AB369_EN

Assembly Bill No. 369–Select Committee on Energy

CHAPTER..........

AN ACT relating to utilities; revising and repealing various provisions governing the regulation of public utilities; preventing certain electric utilities from disposing of certain generation assets for a certain period; placing restrictions on the disposal of such assets after that period; requiring certain electric utilities to use deferred accounting under certain circumstances; repealing provisions pertaining to the competitive provision of retail electric service; requiring the public utilities commission of Nevada to take certain actions to carry out the provisions of this act; establishing certain requirements and making various changes relating to the rates charged by certain electric utilities; requiring certain entities to obtain approval from the commission before carrying out certain transactions; and providing other matters properly relating thereto.

Whereas, In 1997, the legislature enacted comprehensive legislation designed to prepare the electric industry in this state for retail competition; and

Whereas, In 1999, the legislature enacted additional legislation delaying the onset of such competition until March 1, 2000, unless a determination was made that a later date was necessary to protect the public interest; and

Whereas, On several occasions, a determination has been made that commencement of retail competition in the electric industry is not yet in the public interest of this state; and

Whereas, Many residents of this state are senior citizens whose health is especially vulnerable to extreme heat and extreme cold and who rely on electricity to provide safe temperatures in their homes; and

Whereas, In arid regions of this state, there are many population centers that cannot be sustained without electricity to pump potable drinking water; and

Whereas, Several of the major industries in this state are particularly dependent upon electricity; and

Whereas, Under present market conditions in the electric industry, comprehensive and effective regulation of electric utilities in this state is vital to the economy of this state and is essential to protect the health, safety and welfare of the residents of this state; and

Whereas, Until present market conditions have changed and adequate mechanisms have been developed to allow this state to adjust its comprehensive regulation of electric utilities in Nevada, this state has a compelling interest in continuing its comprehensive regulation of electric utilities to protect the consumers in this state, to safeguard the economy of this state and to ensure that the electric utilities in this state provide adequate and reliable electric service at just and reasonable prices; and

Whereas, As part of its comprehensive regulation of electric utilities in Nevada, this state has traditionally exercised its inherent jurisdiction over electric generation assets which have been dedicated to serve the public convenience and necessity in Nevada and which are used and useful for the convenience of the public in Nevada; and

Whereas, To control volatility in the price of electricity in the retail market and to ensure that the electric utilities in this state have necessary and sufficient resources to provide adequate and reliable electric service under present market conditions, this state must retain its traditional

jurisdiction and control over electric generation assets until other mechanisms are available to accomplish these goals; and

Whereas, In recent years, the western United States has experienced a severe and ongoing crisis in the electric industry marked by critical shortages in the supply of electricity and extreme volatility in the price of electricity in the wholesale and retail markets; and

Whereas, The severe and ongoing crisis in the electric industry in the western United States is both an immediate threat and a continuing danger to the economy of this state and to the health, safety and welfare of the residents of this state; and

Whereas, Until the severe and ongoing crisis in the electric industry in the western United States has sufficiently abated, this state must maintain its comprehensive regulation over electric utilities and its traditionally broad jurisdiction and control over electric generation assets to promote stability and predictability in the electric industry, to foster confidence in the financial markets, to ensure that consumers have adequate and reliable electric service and to protect the public from unjust and unreasonable utility rates; now, therefore,

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. NRS 703.010 is hereby amended to read as follows:

703.010 As used in this chapter, unless the context otherwise requires:

1. “Alternative seller” [has the meaning ascribed to it in NRS

704.967.] means a person who sells any competitive, discretionary or

potentially competitive component of natural gas service pursuant to

NRS 704.993 to 704.999, inclusive.

2. “Commission” means the public utilities commission of Nevada.

Sec. 2. NRS 703.025 is hereby amended to read as follows:

703.025 1. The commission, by majority vote, shall organize the

commission into sections, alter the organization of the commission and

reassign responsibilities and duties of the sections of the commission as

the commission deems necessary to provide:

(a) Advice and guidance to the commission on economic policies

relating to utilities under the jurisdiction of the commission, and the

regulation of such utilities;

(b) Administrative, technical, legal and support services to the

commission; and

services offered by such utilities, including, but not limited to, licensing of

such utilities and services and the resolution of consumer complaints.

2. The commission shall:

(a) Formulate the policies of the various sections of the commission;

(b) Coordinate the activities of the various sections of the commission;

obtain a competitive, discretionary or potentially competitive utility

service, take any actions which are consistent with [law as] the statute

and which are necessary to encourage and enhance:

(1) A competitive market for the provision of that utility [services]

service to customers in this state; and

(2) The reliability and safety of the provision of [those services] that

utility service within that competitive market; and

(d) Adopt such regulations consistent with law as the commission

deems necessary for the operation of the commission and the enforcement

of all laws administered by the commission.

3. Before reorganizing the commission, the commission shall submit

the plan for reorganization to:

(a) The director of the legislative counsel bureau for transmittal to the

appropriate legislative committee and the interim finance committee; and

(b) The director of the department of administration.

Sec. 3. NRS 703.130 is hereby amended to read as follows:

703.130 1. The commission shall appoint a deputy commissioner

who shall serve in the unclassified service of the state.

2. The commission shall appoint a secretary who shall perform such

administrative and other duties as are prescribed by the commission. The

commission shall also appoint an assistant secretary.

3. The commission may employ such other clerks, experts or engineers

as may be necessary.

4. [The commission may] Except as otherwise provided in subsection

5, the commission:

(a) May appoint one or more hearing officers for a period specified by

the commission to conduct proceedings or hearings that may be conducted

by the commission pursuant to chapters 704, 704A, 705, 708 and 711 of

NRS. [The commission shall]

(b) Shall prescribe by regulation the procedure for appealing a decision

of a hearing officer to the commission.

5. The commission shall not appoint a hearing officer to conduct

proceedings or hearings pursuant to sections 8 to 18, inclusive, of this

act.

Sec. 4. NRS 703.151 is hereby amended to read as follows:

703.151 In adopting regulations pursuant to this Title relating to the

provision of electric service, the commission shall ensure that the

regulations:

1. [Maximize the benefits of a competitive marketplace for the

provision of electric services;

2. Maintain, to the extent possible, even and fair competition among

providers of electric service;

3. Ensure the flexibility necessary for existing utilities that provide

energy to enter into a deregulated market;

4. Foster innovation in the provision of electric services;

5. Ensure and enhance reliability and safety in the provision of electric

services;

6. Provide for flexible mechanisms for regulating electric services; and

7.] Protect, further and serve the public interest;

2. Provide effective protection [of persons] for customers who depend

upon electric [services.] service;

3. Provide for stability in rates and for the availability and reliability

of electric service;

4. Encourage the development and use of renewable energy

resources; and

5. Require providers of electric service to engage in prudent business

management, effective long-term planning, responsible decision making,

sound fiscal strategies and efficient operations.

Sec. 5. NRS 703.320 is hereby amended to read as follows:

703.320 1. [When, in] In any matter pending before the commission,

if a hearing is required by [law,] a specific statute or is [normally]

otherwise required by the commission, the commission shall give notice of

the pendency of the matter to all persons entitled to notice of the hearing.

The commission shall by regulation specify:

(a) The manner of giving notice[;] in each type of proceeding; and

(b) [Where not specified by law, the] The persons entitled to notice in

each type of proceeding.

2. [Unless,] The commission shall not dispense with a hearing in any

matter pending before the commission pursuant to sections 8 to 18,

inclusive, of this act.

3. In any other matter pending before the commission, the

commission may dispense with a hearing and act upon the matter

pending unless, within 10 days after the date of the notice of pendency, a

person entitled to notice of the hearing files with the commission a request

that the hearing be held . [, the commission may dispense with a hearing

and act upon the matter pending.

3.] If such a request for a hearing is filed, the commission shall give at

least 10 days’ notice of the hearing.

Sec. 6. Chapter 704 of NRS is hereby amended by adding thereto the

provisions set forth as sections 7 to 19, inclusive, of this act.

Sec. 7. As used in this section and NRS 704.330 to 704.430,

inclusive, unless the context otherwise requires, “electric utility” has the

meaning ascribed to it in section 12 of this act.

Sec. 8. As used in sections 8 to 18, inclusive, of this act, unless the

context otherwise requires, the words and terms defined in sections 9 to

15, inclusive, of this act have the meanings ascribed to them in those

sections.

Sec. 9. “Affiliate” means a person who, directly or indirectly

through one or more intermediaries, controls, is controlled by or is

under common control with an electric utility.

Sec. 10. “Consumer’s advocate” means the consumer’s advocate of

the bureau of consumer protection in the office of the attorney general.

Sec. 11. “Dispose of a generation asset” means to:

1. Sell, lease, assign, transfer or divest an interest in a generation

asset, in whole or in part, to another person; or

2. Perform any promise, covenant or obligation to sell, lease, assign,

transfer or divest an interest in a generation asset, in whole or in part, to

another person pursuant to the terms of a contract or agreement

executed before, on or after the effective date of this act unless, before

the effective date of this act:

(a) All terms and conditions of the contract or agreement were

satisfied; and

(b) All parties to the contract or agreement fully performed all

promises, covenants and obligations under the contract or agreement.

Sec. 12. 1. “Electric utility” means:

(a) Any public utility or successor in interest that:

(1) Is in the business of providing electric service to customers;

(2) Holds a certificate of public convenience and necessity issued or

transferred pursuant to this chapter; and

(3) In the most recently completed calendar year or in any other

calendar year within the 7 calendar years immediately preceding the

most recently completed calendar year, had a gross operating revenue of

$250,000,000 or more in this state;

(b) A subsidiary or affiliate of such a public utility;

interest in such a public utility; and

(d) A successor in interest to any public utility, subsidiary, affiliate,

holding company or person described in paragraph (a), (b) or (c).

2. The term does not include a cooperative association, nonprofit

corporation, nonprofit association or provider of electric service which is

declared to be a public utility pursuant to NRS 704.673 and which

provides service only to its members.

Sec. 13. 1. “Generation asset” means any plant, facility,

equipment or system that:

(a) Converts other forms of energy into electricity or otherwise

produces electricity;

(b) Is or was owned, possessed, controlled, leased, operated,

administered, maintained, acquired or placed into service by an electric

utility before, on or after January 1, 2001;

and

(d) Is used and useful for the convenience of the public in this state,

as determined by the commission.

2. The term does not include:

(a) Any hydroelectric plant, facility, equipment or system which has a

generating capacity of not more than 15 megawatts and which is located

on the Truckee River or on a waterway that is appurtenant to or

connected to the Truckee River.

(b) Any net metering system, as defined in NRS 704.771.

Sec. 14. 1. “Interest in a generation asset” means any interest, in

whole or in part, in the physical plant, facility, equipment or system that

makes up the generation asset, whether such interest is legal or

equitable, present or future, or contingent or vested.

2. The term does not include any interest in the electricity or other

energy produced by the generation asset.

Sec. 15. “Person” means:

1. A natural person;

2. Any form of business or social organization and any other

nongovernmental legal entity, including, without limitation, a

corporation, partnership, association, trust or unincorporated

organization;

3. A government or an agency or instrumentality of a government,

including, without limitation, this state or an agency or instrumentality

of this state; and

4. A political subdivision of this state or of any other government or

an agency or instrumentality of a political subdivision of this state or of

any other government.

Sec. 16. Except as otherwise provided in section 17 of this act:

1. Before July 1, 2003, an electric utility shall not dispose of a

generation asset.

2. On or after July 1, 2003, an electric utility shall not dispose of a

generation asset unless, before the disposal, the commission approves

the disposal by a written order issued in accordance with the provisions

of this section.

3. Not sooner than January 1, 2003, an electric utility may file with

the commission an application to dispose of a generation asset on or

after July 1, 2003. If an electric utility files such an application, the

commission shall not approve the application unless the commission

finds that the disposal of the generation asset will be in the public

interest. The commission shall issue a written order approving or

disapproving the application. The commission may base its approval of

the application upon such terms, conditions or modifications as the

commission deems appropriate.

4. If an electric utility files an application to dispose of a generation

asset, the consumer’s advocate shall be deemed a party of record.

5. If the commission approves an application to dispose of a

generation asset before July 1, 2003, the order of the commission

approving the application:

(a) May not become effective sooner than July 1, 2003;

(b) Does not create any vested rights before the effective date of the

order; and

on the date on which the order is issued by the commission.

Sec. 17. 1. An electric utility may dispose of its generation assets

pursuant to a merger, acquisition or transaction that is authorized

pursuant to NRS 704.329 or pursuant to a transfer of its certificate of

public convenience and necessity that is authorized pursuant to NRS

704.410, if:

(a) The electric utility disposes of substantially all of its generation

assets and substantially all of its other assets to the other person in the

merger, acquisition, transaction or transfer; and

(b) The other person in the merger, acquisition, transaction or

transfer is not a subsidiary or affiliate of the electric utility or a holding

company or other person that holds a controlling interest in the electric

utility.

2. Any person who assumes or has assumed ownership, possession,

control, operation, administration or maintenance of a generation asset

pursuant to a merger, acquisition, transaction or transfer described in

subsection 1 is subject to the provisions of sections 8 to 18, inclusive, of

this act.

Sec. 18. If an electric utility disposes of a generation asset in

violation of sections 8 to 18, inclusive, of this act, the disposal is void and

unenforceable and is not valid for any purpose.

Sec. 19. 1. Except as otherwise provided in section 36 of this act,

beginning on March 1, 2001, an electric utility that purchases fuel or

power shall use deferred accounting by recording upon its books and

records in deferred accounts all increases and decreases in costs for

purchased fuel and purchased power that are prudently incurred by the

electric utility.

2. An electric utility using deferred accounting shall include in its

annual report to the commission a statement showing, for the period of

recovery, the allocated rate of return for each of its operating

departments in this state using deferred accounting. If, during the period

of recovery, the rate of return for any operating department using

deferred accounting is greater than the rate of return authorized by the

commission in the most recently completed rate proceeding for the

electric utility, the commission shall order the electric utility that

recovered costs for purchased fuel or purchased power through its rates

during the reported period to transfer to the next energy adjustment

period that portion of the amount recovered by the electric utility that

exceeds the authorized rate of return.

3. Except as otherwise provided in subsection 4, an electric utility

using deferred accounting shall file an application to clear its deferred

accounts after the end of each 12-month period of deferred accounting.

4. An electric utility using deferred accounting may file an

application to clear its deferred accounts after the end of a 6-month

period of deferred accounting if the net increase or decrease in revenues

necessary to clear its deferred accounts for the 6-month period is more

than 5 percent of the total revenues generated by the electric utility

during that period from its rates for purchased fuel and purchased

power most recently authorized by the commission.

5. The commission shall adopt regulations prescribing the period

within which an electric utility must file an application to clear its

deferred accounts after the end of a period of deferred accounting.

6. As used in this section:

(a) “Application to clear its deferred accounts” means an application

filed by an electric utility pursuant to this section and subsection 7 of

NRS 704.110.

(b) “Costs for purchased fuel and purchased power” means all costs

which are prudently incurred by an electric utility and which are

required to purchase fuel, to purchase capacity and to purchase energy.

The term does not include any costs that the commission determines are

not recoverable pursuant to subsection 8 of NRS 704.110.

that:

(1) Is in the business of providing electric service to customers;

(2) Holds a certificate of public convenience and necessity issued or

transferred pursuant to this chapter; and

(3) In the most recently completed calendar year or in any other

calendar year within the 7 calendar years immediately preceding the

most recently completed calendar year, had a gross operating revenue of

$250,000,000 or more in this state.

The term does not include a cooperative association, nonprofit

corporation, nonprofit association or provider of electric service which is

declared to be a public utility pursuant to NRS 704.673 and which

provides service only to its members.

Sec. 20. NRS 704.030 is hereby amended to read as follows:

704.030 “Public utility” or “utility” does not include:

1. Persons engaged in the production and sale of natural gas, other than

sales to the public, or engaged in the transmission of natural gas other than

as a common carrier transmission or distribution line or system.

2. Persons engaged in the business of furnishing, for compensation,

water or services for the disposal of sewage, or both, to persons within this

state if:

(a) They serve 25 persons or less; and

(b) Their gross sales for water or services for the disposal of sewage, or

both, amounted to $5,000 or less during the immediately preceding 12

months.

3. Persons not otherwise engaged in the business of furnishing,

producing or selling water or services for the disposal of sewage, or both,

but who sell or furnish water or services for the disposal of sewage, or

both, as an accommodation in an area where water or services for the

disposal of sewage, or both, are not available from a public utility,

cooperative corporations and associations or political subdivisions

engaged in the business of furnishing water or services for the disposal of

sewage, or both, for compensation, to persons within the political

subdivision.

4. Persons who are engaged in the production and sale of energy,

including electricity, to public utilities, cities, counties or other entities

which are reselling the energy to the public.

5. Persons who are subject to the provisions of NRS 590.465 to

590.645, inclusive.

6. Persons who are engaged in the sale or use of special fuel as defined

in NRS 366.060.

7. [Persons who are licensed as alternative sellers to provide electric

services.

8.] Persons who provide water from water storage, transmission and

treatment facilities if those facilities are for the storage, transmission or

treatment of water from mining operations.

Sec. 21. NRS 704.110 is hereby amended to read as follows:

704.110 Except as otherwise provided in NRS 704.075 or as otherwise

provided by the commission pursuant to NRS 704.095 or 704.097:

1. Whenever there is filed with the commission any schedule stating a

new or revised individual or joint rate or charge, or any new or revised

individual or joint regulation or practice affecting any rate or charge, or

any schedule resulting in a discontinuance, modification or restriction of

service, the commission may, upon complaint or upon its own motion

without complaint, at once, without answer or formal pleading by the

interested utility, investigate or, upon reasonable notice, conduct a hearing

concerning the propriety of the rate, charge, classification, regulation,

discontinuance, modification, restriction or practice.

2. Pending the investigation or hearing and the decision thereon, the

commission, upon delivering to the utility affected thereby a statement in

writing of its reasons for the suspension, may suspend the operation of the

schedule and defer the use of the rate, charge, classification, regulation,

discontinuance, modification, restriction or practice . [, but] If the rate,

charge, classification, regulation, discontinuance, modification,

restriction or practice is part of:

(a) A filing made pursuant to subsection 7, the suspension must not be

effective for more than 90 days beyond the time when the rate, charge,

classification, regulation, discontinuance, modification, restriction or

practice would otherwise go into effect.

(b) Any other filing made pursuant to this section, the suspension

must not be effective for more than 150 days beyond the time when the

rate, charge, classification, regulation, discontinuance, modification,

restriction or practice would otherwise go into effect.

3. Whenever there is filed with the commission any schedule stating an

increased individual or joint rate or charge for service or equipment, the

public utility shall submit with its application a statement showing the

recorded results of revenues, expenses, investments and costs of capital for

its most recent 12 months for which data were available when the

application was prepared. During any hearing concerning the increased

rates or charges determined by the commission to be necessary, the

commission shall consider evidence in support of the increased rates or

charges based upon actual recorded results of operations for the same 12

months, adjusted for increased revenues, any increased investment in

facilities, increased expenses for depreciation, certain other operating

expenses as approved by the commission and changes in the costs of

securities which are known and are measurable with reasonable accuracy

at the time of filing and which will become effective within 6 months after

the last month of those 12 months, but no new rates or charges may be

placed into effect until the changes have been experienced and certified by

the utility to the commission. The commission shall also consider evidence

supporting expenses for depreciation, calculated on an annual basis,

applicable to major components of the public utility’s plant placed into

service during the recorded test period or the period for certification as set

forth in the application. Adjustments to revenues, operating expenses and

costs of securities must be calculated on an annual basis. Within 90 days

after the filing with the commission of the certification required in this

subsection, or before the expiration of any period of suspension ordered

pursuant to subsection 2, whichever time is longer, the commission shall

make such order in reference to those rates or charges as is required by

this chapter. An electric utility shall file a general rate application

pursuant to this subsection at least once every 24 months.

4. After full investigation or hearing, whether completed before or

after the date upon which the rate, charge, classification, regulation,

discontinuance, modification, restriction or practice is to go into effect, the

commission may make such order in reference to the rate, charge,

classification, regulation, discontinuance, modification, restriction or

practice as would be proper in a proceeding initiated after the rate, charge,

classification, regulation, discontinuance, modification, restriction or

practice has become effective.

5. Except as otherwise provided in subsection 6, whenever a general

rate application for an increased rate or charge for, or classification,

regulation, discontinuance, modification, restriction or practice involving

service or equipment has been filed with the commission, a public utility

shall not submit another general rate application until all pending general

rate applications for increases in rates submitted by that public utility have

been decided unless, after application and hearing, the commission

determines that a substantial financial emergency would exist if the other

application is not permitted to be submitted sooner.

6. A public utility may [not] file an application to recover the

increased cost of purchased fuel, purchased power, or natural gas

purchased for resale [more often than] once every 30 days. The provisions

of this subsection do not apply to an electric utility using deferred

accounting pursuant to section 19 of this act.

7. Except as otherwise provided in subsection 8, whenever an electric

utility using deferred accounting pursuant to section 19 of this act files

an application to clear its deferred accounts and to change one or more

of its rates or charges based upon changes in the costs for purchased

fuel or purchased power, the commission, after a public hearing and by

an appropriate order:

(a) Shall allow the electric utility to clear its deferred accounts by

refunding any credit balance or recovering any debit balance over a

period not to exceed 3 years, as determined by the commission.

(b) Shall not allow the electric utility to recover any debit balance, or

portion thereof, in an amount that would result in a rate of return

during the period of recovery that exceeds the rate of return authorized

by the commission in the most recently completed rate proceeding for the

electric utility.

8. Before allowing an electric utility to clear its deferred accounts

pursuant to subsection 7, the commission shall determine whether the

costs for purchased fuel and purchased power that the electric utility

recorded in its deferred accounts are recoverable and whether the

revenues that the electric utility collected from customers in this state for

purchased fuel and purchased power are properly recorded and credited

in its deferred accounts. The commission shall not allow the electric

utility to recover any costs for purchased fuel and purchased power that

were the result of any practice or transaction that was undertaken,

managed or performed imprudently by the electric utility.

9. Whenever an electric utility files an application to clear its

deferred accounts pursuant to subsection 7 while a general rate

application is pending, the electric utility shall:

(a) Submit with its application to clear its deferred accounts

information relating to the cost of service and rate design; and

(b) Supplement its general rate application with the same information,

if such information was not submitted with the general rate application.

10. A utility facility identified in a 3-year plan submitted pursuant to

NRS 704.741 and accepted by the commission for acquisition or

construction pursuant to NRS 704.751 and the regulations adopted

pursuant thereto shall be deemed to be a prudent investment. The utility

may recover all just and reasonable costs of planning and constructing such

a facility.

11. As used in this section, “electric utility” has the meaning

ascribed to it in section 19 of this act.

Sec. 22. NRS 704.329 is hereby amended to read as follows:

704.329 1. Except as otherwise provided in [subsection 4, no person

may]this section, a person shall not merge with, directly acquire,

indirectly acquire through a subsidiary or affiliate, or otherwise directly or

indirectly obtain control of a public utility doing business in this state or

an entity that holds a controlling interest in such a public utility without

first submitting to the commission an application for authorization of the

proposed merger, acquisition or other transaction and obtaining

authorization from the commission .[pursuant to subsection 2.]

2. Any merger, acquisition or [change in control in violation]other

transaction that violates the provisions of this section is void and

unenforceable andis not valid for any purpose.

[2.] 3. Before authorizing [the]a proposed merger, acquisition or

[change in control of a public utility doing business in this state,]other

transaction pursuant to this section, the commission shall consider the

effect of the proposed merger, acquisition or other transaction [. If]on

the public interest and the customers in this state. The commission shall

not authorize the proposed merger, acquisition or other transaction

unless the commission finds that the proposed merger, acquisition or

[change in control is]other transaction:

(a) Will be in the public interest [, the commission shall authorize the

proposed transaction.

3.]; and

(b) Complies with the provisions of sections 8 to 18, inclusive, of this

act, if the proposed merger, acquisition or other transaction is subject to

those provisions.

4. The commission may base its authorization of the proposed

merger, acquisition or other transaction upon such terms, conditions or

modifications as the commission deems appropriate.

5. If the commission does not issue a final [determination]order

regarding the proposed merger, acquisition or other transaction within

180 days after the date on which an application or amended application for

authorization of the proposed merger, acquisition or other transaction was

filed with the commission, and the proposed merger, acquisition or other

transaction is not subject to the provisions of sections 8 to 18, inclusive,

of this act,the proposed merger, acquisition or other transaction shall be

deemed [approved.]to be authorized by the commission.

[4.] 6. The provisions of this section do not apply to the transfer of

stock of a public utility doing business in this state or to the transfer of the

stock of an entity holding a controlling interest in such a public utility, if a

transfer of not more than 25 percent of the common stock of such a public

utility or entity is proposed.

Sec. 23. NRS 704.370 is hereby amended to read as follows:

704.370 1. The commission shall have the power, after hearing, to

issue or refuse such certificate of public convenience, or to issue it for the

construction of a portion only of the contemplated line, plant or systems, or

extension thereof, and may attach thereto such terms and conditions as, in

its judgment, the public convenience and necessity may require.

2. [The] Except as otherwise provided in subsection 3, the

commission, in its discretion[,] and after investigation, may dispense

with the hearing on the application if, upon the expiration of the time fixed

in the notice thereof, no protest against the granting of the [certificate]

application has been filed by or on behalf of any interested person.

3. The commission shall not dispense with the hearing on the

application of an electric utility.

Sec. 24. NRS 704.390 is hereby amended to read as follows:

704.390 1. It [shall be] is unlawful for any public utility to

discontinue, modify or restrict service to any city, town, municipality,

community or territory theretofore serviced by it, except upon 30 days’

notice filed with the commission, specifying in detail the character and

nature of the discontinuance or restriction of the service intended, and

upon order of the commission, made after hearing, permitting such

discontinuance, modification or restriction of service.

2. [The] Except as otherwise provided in subsection 3, the

commission , in its discretion and after investigation, may dispense with

the hearing on the application for discontinuance, modification or

restriction of service[,] if, upon the expiration of the time fixed in the

notice thereof, no protest against the granting of the application has been

filed by or on behalf of any interested person.

3. The commission shall not dispense with the hearing on the

application of an electric utility.

Sec. 25. NRS 704.410 is hereby amended to read as follows:

704.410 1. Any public utility subject to the provisions of NRS

[704.005] 704.001 to 704.751, inclusive, and sections 8 to 18, inclusive,

of this act to which a certificate of public convenience and necessity has

been issued pursuant to NRS [704.005] 704.001 to 704.751, inclusive, and

sections 8 to 18, inclusive, of this act may transfer the certificate to any

person qualified under NRS [704.005] 704.001 to 704.751, inclusive, [but

the] and sections 8 to 18, inclusive, of this act. Such a transfer is void and

unenforceable and is not valid for any purpose [until a] unless:

(a) A joint application to make the transfer has been made to the

commission by the transferor and the transferee [, and the] ; and

(b) The commission has authorized the substitution of the transferee for

the transferor. If the transferor is an electric utility, the commission shall

not authorize the transfer unless the transfer complies with the

provisions of sections 8 to 18, inclusive, of this act.

2. The commission [may] :

(a) Shall conduct a hearing on a transfer involving an electric utility.

The hearing must be noticed and conducted in the same manner as

other contested hearings before the commission.

(b) May direct that a hearing be [had in the matter of the transfer.]

conducted on a transfer involving any other public utility. If the

commission determines that such a hearing should be held, the hearing

must be noticed and conducted in the same manner as other contested

hearings before the commission.

[3. The commission has the sole discretion to direct that a hearing be

held if the application seeks to transfer the certificate from a person or

partners to a corporation when the officers of the corporation will be

substantially the same person or partners.

4.] The commission may dispense with such a hearing if, upon the

expiration of the time fixed in the notice thereof, no protest to the

proposed transfer has been filed by or on behalf of any interested person.

[5.] 3. In determining whether the transfer of a certificate of public

convenience and necessity to an applicant transferee should be authorized,

the commission must take into consideration:

(a) The utility service performed by the transferor and the proposed

utility service of the transferee;

(b) Other authorized utility services in the territory for which the

transfer is sought; [and]

of a public utility and whether the proposed operation will be consistent

with the legislative policies set forth in NRS [704.005] 704.001 to

704.751, inclusive[.

6.] , and sections 8 to 18, inclusive, of this act; and

(d) Whether the transfer will be in the public interest.

4. The commission may make such amendments, restrictions or

modifications in a certificate upon transferring it as the public interest

requires.

[7.] 5. No transfer is valid beyond the life of the certificate transferred.

Sec. 26. NRS 704.430 is hereby amended to read as follows:

704.430 1. Any person, firm, association or corporation who [shall

violate] violates any provisions of NRS 704.330 to [704.410,] 704.430,

inclusive, and section 7 of this act shall be punished by a fine of not more

than $250.

2. Each day’s operation without a certificate as provided in NRS

704.330 to [704.410,] 704.430, inclusive, and section 7 of this act or each

day that service is discontinued, modified or restricted, as defined in

NRS 704.330 to [704.410, inclusive, shall] 704.430, inclusive, and section

7 of this act must be considered a separate offense.

Sec. 27. NRS 704.961 is hereby amended to read as follows:

704.961 The commission [shall expend up to $500,000] may expend

money from its reserve account to provide education and informational

services necessary to educate and inform the residents in this state on

issues related to the provision of [competitive] utility services in this state.

The commission [shall] may contract with an independent person to

provide such educational and informational services.

Sec. 28. NRS 704.989 is hereby amended to read as follows:

704.989 1. The commission shall establish portfolio standards for

domestic energy that [sets]set forth the minimum percentage of the total

amount of electricity sold by an electric utility to its retail customers in

this state during each calendar year that must be derived from renewable

energy resources. The portfolio standards must:

(a) [Be] On January 1, 2001, be set at two-tenths of [one] 1 percent of

the total amount of electricity [annually consumed] sold by the electric

utility to its retail customers in this state [as of January 1, 2001.

(b) Be increased biannually thereafter] during the immediately

preceding calendar year.

(b) On January 1 of each successive odd-numbered year, be increased

by two-tenths of [one] 1 percent of the total [annual electric consumption]

amount of electricity sold by the electric utility to its retail customers in

this state during the immediately preceding calendar year until the

[standard reaches] portfolio standards reach a total of 1 percent of the

total amount of electricity [consumed.] sold by the electric utility to its

retail customers in this state during the immediately preceding calendar

year.

resources.

(d) Be derived from not less than 50 percent solar renewable energy

systems.

(e) Be based on renewable energy credits, if applicable.

2. Each [vertically integrated] electric utility [and alternative seller that

provides electric service in this state] shall comply with the portfolio

[standard]standards established by the commission pursuant to this

section. At the end of each calendar year, each [vertically integrated]

electric utility [and alternative seller] shall submit a report, in a format

approved by the commission, of the quantity of renewable energy and

credits, if applicable, that the electric utility [or alternative seller]

generated, purchased, sold and traded to meet the portfoliostandards . [of

the portfolio.]

3. In establishing the portfolio standardspursuant to this section, the

commission may establish a system of credits pursuant to whichan

electric utility [and alternative seller] may comply with the provisions of

this section. A system of credits must provide that:

(a) Credits are issued for renewable energy resources for each kilowatt

hour of energy which it produces; and

(b) Holders of credits may trade or sell the credits to other parties.

4. For the purposes of this section, [a vertically integrated electric

utility which,]if, on January 1, 1997, [has]at least9 percent of [its

electricity consumed by]the total amount of electricity sold by an electric

utility to its retail customers [served by]in this state during the

immediately preceding calendar year was derived from renewable energy

resources , the electric utilityshall be deemed to be in compliance until

January 1, 2005, with the portfolio standards established by the

commission pursuant to this section. Between January 1, 2005, and

December 31, 2009, such [a vertically integrated]anelectric utility [and

its affiliated alternative seller, if any, shall reach a total of]shall have one

-half of 1 percent of the total amount of electricity [consumed by]sold to

its retail customers [,]in this state, increased in annual increments of one

-tenth of 1 percent [, in]during each calendar year of that period, derived

from solar energy resources for full compliance with the portfolio

[standard] standardsestablished by the commission pursuant to this

section.

5. [The]In addition to the report required by subsection 2, each

electric utility [and alternative seller] shall submit a report [to], in a

format approved bythe commission , that provides information relating to

the compliance by the [vertically integrated] electric utility [or alternative

seller] with the requirements of this section. Such reports must be made at

least annually, unless the commission by regulation determines that such

reports must be made more frequently than annually, and must include

clear and concise information that sets forth:

(a) If the [vertically integrated] electric utility installed a renewable

energy system during the period for which the report is being made, the

date of installation;

(b) The capacity of renewable energy systems of the [vertically

integrated] electric utility ;[or alternative seller;]

systems;

(d) The portion of the production of energy that is directly derived from

renewable energy resources;

(e) The quantity of energy from renewable energy systems that is

transmitted or distributed, or both, to retail customers in this state by the

[vertically integrated] electric utility ;[or alternative seller;] and

(f) Such other information that the commission by regulation may deem

relevant.

6. [Nothing in this section applies]The provisions of this section do

not applyto:

(a) Rural electric cooperatives established pursuant to chapter 81 of

NRS;

(b) General improvement districts established pursuant to chapter 318

of NRS; or

7. As used in this section:

(a) “Electric utility” has the meaning ascribed to it in section 19 of

this act.

(b) “Renewable energy resources” means wind, solar, geothermal and

biomass energy resources [in this state] that are naturally regenerated.

[(b)] (c) “Renewable energy system” means an energy system [in this

state] that utilizes renewable energy resources to produce electricity or

solar thermal energy systems that reduce the consumption of electricity

that was installed and commenced operations after July 1, 1997.

Sec. 29. NRS 228.360 is hereby amended to read as follows:

228.360 The consumer’s advocate [may,] :

1. Shall intervene in and represent the public interest in all

proceedings conducted pursuant to sections 8 to 18, inclusive, of this act.

2. May, with respect to all public utilities except railroads and

cooperative utilities, and except as provided in NRS 228.380:

[1.] (a) Conduct or contract for studies, surveys, research or expert

testimony relating to matters affecting the public interest or the interests of

utility customers.

[2.] (b) Examine any books, accounts, minutes, records or other papers

or property of any public utility subject to the regulatory authority of the

public utilities commission of Nevada in the same manner and to the same

extent as authorized by law for members of the public utilities commission

of Nevada and its staff.

[3. Petition]

initiate, appear or intervene in any proceeding concerning rates, charges,

tariffs, modifications of service or any related matter before the public

utilities commission of Nevada or any court, regulatory body, board,

commission or agency having jurisdiction over any matter which the

consumer’s advocate may bring before or has brought before the public

utilities commission of Nevada or in which the public interest or the

interests of any particular class of utility customers are involved. The

consumer’s advocate may represent the public interest or the interests of

any particular class of utility customers in any such proceeding, and he is a

real party in interest in the proceeding.

Sec. 30. NRS 228.390 is hereby amended to read as follows:

228.390 Except as otherwise provided in sections 8 to 18, inclusive,

of this act:

1. The consumer’s advocate has sole discretion to represent or refrain

from representing the public interest and any class of customers in any

proceeding.

2. In exercising his discretion, the consumer’s advocate shall consider

the importance and extent of the public interest or the customers’ interests

involved and whether those interests would be adequately represented

without his participation.

3. If the consumer’s advocate determines that there would be a conflict

between the public interest and any particular class of customers or any

inconsistent interests among the classes of customers involved in a

particular matter, he may choose to represent one of the interests, to

represent no interest, or to represent one interest through his office and

another or others through outside counsel engaged on a case basis.

Sec. 31. NRS 538.181 is hereby amended to read as follows:

538.181 1. The commission shall hold and administer all rights and

benefits pertaining to the distribution of the power and water mentioned in

NRS 538.041 to 538.251, inclusive, for the State of Nevada[,] and, except

as otherwise provided in NRS 538.186, may enter into contracts relating to

that power and water, including the transmission and other distribution

services, on such terms as the commission determines.

2. Every applicant, except a federal or state agency or political

subdivision, for power or water to be used within the State of Nevada

must, before the application is approved, provide an indemnifying bond by

a corporation qualified pursuant to the laws of this state, or other

collateral, approved by the state board of examiners, payable to the State

of Nevada in such sum and in such manner as the commission may

require, conditioned for the full and faithful performance of the lease,

sublease, contract or other agreement.

3. The power and water must not be sold for less than the actual cost to

the State of Nevada.

4. Except as otherwise provided in subsection 5, before any such sale

or lease is made, a notice of it must be advertised in two papers of general

circulation published in the State of Nevada at least once a week for 2

weeks. The commission shall require any person desiring to make

objection thereto to file the objection with the commission within 10 days

after the date of the last publication of the notice. If any objection is filed,

the commission shall set a time and place for a hearing of the objection not

more than 30 days after the date of the last publication of the notice.

5. The provisions of subsection 4 do not apply to:

(a) Any contract by the commission to sell supplemental power to a

holder of a long-term firm contract with the state for power if the

supplemental power is procured by the commission from a prearranged

source and is secured by the holder for his own use; or

(b) Any agreement by the commission to sell short-term or interruptible

power on short notice for immediate acceptance to a holder of a long-term

firm contract with the state for power who can take delivery of the short

-term or interruptible power when it is available.

6. Except as otherwise provided in subsection 2 of NRS 538.251, any

such lease, sublease, contract or sale of the water or power is not binding

upon the State of Nevada until ratified and approved by the governor and,

where required by federal law, until approved by the United States.

7. The commission shall, upon the expiration of a contract for the sale

of power which is in effect on July 1, 1993, offer to the purchaser the right

to renew the contract. If the commission is unable to supply the amount of

power set forth in the contract because of a shortage of power available for

sale, it shall reduce, on a pro rata basis, the amount of power it is required

to sell pursuant to the renewed contract.

8. [Except as otherwise provided in NRS 704.987, notwithstanding]

Notwithstanding any provision of chapter 704 of NRS, any purchase of:

(a) Power or water for distribution or exchange, and any subsequent

distribution or exchange of power or water by the commission; or

(b) Water for distribution or exchange, and any subsequent distribution

or exchange of water by any entity to which or with which the commission

has contracted the water,

is not subject to regulation by the public utilities commission of Nevada.

Sec. 32. 1. NRS 704.965, 704.966, 704.967, 704.968, 704.969,

704.970, 704.971, 704.972, 704.973, 704.974, 704.975, 704.976, 704.977,

704.978, 704.979, 704.980, 704.981, 704.982, 704.9823, 704.9826,

704.9829, 704.983, 704.984, 704.985, 704.986, 704.9865, 704.987,

704.988 and 704.990 are hereby repealed.

2. Sections 335 and 337 of chapter 482, Statutes of Nevada 1997, at

pages 2021 and 2022, respectively, and sections 17, 21, 22, 24 and 26 of

chapter 600, Statutes of Nevada 1999, at pages 3269 and 3272, are hereby

repealed.

3. Section 127 of Senate Bill No. 29 of this session is hereby repealed.

Sec. 33. The public utilities commission of Nevada shall:

1. Amend, modify, supplement, annul or vacate any order or directive

issued by the commission before the effective date of this act that

authorizes or requires an electric utility to dispose of any generation asset,

if such disposal would violate the provisions of this act;

2. Take all appropriate action to request that the Federal Energy

Regulatory Commission and any other officer, agency or department of

the Federal Government:

(a) Not issue any order or directive that authorizes or requires an

electric utility to dispose of any generation asset, if such an order or

directive could be interpreted as being in conflict with or preempting the

provisions of this act; and

(b) Amend, modify, supplement, annul or vacate any order or directive

issued before, on or after the effective date of this act that authorizes or

requires an electric utility to dispose of any generation asset, if such an

order or directive could be interpreted as being in conflict with or

preempting the provisions of this act;

3. If any action taken pursuant to subsection 2 is unsuccessful, take all

appropriate legal action to challenge any order or directive issued by the

Federal Energy Regulatory Commission or any other officer, agency or

department of the Federal Government that authorizes or requires an

electric utility to dispose of any generation asset, if such an order or

directive could be interpreted as being in conflict with or preempting the

provisions of this act; and

4. Take any other action or issue any other orders necessary to carry

out the provisions of this act.

Sec. 34. As used in this section and sections 35 and 36 of this act,

unless the context otherwise requires:

1. “Affiliate” means an entity that, directly or indirectly through one or

more intermediaries, controls, is controlled by or is under common control

with another entity.

2. “Commission” means the public utilities commission of Nevada.

3. “Comprehensive energy plan” means the application to adopt a

comprehensive energy plan, designated in the records of the commission

as Docket No. 01-1045, and all amendments and modifications to the

application or the plan.

4. “Deferred account” means any account that is used to carry out

deferred accounting pursuant to section 19 of this act.

5. “Electric utility” has the meaning ascribed to it in section 19 of

this act.

6. “Electric utility holding company” means:

(a) An entity which is incorporated or organized under the laws of this

state and which holds a controlling interest in an electric utility; and

(b) A successor in interest to any entity described in paragraph (a).

7. “Electric utility that primarily serves densely populated counties”

means an electric utility that, with regard to the provision of electric

service, derives more of its annual gross operating revenue in this state

from customers located in counties whose population is 400,000 or more

than it does from customers located in counties whose population is less

than 400,000.

8. “Electric utility that primarily serves less densely populated

counties” means an electric utility that, with regard to the provision of

electric service, derives more of its annual gross operating revenue in this

state from customers located in counties whose population is less than

400,000 than it does from customers located in counties whose population

is 400,000 or more.

Sec. 35. Except as otherwise provided in section 36 of this act and

notwithstanding the provisions of any other specific statute to the contrary:

1. An electric utility shall not file an application for a fuel and

purchased power rider on or after the effective date of this act.

2. Each application for a fuel and purchased power rider filed by an

electric utility which is pending with the commission on the effective date

of this act and which the electric utility did not place into effect before or

on April 1, 2001, is void and unenforceable and is not valid for any

purpose after April 1, 2001.

3. If, before March 1, 2001, an electric utility incurred any costs for

fuel or purchased power, including, without limitation, any costs for fuel

or purchased power recorded or carried on the books and records of the

electric utility, and those costs were not recovered or could not be

recovered pursuant to a fuel and purchased power rider placed into effect

by the electric utility before March 1, 2001, the electric utility is not

entitled, on or after March 1, 2001, to recover any of those costs for fuel or

purchased power from customers, and the commission shall not allow the

electric utility to recover any of those costs for fuel or purchased power

from customers.

4. Except as otherwise provided in this section, on and after the

effective date of this act:

(a) The commission shall not take any further action on the

comprehensive energy plan, and each electric utility that jointly filed the

comprehensive energy plan shall be deemed to have withdrawn the

comprehensive energy plan;

(b) The rates that each electric utility placed into effect on March 1,

2001, pursuant to the comprehensive energy plan shall be deemed to be a

component of the electric utility’s rates for fuel and purchased power; and

from the rates that each electric utility placed into effect on March 1, 2001,

pursuant to the comprehensive energy plan shall be deemed to be a credit

in the electric utility’s deferred accounts.

5. On or before October 1, 2001, each electric utility that primarily

serves densely populated counties shall file a general rate application

pursuant to subsection 3 of NRS 704.110, as amended by this act. On or

before December 1, 2001, each electric utility that primarily serves

densely populated counties shall file an application to clear its deferred

accounts pursuant to subsection 7 of NRS 704.110, as amended by this act.

After such an electric utility files the application to clear its deferred

accounts, the commission shall investigate and determine whether the

rates that the electric utility placed into effect on March 1, 2001, pursuant

to the comprehensive energy plan are just and reasonable and reflect

prudent business practices. On the date on which the commission issues a

final order on the general rate application, the commission shall issue a

final order on the electric utility’s application to clear its deferred

accounts. The total rates to provide electric service that were in effect on

April 1, 2001, for the electric utility must remain in effect until the date on

which the commission issues a final order on the general rate application.

The commission shall not adjust the rates of the electric utility during this

period unless such an adjustment is absolutely necessary to avoid rates that

are confiscatory under the Constitution of the United States or the

constitution of this state. The commission:

(a) May make such an adjustment only to the extent that it is absolutely

necessary to avoid an unconstitutional result; and

(b) Shall not, in any proceedings concerning such an adjustment,

approve any rate or grant any relief that is not absolutely necessary to

avoid an unconstitutional result.

After the electric utility files the general rate application that is required by

this subsection, the electric utility shall file general rate applications in

accordance with subsection 3 of NRS 704.110, as amended by this act.

After the electric utility files the application to clear its deferred accounts

that is required by this subsection, the electric utility shall file applications

to clear its deferred accounts in accordance with section 19 of this act and

subsection 7 of NRS 704.110, as amended by this act.

6. On or before December 1, 2001, each electric utility that primarily

serves less densely populated counties shall file a general rate application

pursuant to subsection 3 of NRS 704.110, as amended by this act. On or

before February 1, 2002, each electric utility that primarily serves less