider that issue.

 

Chairman O’Connell:

All right, anything else on S.B. 96 that anybody wants to bring up?

 

Senate Bill (S.B.) 125.  Mr. Leavitt, I do not know if there is any question on this.  This is simply allowing the transfer from a function that has been going on in the Legislative Building, to actually be transferred over to the Department of Taxation where it can gain some substance as far as putting together the data that we need on the financial welfare of the different counties and/or cities.

 

SENATE BILL 125:  Makes various changes to provisions relating to financial    reporting of local governments.  (BDR 31-898)

 

Senator Raggio:

I think we need to also get the fiscal note from the Department of Taxation for Web site development.

 

Mr. Leavitt:

Senator Raggio had mentioned one thing that is hanging a little bit on this.  It is that you recognize right now we have someone in the Legislative Counsel Bureau performing this function, that person will no longer be needed.  The main cost, as it relates to the Department of Taxation, would be someone to eventually write the computer program which we would use to accumulate the information.  It would be a more of a one-time cost, perhaps with some small maintenance cost in time.  What we are doing essentially is substituting the ongoing cost of an employee in the Legislative Counsel Bureau for a one-time cost related to the development of a program, basic computer program, to gather the information.  As it relates to the Internet, the program will accommodate individual counties and cities and other local governments entering that information.

 

Senator Raggio:

There is a fiscal note that we have from local government, and they are saying it is going to cost them $10,000 to do this.  If that is an unfunded mandate, then we have to write some language in here that says we are not going to pay for it if they want to do this.

 

Mr. Leavitt:

I think, probably, the local governments are misunderstanding what they are reading when they read this.  We have a situation where they would be writing information into this program.  At the same time there is a quarterly report that they are now preparing, that they have to go through the effort to prepare that they would no longer have to prepare.  I think if you look at the total, I cannot believe that we are really asking them to do something additional to what they are doing now.  I think it is a process that will actually be easier than what they are doing now.

Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO):

Madam Chairman, I agree with Mr. Leavitt that there is probably a misunderstanding.  As long as the program exists, and it would obviously be housed in the state and could be paid for out of our sales tax collection fees, there should not be any real problem for people to use it.  It should not cost the local government money to simply change the way that they are transmitting information into the system.  That would be my view, and I think there is a misunderstanding on the reading of the bill.

 

Mr. Grady:

I would agree with Mr. Hadfield that, if anything, we would hope that it would be a savings by eliminating a report and making the electronic report more user friendly for our people. 

 

Senator Raggio:

Do we have any indication as to what Mr. Pursell (David Pursell, Executive Director, Department of Taxation) is going to say is the cost of developing a Web site?

 

Mr. Leavitt:

I do not know.

 

Senator Raggio:

It cannot be very much can it?  Is it expensive?

 

Mr. Leavitt:

I would not think it would be a huge cost.  I would envision the report that has to be developed is mainly just information as it relates to revenues, expenditures, fund balances, cash and those kinds of things where you could ascertain the financial condition of the local government.

 

            SENATOR RAGGIO MOVED TO DO PASS S.B. 125.

 

Chairman O’Connell:

Just for the record, I know that Mr. Pursell (David Pursell, Executive Director, Department of Taxation) has been very supportive of this and felt that it was necessary that we have a financial picture.  The computer program is something that we are planning on doing anyway.  We felt that since this information was being collected through the Legislative Counsel Bureau and the person is retiring who is now collecting the data, it would be much more efficient to have it go directly to the Department of Taxation as opposed to coming to the counsel bureau here where the information has never really been utilized.

 

            SENATOR CARE SECONDED THE MOTION.

 

            THE MOTION PASSED UNANIMOUSLY.

 

*****

Chairman O’Connell:

The booklet that you have before you, “World Energy Resources Corporation(Exhibit I. Original is on file in the Research Library.), is some additional information that was provided for S.B. 22.  I understand this is a group of people who are going to be testifying before the Commerce Committee tomorrow (Tuesday, February 20, 2001), and they thought that if indeed there was time, that we might like to hear more testimony on S.B. 22, but I think we have pretty well covered that subject. 

 

We have bills to introduce.  The first one is from the City of Reno.  Mary Henderson, Lobbyist, City of Reno, do you want to come up and tell us what you want us to do here?

 

BILL DRAFT REQUEST 21-631:  Expands authority of certain local governments    with respect to administration of municipal finances.  (Later introduced as  Senate Bill 200.)

 

Ms. Henderson:

This bill deals with the room tax, which we are now collecting on a couple of major projects in which the city is involved.  What we have found from bond counsel and through our finance division, was that under general obligation bonding we can use the interest monies that are collected to pay off the bond. Under special obligation bonds or the room tax, that is not allowed.  So there is an anomaly in how those two revenue sources are treated.

 

This bill would allow the city to utilize those interest dollars to help retire the bond and the bonded indebtedness.

 

            SENATOR RAGGIO MOVED TO INTRODUCE BDR 21-631.

 

 

            SENATOR CARE SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman O’Connell:

The next one we are going to be looking at is BDR 31-890. 

 

BILL DRAFT REQUEST 31-890:  Makes various changes relating to ad valorem           taxes to pay for operation of regional facilities.  (Later introduced as     Senate Bill 203.)

 

Mr. Leavitt:

Madam Chairman, this is another situation coming out of the “253 committee” (Senate Bill 253 of the Sixty-ninth Session) as we call it.  This is one in which the Nevada Taxpayers Association had participated.  We have a situation where there is a facility that used to be run jointly by two counties.  This bill simply provides a means and mechanism for funding.  If you look, for instance, at a detention facility or some type of public safety facility, it would be a normal thing between two separate counties to provide for an agreement for funding, perhaps through an administrative agency at the request of the two counties.  That is what the bill does.

 

SENATE BILL 253 OF THE SIXTY-NINTH SESSION:  Creates legislative    committee to study distribution among local governments of revenue          from state and local taxes.  (BDR 17-193)

 

            SENATOR RAGGIO MOVED FOR COMMITTEE INTRODUCTION OF             BDR 31-890.

 

            SENATOR PORTER SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

 

 

Chairman O’Connell:

Thank you, Mr. Leavitt, we need you up here again, because the next bill we are looking at is BDR 31-367.  This is from the Nevada League of Cities and Municipalities.

 

BILL DRAFT REQUEST 31-367:  Makes various changes relating to certain loans        made by local governments.  (Later introduced as Senate Bill 201.)

 

Mr. Leavitt:

Madam Chairman, this is a bill in the name of the League, which is actually coming from the committee on local government finance.  We had a situation in Nevada where a county essentially loaned, for a particular project, monies on almost every account they have, whether it is restricted monies, bond monies, you name it.  They have loaned it for a project.  Once we start this process, sometimes we get others involved.  Those of us involved in finance in the state are quite concerned.  We need to put a stop so that you do not take restricted monies, in particular, and loan it for projects, whatever they are.  I recommend this bill draft.

 

            SENATOR RAGGIO MOVED TO INTRODUCE BDR 31-367.

 

            SENATOR PORTER SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman O’Connell:

The next one comes from the state controller’s office, this is BDR 18-170. 

 

BILL DRAFT REQUEST 18-170:  Makes various changes concerning state        financial administration.  (Later introduced at Senate Bill 202.)

 

Jeannine Coward, Assistant State Controller, Office of the State Controller:

This bill, BDR 18-170, makes various changes concerning financial administration in the state.  It is a composite of several things that we wanted to do, and we just rolled everything into one bill.

 

Section 1 deletes the requirement for the preliminary financial report to the Governor and adds a requirement to produce our annual financial report.  This eliminates the duplication of financial reporting.

 

Sections 2, 3, and 6 require new employees of the state to have direct deposit for their payroll checks.  We have built into that an exception for practical difficulties or unnecessary hardships.  The justification is that direct deposits are cost-saving measures.

 

Sections 4, 5, 7, 8, 13 through 43 are just language changes that are required by the new Governmental Accounting Standards Board.

 

            SENATOR RAGGIO MOVED FOR COMMITTEE INTRODUCTION OF             BDR 18-170.

 

            SENATOR PORTER SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

(An exhibit was given to committee members, but never discussed: “Utility Rate Hikes Threaten School Programs,” by Terry Webster [Exhibit J]).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman O’Connell closed the work session meeting at 3:51 p.m.

 

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                

Sherry Rodriguez,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Senator Ann O'Connell, Chairman

 

 

DATE: