Senate Bill No. 253–Committee on Commerce and Labor
February 27, 2001
____________
Referred to Committee on Commerce and Labor
SUMMARY—Prevents certain electric utilities from disposing of certain generation assets for a limited period and places restrictions on disposal of such assets after that period. (BDR 58‑1122)
FISCAL NOTE: Effect on Local Government: No.
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EXPLANATION
– Matter in bolded italics is new; matter
between brackets [omitted material] is material to be omitted.
Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to utilities; preventing certain electric utilities from disposing of certain generation assets for a limited period; placing restrictions on the disposal of such assets after that period; repealing the prospective conditional expiration by limitation of certain provisions that govern changes to the regulation of electric utilities; requiring the public utilities commission of Nevada to take certain actions to carry out the provisions of this act; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. Chapter 704 of NRS is hereby amended by adding thereto
1-2 the provisions set forth as sections 2 to 7, inclusive, of this act.
1-3 Sec. 2. As used in sections 2 to 7, inclusive, of this act, unless the
1-4 context otherwise requires, the words and terms defined in sections 3 to
1-5 6, inclusive, of this act have the meanings ascribed to them in those
1-6 sections.
1-7 Sec. 3. 1. “Dispose of a generation asset” means to:
1-8 (a) Sell, lease, assign, transfer or divest an interest in a generation
1-9 asset, in whole or in part, to another person;
1-10 (b) Execute a contract or agreement to sell, lease, assign, transfer or
1-11 divest an interest in a generation asset, in whole or in part, to another
1-12 person; or
1-13 (c) Perform any promise, covenant or obligation to sell, lease, assign,
1-14 transfer or divest an interest in a generation asset, in whole or in part, to
1-15 another person pursuant to the terms of a contract or agreement unless:
1-16 (1) The electric utility executed the contract or agreement before
1-17 January 1, 2001;
2-1 (2) The commission approved the contract or agreement before
2-2 January 1, 2001, if such approval was required; and
2-3 (3) The electric utility fully performed the promise, covenant or
2-4 obligation to sell, lease, assign, transfer or divest the interest before the
2-5 effective date of this act.
2-6 2. The term does not include a transaction approved pursuant to
2-7 NRS 704.329 or a transfer authorized pursuant to NRS 704.410, except
2-8 that any person who assumes or has assumed ownership, possession,
2-9 control, operation, administration or maintenance of a generation asset
2-10 pursuant to such a transaction or transfer is subject to the provisions of
2-11 section 7 of this act.
2-12 Sec. 4. “Electric utility” means:
2-13 1. A vertically integrated electric utility, as defined in NRS 704.975;
2-14 2. A subsidiary or affiliate of such a vertically integrated electric
2-15 utility;
2-16 3. A holding company or other person that holds a controlling
2-17 interest in such a vertically integrated electric utility; and
2-18 4. A successor in interest to any utility, subsidiary, affiliate, holding
2-19 company or person described in subsection 1, 2 or 3.
2-20 Sec. 5. 1. “Generation asset” means any plant, facility, equipment
2-21 or system that:
2-22 (a) Converts other forms of energy into electricity or otherwise
2-23 produces electricity;
2-24 (b) Is located within this state;
2-25 (c) Is or was owned, possessed, controlled, leased, operated,
2-26 administered, maintained, acquired or placed into service by an electric
2-27 utility on or after January 1, 2001;
2-28 (d) Is subject, in whole or in part, to regulation by the commission;
2-29 and
2-30 (e) Is used and useful for the convenience of the public, as determined
2-31 by the commission.
2-32 2. The term does not include:
2-33 (a) Any hydroelectric plant, facility, equipment or system that has a
2-34 generating capacity of not more than 3 megawatts; and
2-35 (b) Any net metering system, as defined in NRS 704.771.
2-36 Sec. 6. 1. “Person” means:
2-37 (a) A natural person;
2-38 (b) Any form of business or social organization and any other
2-39 nongovernmental legal entity, including, without limitation, a
2-40 corporation, partnership, association, trust or unincorporated
2-41 organization; and
2-42 (c) A government, a political subdivision of a government or an
2-43 agency or instrumentality of a government or a political subdivision of a
2-44 government.
2-45 2. The term does not include the State of Nevada or an agency or
2-46 instrumentality of the State of Nevada.
2-47 Sec. 7. 1. An electric utility shall not dispose of a generation asset
2-48 unless, before the disposal, the commission approves the disposal by a
2-49 written order issued in accordance with the provisions of this section.
3-1 2. Except as otherwise provided in subsection 4, not sooner than
3-2 January 1, 2003, an electric utility may apply to the commission for
3-3 approval to dispose of a generation asset on or after July 1, 2003. If an
3-4 electric utility applies to the commission for approval pursuant to this
3-5 subsection, the commission may approve the application upon the terms
3-6 of the application as filed or upon such terms, conditions or
3-7 modifications as the commission deems appropriate, if the commission
3-8 finds that:
3-9 (a) Disposal of the generation asset will be in the public interest, will
3-10 not adversely affect customers in this state and will not impair the
3-11 development of effective competition, as defined in NRS 704.969; and
3-12 (b) The electric utility has:
3-13 (1) Demonstrated that the total cost to provide electric service after
3-14 disposal of the generation asset is likely to be less than the total cost to
3-15 provide electric service if the electric utility were to retain the generation
3-16 asset over its remaining life; or
3-17 (2) Replaced the entire generating capacity of the generation asset
3-18 with:
3-19 (I) One or more other generation assets; or
3-20 (II) One or more obligations for the purchase of power that, in
3-21 the aggregate, are effective for a period of at least 15 years and provide
3-22 power over that period for a total cost that does not exceed the total cost
3-23 that would have been incurred by the electric utility to generate the same
3-24 amount of power using the generation asset at its present operating cost.
3-25 3. If the commission approves an application pursuant to subsection
3-26 2 before July 1, 2003, the order of the commission approving the
3-27 application:
3-28 (a) May not become effective sooner than July 1, 2003;
3-29 (b) Does not create any vested rights before the effective date of the
3-30 order; and
3-31 (c) For the purposes of NRS 703.373, shall be deemed a final decision
3-32 on the date on which the order is issued by the commission.
3-33 4. If the governor establishes a date on which customers may begin
3-34 obtaining one or more potentially competitive services from an
3-35 alternative seller pursuant to NRS 704.976, not sooner than 6 months
3-36 before that date, an electric utility may apply to the commission for
3-37 approval to dispose of a generation asset. If an electric utility applies to
3-38 the commission for approval pursuant to this subsection, the commission
3-39 may approve the application upon the terms of the application as filed or
3-40 upon such terms, conditions or modifications as the commission deems
3-41 appropriate, if the commission finds that disposal of the generation asset:
3-42 (a) Will promote effective competition, as defined in NRS 704.969,
3-43 and will further the purposes of NRS 704.965 to 704.990, inclusive; and
3-44 (b) Will be in the public interest.
3-45 5. If the commission approves an application pursuant to subsection
3-46 4 before the date on which customers may begin obtaining one or more
3-47 potentially competitive services from an alternative seller, the order of the
3-48 commission approving the application:
4-1 (a) May not become effective sooner than the date on which
4-2 customers may begin obtaining one or more potentially competitive
4-3 services from an alternative seller;
4-4 (b) Does not create any vested rights before the effective date of the
4-5 order; and
4-6 (c) For the purposes of NRS 703.373, shall be deemed a final decision
4-7 on the date on which the order is issued by the commission.
4-8 6. If an electric utility disposes of a generation asset in violation of
4-9 this section, the disposal is void and unenforceable and is not valid for
4-10 any purpose.
4-11 Sec. 8. NRS 704.979 is hereby amended to read as follows:
4-12 704.979 1. The commission shall monitor the markets for electric
4-13 services affected by NRS 704.965 to 704.990, inclusive, to identify and
4-14 prevent activities that are inconsistent with the goals of NRS 704.965 to
4-15 704.990, inclusive. The commission shall:
4-16 (a) Establish standards of conduct related to activities that are
4-17 inconsistent with the goals of NRS 704.965 to 704.990, inclusive, and
4-18 establish penalties for such activities and procedures for imposing such
4-19 penalties; and
4-20 (b) [Establish] Except as otherwise provided in section 7 of this act,
4-21 establish conditions and limitations on the ownership, operation and
4-22 control of the assets of a provider of an electric service to:
4-23 (1) Prevent activities that are inconsistent with the goals of NRS
4-24 704.965 to 704.990, inclusive; and
4-25 (2) Ensure the development of effective competition for electric
4-26 services.
4-27 [Such] Except as otherwise provided in section 7 of this act, such
4-28 conditions and limitations may include, but are not limited to, limitations
4-29 on the ownership, operation and control of transmission facilities and any
4-30 generation necessary to the reliable and economic operation of such
4-31 transmission facilities. In establishing such conditions and limitations, the
4-32 commission shall take into consideration any financial obligations that a
4-33 provider of an electric service incurred, as of the date on which customers
4-34 may begin obtaining potentially competitive services from alternative
4-35 sellers, to carry out a statutory obligation of a utility.
4-36 2. Upon a showing of good cause by a party requesting an
4-37 investigation or upon motion of the commission, the commission shall
4-38 conduct an investigation of the operation of the relevant markets for any
4-39 electric service in this state to determine whether those markets are
4-40 functioning in a manner consistent with the provisions of NRS 704.965 to
4-41 704.990, inclusive. The investigation must include, without limitation, the
4-42 effect on the market of:
4-43 (a) Mergers, consolidations or acquisitions of the assets or the securities
4-44 of providers of electric services;
4-45 (b) The disposition of ownership, operation or control of the assets of
4-46 providers of electric services;
4-47 (c) Transmission congestion or constraints; and
4-48 (d) Anticompetitive or discriminatory conduct.
5-1 3. The commission may require an alternative seller, an electric
5-2 distribution utility or a vertically integrated electric utility to provide
5-3 information directly related to the provision of electric services by the
5-4 alternative seller, electric distribution utility or vertically integrated electric
5-5 utility in this state, including, but not limited to, documents and testimony,
5-6 in accordance with the regulations of the commission relating to the
5-7 discovery of information for a provider of electric service.
5-8 4. If evidence is presented to the commission that anticompetitive or
5-9 discriminatory conduct, including, but not limited to, the unlawful exercise
5-10 of market power, is denying customers the benefits of effective
5-11 competition in a market for electric services, the commission shall:
5-12 (a) Consult with, and transmit such evidence to, the attorney general;
5-13 and
5-14 (b) If appropriate, inform, and transmit such evidence to, the United
5-15 States Department of Justice and any appropriate federal agency.
5-16 5. NRS 704.965 to 704.990, inclusive, must not be construed as
5-17 exempting alternative sellers and affiliates from any other applicable
5-18 statute of this state or the United States, relating to consumer and antitrust
5-19 protections. The exemption provided in paragraph (c) of subsection 3 of
5-20 NRS 598A.040 does not apply to conduct of or actions taken by an
5-21 alternative seller pursuant to NRS 704.965 to 704.990, inclusive.
5-22 6. Nothing in NRS 704.965 to 704.990, inclusive, requires any person
5-23 who is or has been aggrieved by the conduct of an alternative seller to seek
5-24 relief first before the commission.
5-25 Sec. 9. NRS 704.9826 is hereby amended to read as follows:
5-26 704.9826 1. [The provider of electric service designated pursuant to
5-27 subsection 1 of NRS 704.982] If, before July 2, 2003, a designated
5-28 provider receives approval to dispose of all of its generation assets
5-29 pursuant to section 7 of this act, the designated provider is entitled to
5-30 recover only from the gain, if any, from the [sale] disposal by the
5-31 designated provider of all of its generation assets any shortfall during the
5-32 period commencing on March 1, 2000, or such other date that is
5-33 determined to be in the public interest by the governor pursuant to NRS
5-34 704.976, and ending on March 1, 2003, that results from the netting of any
5-35 difference between:
5-36 (a) The revenues generated by the total rates charged to all classes of
5-37 customers pursuant to NRS 704.9823; and
5-38 (b) The total cost incurred by the designated provider to provide that
5-39 service to all classes of customers.
5-40 2. [Upon] If the provisions of subsection 1 apply to a designated
5-41 provider, upon approval of the amount of the net shortfall, if any, the
5-42 commission shall authorize the designated provider to recover that amount
5-43 from the gain , if any, on the [sale] disposal of all of its generation assets,
5-44 after the deduction of any taxes.
5-45 3. If, before July 2, 2003, a designated provider has not received
5-46 approval to dispose of all of its generation assets pursuant to section 7 of
5-47 this act, the commission shall authorize the designated provider to
5-48 recover any shortfall described in subsection 1 from:
6-1 (a) The gain, if any, on the disposal of the generation assets, if any,
6-2 for which the designated provider received approval before July 2, 2003,
6-3 after the deduction of any taxes; and
6-4 (b) Any just and reasonable charges allowed pursuant to subsection 4.
6-5 4. If the provisions of subsection 3 apply to a designated provider
6-6 and the commission determines that the amount recovered by the
6-7 designated provider pursuant to paragraph (a) of subsection 3 is less
6-8 than the amount that the designated provider most likely would have
6-9 recovered if the designated provider had received approval before July 2,
6-10 2003, to dispose of all of its generation assets, the commission shall
6-11 authorize the designated provider to assess just and reasonable charges
6-12 to recover the difference between such amounts.
6-13 5. If the commission authorizes a designated provider to assess just
6-14 and reasonable charges pursuant to subsection 4, the commission shall
6-15 adopt by regulation procedures to provide for the direct and unavoidable
6-16 assessment of those charges on customers. The procedures must include
6-17 a determination of the period over which the charges will be assessed on
6-18 customers and include the authority for the commission to assess the
6-19 charges on those customers who are no longer receiving transmission or
6-20 distribution service, or both, from the designated provider. Such
6-21 determinations and procedures must not discriminate against a
6-22 participant in the market.
6-23 6. As used in this section[, “total] :
6-24 (a) “Designated provider” means a provider of electric service
6-25 designated pursuant to subsection 1 of NRS 704.982.
6-26 (b) “Dispose of a generation asset” has the meaning ascribed to it in
6-27 section 3 of this act.
6-28 (c) “Generation asset” has the meaning ascribed to it in section 5 of
6-29 this act.
6-30 (d) “Total cost incurred by the designated provider” means the total
6-31 revenues generated by all classes by the rates in effect on July 1, 1999, as
6-32 adjusted to account for the effects of any decision of the commission
6-33 relating to any cases filed with the commission before October 1, 1999,
6-34 which involve the use of deferred accounting.
6-35 Sec. 10. NRS 704.986 is hereby amended to read as follows:
6-36 704.986 1. Each vertically integrated electric utility shall submit to
6-37 the commission, pursuant to a schedule established by the commission, a
6-38 plan for compliance with the requirements set forth in NRS 704.965 to
6-39 704.990, inclusive, and the applicable regulations. The vertically integrated
6-40 electric utility shall include with the plan any information the commission
6-41 needs to:
6-42 (a) Set rates for electric services, including, but not limited to:
6-43 (1) A statement of the costs of the vertically integrated electric utility
6-44 to provide the service.
6-45 (2) The amount of revenue required by the vertically integrated
6-46 electric utility.
6-47 (b) Allocate among customers the costs of service and the requirements
6-48 for revenues for noncompetitive services.
7-1 (c) Adopt regulations for potentially competitive services if a market is
7-2 not sufficiently competitive.
7-3 2. The commission may exempt a vertically integrated electric utility
7-4 or an alternative seller from the strict application of any provision of this
7-5 chapter, other than the provisions of sections 2 to 7, inclusive, of this act
7-6 and NRS 704.965 to 704.990, inclusive, upon a determination by the
7-7 commission that the exemption is necessary to achieve effective
7-8 competition within the electric industry.
7-9 Sec. 11. Section 26 of chapter 600, Statutes of Nevada 1999, at page
7-10 3272, is hereby repealed.
7-11 Sec. 12. 1. The public utilities commission of Nevada shall:
7-12 (a) Amend, modify, supplement, annul or vacate any order or directive
7-13 issued by the commission before the effective date of this act that
7-14 authorizes or requires an electric utility to dispose of any generation asset,
7-15 if such disposal would violate the provisions of this act;
7-16 (b) Take all appropriate action to request that the Federal Energy
7-17 Regulatory Commission and any other officer, agency or department of the
7-18 Federal Government:
7-19 (1) Not issue any order or directive that authorizes or requires an
7-20 electric utility to dispose of any generation asset, if such an order or
7-21 directive could be interpreted as being in conflict with or preempting the
7-22 provisions of this act; and
7-23 (2) Amend, modify, supplement, annul or vacate any order or
7-24 directive issued before, on or after the effective date of this act that
7-25 authorizes or requires an electric utility to dispose of any generation asset,
7-26 if such an order or directive could be interpreted as being in conflict with
7-27 or preempting the provisions of this act;
7-28 (c) If any action taken pursuant to paragraph (b) is unsuccessful, take all
7-29 appropriate legal action to challenge any order or directive issued by the
7-30 Federal Energy Regulatory Commission or any other officer, agency or
7-31 department of the Federal Government that authorizes or requires an
7-32 electric utility to dispose of any generation asset, if such an order or
7-33 directive could be interpreted as being in conflict with or preempting the
7-34 provisions of this act; and
7-35 (d) Take any other action or issue any other orders necessary to carry
7-36 out the provisions of this act.
7-37 2. Notwithstanding any other provision of law, the public utilities
7-38 commission of Nevada is hereby empowered and authorized to take any
7-39 action or to issue any orders necessary to carry out the provisions of this
7-40 act.
7-41 Sec. 13. This act becomes effective upon passage and approval.
8-1 TEXT OF REPEALED SECTION
8-2 Section 26 of chapter 600, Statutes of Nevada 1999:
8-3 Sec. 26. If the pending merger between Sierra Pacific Resources
8-4 and Nevada Power Company, referred to in the records of the Public
8-5 Utilities Commission of Nevada as Docket No. 98-7023, is
8-6 terminated for any reason before the completion of the merger, this
8-7 act expires by limitation on the date on which the pending merger is
8-8 terminated.
8-9 H