MINUTES OF THE meeting

of the

ASSEMBLY Committee on Commerce and Labor

 

Seventy-Second Session

February 17, 2003

 

 

The Committee on Commerce and Laborwas called to order at 2:08 p.m., on Monday, February 17, 2003.  Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr. David Goldwater, Chairman

Ms. Barbara Buckley, Vice Chairman

Mr. Morse Arberry Jr.

Mr. Bob Beers

Mr. David Brown

Mrs. Dawn Gibbons

Ms. Chris Giunchigliani

Mr. Josh Griffin

Mr. Lynn Hettrick

Mr. Ron Knecht

Ms. Sheila Leslie

Mr. John Oceguera

Mr. David Parks

Mr. Richard Perkins

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

Mr. Jason Geddes

Mr. Joe Hardy

 

STAFF MEMBERS PRESENT:

 

Vance Hughey, Committee Policy Analyst

Wil Keane, Committee Counsel

Diane Thornton, Senior Research Analyst

Sharee Gebhardt, Committee Secretary

 

OTHERS PRESENT:

 

Susan L. Fisher, Legislative Advocate, Barrick Goldstrike Mines

Be-Be Adams, Director of Community Relations, Barrick Goldstrike Mines

K. Neena Laxalt, Legislative Advocate, Natural Lighting Company, Inc.

Joe Johnson, Legislative Advocate, Toiyabe Chapter of the Sierra Club

Doug Bierman, Legislative Advocate, Humboldt River Basin Water Authority

Timothy Hay, Consumer Advocate, Nevada Attorney General, Bureau of Consumer Protection

Bob Cooper, Sr. Regulatory Analyst, Nevada Attorney General’s Bureau of Consumer Protection

David S. Noble, Assistant General Counsel, Nevada Public Utilities Commission

Judy Stokey, Director of Public Policy, Nevada Power and Sierra Pacific

Kathleen Drakulich, Associate General Counsel, Legal Division for Nevada Power and Sierra Pacific

Ned Shamo, Electric Utility Administrator, City of Boulder City

Doug Bache, private citizen, Las Vegas, Nevada

Alice A. Molasky-Arman, Commissioner of Insurance, Nevada Department of Business and Industry, Division of Insurance

Mary C. Walker, Legislative Advocate, Carson-Tahoe Hospital

Larry Matheis, Executive Director, Nevada State Medical Association

James L. Wadhams, Legislative Advocate, Nevada Hospital Association

 

 

Chairman Goldwater called the meeting to order with all members present.  He advised the Committee there were many bills to be introduced during the legislative session, but sponsors had been reluctant to proceed.  He cautioned that if members and sponsors continued to stall, time would run out for all bills to be heard before the April deadline.  He encouraged the members to not delay in getting their BDRs introduced.  Chairman Goldwater then opened the hearing on A.B. 49, sponsored by Assemblyman Josh Griffin, Assemblyman Joe Hardy, and Assemblyman Jason Geddes.

 

Assembly Bill 49:  Revises definition of renewable energy to include waterpower for certain purposes. (BDR 58-920)

 

Assemblyman Griffin explained the bill had arisen from a discussion with Assemblyman Hardy and Assemblyman Geddes regarding hydropower as a renewable resource.  Because of its affordability and ready availability in Nevada, they agreed hydropower should be encouraged as a renewable resource in the portfolio standards created by S.B. 372 of the 71^st Legislative Session.  Mr. Griffin acknowledged, however, that simply identifying waterpower as a renewable energy resource in a bill did not address many related issues.  He submitted “Amendments to A.B. 49“ (Exhibit C) and expressed the desire the amendments would allow the Committee to accomplish all their goals and still remain sensitive to the rationale evident in the 2001 session that excluded hydropower from legislation. 

 

Citing Exhibit C, Assemblyman Griffin defined “small hydro” as 30 megawatts or less.  Chairman Goldwater asked whether 30 megawatts was considered a lot of power.  Mr. Griffin responded that it depended on how it was used, but he believed it would be a lot of power.

 

Assemblyman Griffin acknowledged the next definition of waterpower in Exhibit C required further work but explained the intention was to allow hydropower only from the standpoint of new energy development.  The amendment would, thereby, protect Hoover Dam and other dams built before the 1940 cut-off date.

 

Assemblyman Griffin explained the intention of the third definition of waterpower in Exhibit C, which provided that hydropower generated from existing sources could be placed in the portfolio standard until July 31, 2004, was to accommodate a potential regulatory environment.  Mr. Griffin believed there had been considerable ongoing energy investments, but the standard was set at a level that was difficult for many utilities to achieve.  He continued that if an expiration date was set in mid-2004, Nevada would still be able to encourage long-term investments and development in hydropower as a new resource, but he added, an expiration date would allow some leeway for the next year and a half. 

 

The “additional amendments” in Exhibit C, Mr. Griffin advised, were primarily linguistic in nature.  The words “thermal” and “electricity” were removed from NRS 704.7815(2) and “electricity” was replaced with “energy.”  Likewise, in NRS 704.7821 the word “thermal” was struck.  The intention of the change, Mr. Griffin explained, was to encourage various optional uses for renewable resources at remote or singular locations. 

 

Assemblyman Griffin stated that allowing a 2.5 multiplier within the portfolio standard for photovoltaic (PV) energy provided an opportunity for a very clean, renewable resource.  He acknowledged that it was an expensive investment initially, which could be partially offset by passing on the increased cost to the ratepayer.  He believed the numeric amount of the multiplier needed to be considered more carefully in order to offer attractive incentives to the supplier without causing excessive increases to the consumer. 

 

The last item Assemblyman Griffin addressed from Exhibit C was the allowance for renewable sources of power to be off the Nevada grid.  This would accommodate power generation in rural, remote agricultural, and mining locations.  Although off the grid, he believed those renewable energy sources should be encouraged. 

 

Assemblywoman Buckley questioned the intent of the bill.  She recalled the issue was studied in depth during the 71^st Legislative Session after electrical costs had increased dramatically.  At that time, in an effort to encourage renewable energy sources to offset increased electrical rates, she explained, the Legislature had adopted a renewable energy portfolio bill.  The bill set public policy that encouraged investments in renewable resources.  Because investments in waterpower had already transpired, Ms. Buckley questioned whether this bill would enhance already established public policy.

 

Assemblyman Griffin acknowledged that some of those matters were considered last legislative session but suggested that more details needed to be addressed.  He also clarified that the thrust of this legislation was to encourage new hydropower sources, not existing plants. 

 

Assemblywoman Buckley asked if this bill would only count towards that portfolio standard for new endeavors involving hydropower.  Mr. Griffin confirmed that was the intention.

 

Assemblyman Knecht inquired whether Pelton wheel projects were included in the term “waterpower.”

 

Assemblyman Griffin deferred to Assemblyman Hardy to respond to the question.  Mr. Hardy, in an effort to put the question in perspective, cited a power plant in Eldorado Valley near Boulder City that generated 500 to 600 megawatts.  Mr. Hardy proposed that 30 megawatts, as identified in A.B. 49, would provide smaller hydropower opportunities for the state. 

 

Assemblyman Hardy identified his district from Mesquite to Laughlin as the “river cities” district where every river flowed downhill.  Boulder City, as the home of Hoover Dam, was also the home of hydropower.  Mr. Hardy reported that Boulder City Eldorado Valley anticipated a $3 million emission reduction commitment for every power plant built in Boulder City.  The cost included planting 15,000 trees and decreasing PM 10’s to improve air quality.  Because planting more trees would not be water-efficient, Mr. Hardy stated that Boulder City was also interested in other alternatives such as photovoltaic sources.

 

Assemblyman Hardy reiterated the benefits of hydropower as being a clean, “green” source of power and for its potential as an efficient and economical power source.  He pointed out that hydropower was especially beneficial for rural residents in remote areas of the state.  He recommended Ned Shamo from the City of Boulder City as an “energy guru” to consult for further questions. 

 

Assemblyman Hardy noted that some Nevada statutes included waterpower as a renewable energy source.  The purpose of A.B. 49 was to revise the definition for the credit-trading program so that hydropower, on a smaller scale as a renewable energy source, would be considered “clean, green, and good” energy production without depending on former projects. 

 

Chairman Goldwater agreed with Mr. Hardy’s concept of the intent of A.B. 49 and stated he believed the bill required further work. 

 

Referring to the definition of waterpower identified in Exhibit C, Assemblyman Knecht inquired whether Pelton wheel projects and steam turbines would be covered under the definition.  Assemblyman Jason Geddes responded that he could not address the specifics of that question. 

 

Assemblyman Knecht acknowledged that his was a trick question, but that it had a point.  He believed the definition would apply to Pelton wheel projects, but hoped the definition would not apply to steam turbines since that would include the use of fossil fuels.  From that example, he believed a clear definition for waterpower was necessary.  Mr. Knecht also expressed concern about the cost of some renewable resources and the need for a provision to keep projects cost-competitive to prevent unduly costly resources from being paid by captive ratepayers.

 

Assemblyman Griffin, addressing the matter of fossil fuels, stated that a number of ideas had been discussed and the use of fossil fuels to create hydropower somewhat defeated the purpose of the bill.  He referenced the PV energy provision with a 2.5 multiplier and cautioned the Committee to be sensitive to the cost required to produce that level of energy and the consequent turnaround result to the ratepayers.  He agreed the fossil fuel issue needed further attention.  He also expressed the belief that if incentives could be created within the portfolio standards to encourage development, eventually the prices would become competitive.

 

Assemblyman Knecht referenced his disclosure declaration discussed in a previous hearing and reiterated that he had worked as an economist at the Public Utilities Commission (PUC) and planned to return to that position after the legislative session.  He believed A.B. 49 would not affect his work any more than any other public employee and his affiliation with the PUC would not affect his vote.  He saw no conflict and planned to participate and vote on the bill.

 

Assemblywoman Giunchigliani wanted to clarify Mr. Griffin’s answer to a previous question regarding whether 30 kilowatts was a small amount, noting the amendment indicated it was.  Assemblyman Griffin nodded assent. 

 

Ms. Giunchigliani shared Assemblywoman Buckley’s concern that the previous session encouraged utilizing renewable resources such as solar and wind power, and that by including hydropower in the definition, power plants could use hydropower as an excuse to meet their percentages. 

 

Assemblyman Griffin responded A.B. 49 was not designed to subvert measures to encourage development of renewable resources such as photovoltaic, solar, and wind power.  At the same time, he added, the bill should not discourage hydropower as a potential green, clean source of energy.  The suggested amendments, he opined, would allow small hydropower operations to be considered as well as any new sources of hydropower that became available on a grid. 

 

Assemblywoman Giunchigliani agreed that the portfolio standard should allow for those projects that were addressed in the suggested amendment.  She inquired how long it would take for companies dealing in alternative sources of energy to become cost-competitive.  

 

Assemblyman Hardy stated the City of Boulder City was negotiating with Duke Energy and was committed to utilizing solar energy in Eldorado Valley irrespective of any legislative mandate.  He said Duke Energy was dedicated to this project in order to meet their energy requirements.  Mr. Hardy believed hydropower would become available more readily in rural areas, particularly in mines, where water running downhill in streams and creeks could be used to generate electricity.  He noted that this type of energy was green and clean and was appropriate to include in the statutes. 

 

Assemblywoman Giunchigliani asked about the incentive percentage.  It was confirmed that it was five percent.  Ms. Giunchigliani then suggested that perhaps a lower percentage could be offered for hydropower to at least prevent a disincentive.  She said this was just a possibility to consider.  She then inquired how many dams had been built in Nevada since 1940.  She cautioned that the verbiage to the amendment needed to be carefully crafted, given the water problems evident with Walker River and the possible removal of some other dams.

 

Assemblyman Geddes acknowledged that both S.B. 372 of the 71^st Legislative Session and A.B. 661 of the 71^st Legislative Session were very good bills.  At national conferences he had attended on all forms of renewable energy, he reported, the portfolio standard created in the last legislative session was considered one of the front-runners in the nation with the highest standard at the time it was approved.  Mr. Geddes added that Nevada was leading the way in ending the nation’s dependence on petroleum and petroleum products. 

 

Mr. Geddes reiterated the focus of the bill was renewable energy, and he believed hydropower had been removed from last session’s bill because of the large amount of hydropower already generated in the state.  Additionally, he advised it was not the intention of the sponsors to create a system of damming up rivers and streams to generate electricity.  He acknowledged there were environmental detriments that accompanied such activity, but also acknowledged new advances in technology were such that he did not want to preclude companies from entering the market if they were able to produce electricity using hydropower. 

 

Assemblyman Geddes stated that other sections of the Nevada Revised Statutes had defined hydropower as a renewable resource.  He added that, of the twelve states that had portfolio standards, only Nevada and one other state did not include hydropower.  Mr. Geddes said the 30-megawatt cap cited in Exhibit C was copied from the California standard.  He believed the numeric amount of 30-megawatt was selected in California to discourage major industrial damming operations, and thereby would prevent negative environmental effects. 

 

Assemblyman Geddes continued that the intent of the bill was to maximize Nevada renewables.  Citing NRS 704.7811, he said current law did not include in the definition of “renewable energy” coal, natural gas, oil, propane, or any other fossil fuel.  Although the 2001 Legislative Session had passed a landmark bill, Mr. Geddes opined it did have some problems.  As an example, he pointed out that “biomass” was included in the “renewable energy” definition, and the statutory definition of biomass included municipal waste.  One source of municipal waste was used tires.  Mr. Geddes mentioned that currently there were two or three manufacturers or producers in the state who were considering building tire-burning facilities in order to meet their renewable portfolio standard.  He noted a paradox in a law that awarded green credits for burning tires, which were petroleum-derived, but denied credits for generating power from water flowing down a stream.  Mr. Geddes concluded that the intent of the bill was to include waterpower in its amended limited capacity in the renewable energy definition.  He added that eventually legislation would be needed to exclude tires from the biomass definition.

 

Chairman Goldwater thanked Mr. Geddes and commented that his presentation was very informative and thorough.

 

Assemblywoman Leslie asked whether the Renewable Energy Task Force, created under A.B. 661 of the 71^st Legislative Session, had reviewed and supported A.B. 49.

 

Assemblyman Geddes responded that he had communicated with the Task Force and they were in support of the general concept of the bill.  He said the Task Force had yet to meet regarding the bill but planned to review more of the details and would then make their suggestions.

 

Assemblywoman Leslie said the members of the Task Force were the experts in the state and she would be very interested in their opinion. 

 

Chairman Goldwater commented it was clear the Committee did not intend to harm the portfolio standard, and with further work, they would achieve their goal. 

 

Susan L. Fisher, Legislative Advocate for Barrick Goldstrike Mines, testified in support of A.B. 49.  Ms. Fisher stated there currently were 21 states that defined renewable energy.  Of those states, she said, 17 included hydro in their portfolio standards.  She added that some states applied limitations or restrictions on their hydro use. 

 

Be-Be Adams, Director of Community Relations, Barrick Goldstrike Mines, read from prepared testimony (Exhibit D).  She stated that Barrick Goldstrike Mines was the largest customer of Sierra Pacific Power and the third largest power user in Nevada.  Under the Repower Nevada legislation, A.B. 661 of the 71^st Legislative Session, enacted in 2001, Ms. Adams reported, Goldstrike was dedicated to utilizing renewable energy at no environmental cost and to meet their renewable energy obligations.  Ms. Adams described the mine’s water management system, which was a system of wells, pumps, and pipelines that were used to control the water level and keep the mine dry.  She said the water that was not consumed by mining and milling operations was delivered downhill within the same water basin, and, by simply harnessing the water flowing downhill, the mine could produce 7 megawatts of power at no environmental cost, which could help meet their renewable energy obligations.  She noted that, unfortunately, under current law, this type of hydropower would not apply for a renewable credit. 

 

Chairman Goldwater inquired whether Goldstrike would incorporate hydropower regardless of legislation or whether the portfolio standard requirement would inspire the mine to produce that kind of power.

 

Ms. Adams responded that currently Goldstrike was not using any hydropower.  She added that Goldstrike was currently utilizing a pipeline system for dewatering the mine and transporting the water downhill for irrigation, which provided an opportunity for hydropower development.  In the future, Ms. Adams said, if hydropower were included in the renewable definition, it would help with the renewability requirement. 

 

Chairman Goldwater asked whether Goldstrike would proceed with hydropower plans regardless of whether it counted for the portfolio standard.

 

Ms. Fisher answered that they would consider it.  She said the mine engineers were looking at the feasibility of bringing the hydro facility to Nevada and installing it.  Ms. Fisher added it was not an absolute, but it would be very advantageous if they would receive a renewable credit for it.  

 

K. Neena Laxalt, Legislative Advocate, representing Natural Lighting Company, Inc., Glendale, Arizona, spoke in support of Assemblyman Griffin’s removal of the word “thermal” from renewable energy system’s definition. 

 

Chairman Goldwater asked for more elaboration.  Ms. Laxalt explained the change was desirable because currently the statutory language provided only for credits and for the portfolio to be met by solar thermal systems.  She represented a day lighting company, which was not operating through a thermal system, and consequently they were excluded from any credit.

 

Joe Johnson, Legislative Advocate, representing the Toiyabe Chapter of the Sierra Club, stated he had previously opposed hydropower for inclusion in renewable energy credits because he feared existing geothermal plants would be included in the portfolio.  He believed that if hydropower was included without some definition, there could be problems with federal programs.  He advised he now supported the bill with the amendments under consideration.  Mr. Johnson said he had previously recommended legislation favoring solar thermal energy.  He believed enactment of this bill would generate significant economic activity.  Allowing a multiplier, he noted, was fairly novel, but he cited the New Mexico standard, recently adopted by regulation that allowed a multiplier of either 2 or 3 to qualify for renewable credits. 

 

Referring to the definitions of waterpower, Mr. Johnson said Sierra Club had concerns about dams and minimum stream flows.  He believed the proposed amendments adding restrictions would resolve most issues of concern.  He concluded that with some reworking and consolidation of the amendments, the bill would make a significant improvement in the portfolio standard. 

 

Chairman Goldwater advised Mr. Johnson that he would probably commission him to work with Assemblyman Griffin.  He stated he did not want to harm the intent of the portfolio standard, but added Mr. Johnson’s input might inspire additional uses of hydro electric power in the portfolio.  Chairman Goldwater asked Mr. Johnson if he would be agreeable to working with Mr. Griffin.  Mr. Johnson responded in the affirmative and added that he was also interested in other BDRs, including one regarding biomass, that were before the Legislature this session.

 

Doug Bierman, Legislative Advocate, representing the Humboldt River Basin Water Authority, testified in support of A.B. 49.  Mr. Bierman explained that the Humboldt River Basin Water Authority was a consortium of five counties in the northern and northeastern parts of the state that had helped to successfully manage the affairs and concerns of the river basin of those counties through which the Humboldt River flows.  Mr. Bierman reported that currently the Water Authority had several applications before the federal energy regulatory staff for Phase I feasibility studies for the placement of small hydroelectric sites on the Humboldt River and its tributaries.  Mr. Bierman believed actual implementation would be in the future, but the Water Authority saw the bill as a means to help rural areas.  He pointed out that mining was a huge part of Nevada’s economy, and legislation beneficial for the mining community would both directly and indirectly benefit the people of the northern and eastern counties of the Humboldt River Basin. 

 

Timothy Hay, Consumer Advocate, Office of the Attorney General, Bureau of Consumer Protection, stated he was unaware the Renewable Energy Task Force had an executive director, but he encouraged interaction with the Task Force on the bill.  His office opposed the initial version of the bill.  He said his office would be supportive of a limited small hydro exemption.  He cited the debate over the hydro issue at the last legislative session when the original portfolio standard was developed.  Mr. Hay believed clarifying the language could rectify some problems with the amendment.  He opined hydropower-generated dams built after 1940 could easily be grandfathered in.  He expressed concern that allowing hydropower from existing sources to be placed in the portfolio standard for the period from passage to the July 31, 2004, deadline could open further problems.  He reminded the Committee the intent in developing the portfolio standard was to encourage the development of indigenous Nevada resources.  Mr. Hay conceded there might be some mining dewatering applications and/or agricultural applications for smaller hydropower facilities, which would be consistent with the legislative intent.  He believed the 30 megawatts was quoted in relative terms.  He advised 30-megawatt hours on an annual basis would power approximately 30,000 homes, which would be a fairly substantial amount of power.  He suggested a smaller number of megawatts, perhaps 15, would be more appropriate.  Mr. Hay offered his support to the proposed amendments removing “thermal” from the existing statute and from the photovoltaic multiplier.  He cited Public Service Commission regulations, which allowed for a multiplier for distributed generation sources.  The multiplier basically represented additional credit because the power was not transmitted over power lines, thereby improving its efficiency.  The analysis for the photovoltaic multiplier, Mr. Hay opined, could be similar to that. 

 

Accompanying Mr. Hay to testify was Bob Cooper, Senior Regulatory Analyst, Office of the Attorney General, Bureau of Consumer Protection.  Mr. Hay advised that Mr. Cooper was his designee on the Renewable Energy Task Force.  Mr. Cooper testified the Task Force had set aside a substantial amount of its agenda the next day to discuss legislative matters, and he was sure A.B. 49 would be part of that discussion.  He clarified that although the Task Force did not have an executive director, it did have a chairman, Rose McKinney James, who was its solar representative.  The vice-chairman was Sam Roultson, who was its biomass representative.  He reminded the Committee that on January 30, 2003, the Task Force had provided each member of the legislature with a CD-ROM and a 70-page report that detailed the four renewable energy technologies enumerated in the portfolio standard. 

 

David S. Noble, Assistant General Counsel, Nevada Public Utilities Commission (PUC), announced the Commission’s support of the bill’s inclusion of waterpower as a renewable energy source, and also of the cap as identified in the amendments.  He advised that the Commission would reserve comment on further amendments until such time as they were able to review them. 

 

Chairman Goldwater invited other witnesses to speak who could offer further information.  Judy Stokey, Director of Public Policy, Nevada Power and Sierra Pacific, spoke in support of A.B. 49 in concept.  She believed that hydropower was efficient, inexpensive, and very convenient for rural and agricultural needs.  She made note that most states did include hydropower as part of their renewable portfolio standard. 

 

Accompanying Ms. Stokey was Kathleen Drakulich, Associate General Counsel, Legal Division, Nevada Power and Sierra Pacific.  Ms. Drakulich had worked on S.B. 372 of the 71^st Legislative Session and was involved in the renewable energy hearings at the Public Utilities Commission.  She began by reviewing recent history on renewable energy legislation.  She recalled that S.B. 372 of the 71^st Legislative Session had a provision that required the PUC to draft a regulation that was in place no later than 120 days after the bill’s passage.  Ms. Drakulich believed the purpose of the 120-day stipulation was to aggressively get contracts in place with developers.  She said the Legislative Commission had later sent that regulation back because of a price cap.  It had been almost a year later, she reported, before the first regulation was in place, and later the PUC had developed the renewable energy credit-trading program. 

 

Ms. Drakulich explained the credit program provided credit for renewable energy in two ways:  a utility company could actually purchase and receive the power over its wires, or a company could purchase the credit without purchasing the energy.  In the second scenario, she advised that the power company was not actually interconnected with the independent power sources, but the independent owners of the power would submit confirmation to the PUC confirming the number of hours of power generated and making the credit they earned available to the utility company to purchase. 

 

Ms. Drakulich advised the final regulation on the renewable credit program had been passed by the PUC last December, and she reiterated Nevada Power and Sierra Pacific’s support of legislation, including hydropower.  

 

Addressing Assemblywoman Giunchigliani’s question as to how to reduce costs, Ms. Drakulich advised that solar power was one of the most expensive resources for power companies to procure for their customers.  It normally cost three times more than what they paid for other resources.  She suggested that to reduce costs, one must increase the volume.  She expressed concern that increasing the volume of renewable energy in the market might inhibit developing other desirable resources.  She suggested including a provision that would “incentivize” renewable energy procurement in excess of the portfolio standard.  Ms. Drakulich said a Governor’s Task Force meeting had discussed this matter.  She believed such an incentive would reduce worry about how much hydro was on the market and would actually bring the price of the credits down which, in turn, would bring the price of energy down to customers. 

 

Ms. Drakulich addressed a concern of the Office of the Bureau of Consumer Protection about bringing in hydro from the Pacific Northwest.  She said a provision in NRS 704.7815, “Renewable energy system” defined, limited the importation of large amounts of hydroelectric power from the Pacific Northwest or assuming credit for it. 

 

Ms. Drakulich advised the Committee that the utilities had entered into contracts to meet the standards in 2005 and 2006, and she believed enacting A.B. 49 would advance utilities toward meeting the portfolio standards in 2003 and 2004.  She believed this would enable power companies to remain in compliance for those years.

 

Assemblywoman Giunchigliani commented that passive solar and active solar systems were not widely used in Nevada and suggested that perhaps incentives should be created for local governments to require the building industry to utilize renewable resources in construction.  She suggested there were other methods to achieve their goal besides incentives; however, she said she was not necessarily opposed to incentives.  Ms. Giunchigliani cautioned that to reach the large sector, A.B. 49 needed to encourage and empower the smaller individual homes.  She inquired about a “box” that was supposed to be attached for homeowners. 

 

Ms. Drakulich explained a residential solar unit dealt more with net metering units of less than 10 KW, pursuant to current law.  She said the power company usually put a second meter on a residence and she explained that, with a net metering system, the meter did not spin when the sun was shining if a consumer had a solar unit on his house.  Ms. Drakulich advised that during that time the consumer would not be charged for energy, and additionally would not be charged a distribution or generation fee.  Instead, the consumer was charged a basic fee.  She said the net metering statute provided an incentive to those residential units and meters.  

 

Assemblywoman Giunchigliani inquired whether it was cost-competitive to install the unit or whether that was part of the problem of getting it functioning.

 

Ms. Drakulich responded that the cost of the meter and the actual labor hours that the utility company expended to set up a customer on the net metering system was borne by the rest of the customer base because of the benefits associated with the net metering unit.  The cost of the actual solar panels and installation, however, were borne by the customer.

 

Assemblywoman Giunchigliani received confirmation that Ms. Drakulich had explained an active solar system.  She asked what was involved in a passive solar system. 

 

Ms. Drakulich responded the passive idea was an example of what Neena Laxalt had discussed earlier and concurred with Ms. Laxalt that “thermal” should be struck from the statutory language.

 

Assemblyman Knecht said he wanted to emphasize that every dollar out of market cost that a utility company incurred for renewable resources, and also every dollar to run the program, came from its captive customers, and none of it was a below-the-line cost.

 

Ms. Drakulich confirmed that was true.  She added, however, that under S.B. 372 of the 71^st Legislative Session, the utility must first enter into a contract and submit the contract to the Commission to determine whether the cost associated with the contract was just and reasonable.  She said only contracts that met the “just and reasonable” standard were authorized to receive energy credits and commence construction.  She reiterated that the cost was borne by the customers, but only after the utility company went through the regulatory process, which included a standard hearing with public notice and which offered intervention and participation to all parties.

 

Assemblyman Knecht asked Ms. Drakulich, as a member of the Nevada Bar, whether, unless the cost was found to be not just and reasonable, it was her view that the Hope Natural Gas case would require state regulators to allow the utility to recover those costs from their captive rate payers. 

 

Chairman Goldwater intervened to inquire whether Mr. Knecht was referencing an open docket with the PUC.

 

Assemblyman Knecht clarified that it was not a docket, but that he was referring to a 1944 landmark federal case. 

 

Ms. Drakulich explained she had not read the Hope Natural Gas case since Mr. Knecht had cited it in some testimony a year ago.  She said she would need to review that case and get back to Mr. Knecht.

 

Assemblyman Knecht inquired whether the costs incurred by the utility companies were ultimately paid by ratepayers.

 

Ms. Drakulich responded affirmatively. 

 

Chairman Goldwater asked for clarification.  He asked what more incentive was needed for hydroelectric power when there was plenty of water and snow and $.02 power on the grid from the Pacific Northwest.

 

Ms. Drakulich explained her understanding of the law:  that while power companies imported hydroelectric from the Pacific Northwest and used it to serve their customers, it could not be included in the portfolio standard.  Citing NRS 704.7815, she said she believed the definition included hydropower in the statute, but that the intent of the law was to preclude power companies from applying hydroelectric from the Pacific Northwest to qualify as a renewable energy system. 

 

Chairman Goldwater stated he did not believe that was the intent of the sponsor.

 

Assemblyman Griffin agreed that that, in itself, was not the intention of the bill, but he believed there were some new sources of hydropower that might come from outside the state that would be considered for the portfolio standard.

 

Ms. Drakulich advised that if the renewable energy system was outside of the state, it could not be used.  She cited the statutory definition that required a single line directly interconnected to a Nevada utility.  She added that a dedicated line to that facility would qualify.

 

Ned Shamo, Electric Utility Administrator, representing City of Boulder City, Nevada, testified in favor of A.B. 49 via videoconference.  He explained that Boulder City was a hydropower town and about 65 per cent of their resources were hydro.  He strongly advocated using the 30-megawatt limitation.  He believed there were many viable resources to be developed.  As an example, he said Boulder City had a peak demand 15 years ago of 30 megawatts.  At that time the town had a population of 10,000.  He advised that 30 megawatts was not a large resource and would be very manageable and workable.  He said he strongly supported the bill and favored the limitations set out in the amendment.  He thought the portfolio standard needed to be there to encourage and allow the development of new innovations of green power. 

 

Doug Bache testified as a resident of Las Vegas, via videoconference from Las Vegas, and stated that he had originally opposed A.B. 49.  He had feared the bill would circumvent the portfolio standards by allowing Sierra Pacific and Nevada Power to purchase power from various hydro entities in the Northwest, Idaho, or even from Hoover Dam to meet their portfolio standard.  He was therefore concerned the bill would not encourage development of further renewable energy, such as the wind contract entered by Nevada Power and their test site.  He noted that because the proposed amendments in Exhibit C were not available at the Las Vegas hearing, he was unsure what position he would take.  He believed, in concept, he would support including new hydropower using a January 1, 2003, date.  After that date, he suggested, hydropower could be used as a renewable source, but the current amount could not be used to meet the portfolio standard.  Regarding the portfolio standard, Mr. Bache stated that, either through legislation or the authority of the Commission, an entity could receive a waiver in situations where it had made a good-faith effort to meet the standard.  He believed Nevada Power had made a good-faith effort to add solar and wind and other renewable energies. 

 

There were no further questions or witnesses.  Chairman Goldwater closed the hearing on A.B. 49 and remanded the bill with the proposed amendments to Assemblyman Griffin for further work.  He stated his belief that the Committee had no appetite to pass legislation that would violate the spirit of the portfolio standard, but added there might be value in encouraging the use of renewable resources indigenous in the state, particularly hydroelectric.  He further advised Mr. Griffin to work with Mr. Johnson, Ms. Drakulich, and Mr. Bache.

 

Chairman Goldwater opened the hearing on A.B. 70.

 

Assembly Bill 70:  Limits certain fees which providers of health services that accept insurance payments may collect from patients. (BDR 40-33)

 

Assemblywoman Chris Giunchigliani, District No. 9, introduced A.B. 70 and explained the bill’s concept had originated last session with Doug Bache.  She said the Ways and Means Committee had amended the bill by removing some of the audit language, but that basically the bill was about balanced billing.  Ms. Giunchigliani said she was pleased that the bill addressed the issue of self-insured individuals, over which there was minimal jurisdiction.  She explained that if a patient’s health care company or business entered into a contract, there was a fixed rate and the patient could not be billed as an individual for additional out-of-pocket costs.  She said some hospitals were concerned because most were covered under a contract, but due to some loopholes, the bill was necessary. 

 

Doug Bache testified as an individual via videoconference in Las Vegas.  He referenced A.B. 70 as originating from A.B. 52 of the 71^st Legislative Session.  During the 71^st Session, the bill had passed from the Health and Human Services Committee and the Assembly Ways and Means Committee.  There had been an audit provision of the University Medical Center that had since been resolved.  The bill had been voted out of the Senate Committee on Health and Human Services, but, in the rush to close on the 120^th day, had never been processed.  The genesis of this bill, Mr. Bache said, was a problem with balanced billing.  There were a number of particular descriptions, but primarily it focused on the situation where a health trust or insurer had a contract for a health provider to provide a service.  There was a co-pay from the insured person.  The insurance company or health trust would pick up a certain amount of the cost and the balance of the billing would be written off.  There had been a number of cases with various providers in which the insurance company or health trust paid their portion, the insured person made their co-pay, and, subsequently, the provider billed the insured person the balance, which was supposed to have been written off.  Mr. Bache said that was the problem this legislation was supposed to remedy.  He said he personally had experienced the problem, but after some negotiation was able to resolve his billing satisfactorily.  Mr. Bache opined that often the average person was not aware of the balanced billing process when they received a medical bill.  He believed this legislation would give the insured some leverage if they did not pay off a balanced bill. 

 

Alice A. Molasky-Arman, Commissioner of Insurance, Nevada Department of Business and Industry, provided information about the position the Division of Insurance had taken about balanced billing.  She believed A.B. 70 complemented the efforts of the Division in its effort to prohibit balanced billing.  She first became aware of balanced billing practices in late 2000 during previous discussions on provider payment issues.  She said the subject of balanced billing had arisen simultaneously.  She said the Division of Insurance had noticed that the explanation of benefits and the explanation of payment issued by HMOs, by indemnity insurers, and by third party administrators were very unclear.  Ms. Molasky-Arman commented she had compared the Medicare explanation of benefits with the explanation of benefits she had received from a third party administrator for the state plan.  She believed Medicare’s explanation was very explicit.  She said it clearly stated that a patient was not responsible for any further payment.  She said she had not seen any explanation issued by an insurer or third-party administrator that was as explicit.  Ms. Molasky-Arman explained the Division of Insurance did two things.  First, in issuing Bulletin No. 00-004 (Exhibit E) on December 15, 2000, she said the Division explained to providers that the practice of balanced billing was a violation of the Unfair Trade Practices law and constituted a false claim per payment under an insurance contract.  Additionally, the Division required their insurers to place a notice on all explanations of benefits and payments stating that the beneficiary of the contract of insurance was not required for any additional payment beyond the co-pay that was stated in the contract of insurance.  She referenced Exhibit F that had been distributed to the Committee.

 

Chairman Goldwater said he believed they all had personal anecdotes.  He shared his experience of being been billed $8 for an APL blood test.  He said he never received the bill, but the company balance billed him for it and the overdue bill ended up on his credit report.  He commented that it had taken him three times the amount of the bill in postage simply to get the bill removed.

 

Ms. Molasky-Arman acknowledged the problem was widespread and advised that the Division would be available to help consumers in those situations.

 

Chairman Goldwater asked if there were any questions and called on James Jackson in the audience, who advised the Chairman of his support.

 

Mary C. Walker, Legislative Advocate, representing Carson-Tahoe Hospital, expressed a concern that billed insurance companies often failed to pay within the 90-day time limit.  She said the hospital would then present the bill to the patient and attach a notice stating:  “Your insurance company has not paid; at this time, if your insurance company does not pay, you may have to pay the bill.”  Ms. Walker stated the intent of the notice was not to make the patient pay, but experience had demonstrated an insurance company was more responsive to the demands of the insured than to the hospital’s demand for payment.  She said the hospitals were concerned about having to circumvent the insured to demand payment from the insurance companies.  She stated that had not been as effective in receiving prompt payments.  She wondered if perhaps there were some other mechanism that would help. 

 

Assemblywoman Giunchigliani said she appreciated Ms. Walker’s concern about delinquent payments from the insurance company, but said that probably was not a balanced billing issue.  She agreed it was a kind of hidden threat and suggested maybe they could talk to the Commissioner later to see what fell into what jurisdiction.  She said, unfortunately, the law stated how fast the insurance carriers had to pay claims, and, if they did not comply, the insurer should not be responsible for that cost.  She suggested those factors merited consideration, but should not affect the legislation of this bill. 

 

Ms. Walker said that was just their reading of A.B. 70.  She opined it seemed they could not actually continue the process they had been doing.

 

Lawrence P. Matheis, Executive Director, Nevada State Medical Association, wanted to clarify his understanding of the necessity of the bill.  Mr. Matheis said A.B. 52 of the 71^st Legislative Session had considered the scenario where a bill could not be balanced if a provider for a physician had a contract that prohibited balanced billing.  Likewise, if a provider did not have a contract or if the patient had done something that negated the contract, such as failure to get proper authorization, the provider could proceed with the billing.  Mr. Matheis believed A.B. 70 basically put into statute what already was included in basic contract law and basic insurance law.  Because this had been the standard all along, Mr. Matheis opined the bill did not actually change anything.  He asked that he be advised if he was incorrect. 

 

Chairman Goldwater concurred with Mr. Matheis’s interpretation of A.B. 70, but added that Ms. Molasky-Arman had identified how the bill helped extend the insurance regulation concept to the self-insureds, which was also the intent of the sponsor.

 

James L. Wadhams, Legislative Advocate, representing the Nevada Hospital Association, advised that, after hearing testimony in several legislative sessions, the concept and the underlying issue were not fully addressed.  He said A.B. 70 first assumed, in Line 4, that there was a “written agreement” and, as prior witnesses had stated, a law of contracts had already been enacted.  He said that obviously the failure to adhere to a statute required some action, but he doubted that passing a bill mandating people to honor their contracts was necessary.  Beginning on Line 6 of A.B. 70, he foresaw another problem when a health care provider had a contract with a managed care company, but the patient was not insured with that company, and the patient happened to be in their care for a provision of a service that was not covered under the contract.  Mr. Wadhams provided the example of cosmetic surgery or eye surgery that was completely outside of the contract.  This statute would say that the provider could not bill for that service because the provider was under a written contract.  He believed the language needed to be revised.  Mr. Wadhams said he also represented the Nevada Dental Association and, although he was not speaking on their behalf, he advised that under Chapter 633 of the Nevada Revised Statutes, it was unprofessional conduct for providers in the dentistry profession to engage in balanced billing beyond their contracts.  He suspected a similar provision was found in other professional licensing statutes.  Mr. Wadhams agreed there was a problem, but he believed the language of the bill was insufficient.  He suggested that it might involve ERISA Taft-Hartley trusts.  He thought the burden of complying with this bill, should it pass, was upon health care providers, not payers.  He concluded the concept of the bill was satisfactory, but the language needed more articulation.  

 

Chairman Goldwater asked whether Mr. Wadhams was suggesting some sort of penalty, a criminal, financial, or civil penalty, to give the concept some “teeth.” 

 

Mr. Wadhams stated he was not suggesting that, but agreed that it could be included.  He said he believed the bill was not directed at solving the problem.  The bill said that providers should not balance-bill if they had a contract that stated they should not balance-bill.  He did not believe additional enforcement was the issue.  Citing Ms. Giunchigliani’s earlier comments, he pointed out that statutes had to be enforced, so adding penalties did not resolve the matter.  He believed that rewriting the bill was necessary so that it was directed at the problem. 

 

Assemblywoman Giunchigliani asked if by including “payers” it would be more inclusive for the self-insured.  

 

Mr. Wadhams answered in the negative.  He expressed that it was easy to get lost in the differing relationships.  He said the bill appeared to place a statutory prohibition on providers who had contracted to render a service for a particular amount of money, balance-billing for what the retail charge on that service might be, but only for that contract.  It was not directed at self-insured employers, trusts, or payers.  It was directed at doctors and hospitals. 

 

Chairman Goldwater invited Ms. Molasky-Arman to clarify the matter on the Commission’s behalf. 

 

Ms. Molasky-Arman agreed that the bill placed prohibitions against the provider of the services.  She said she would be involved only in the event one of the insurers, HMOs, or third-party administrators allowed it to occur, in which case she believed they would be abetting the provider.

 

Chairman Goldwater thanked Ms. Molasky-Arman and said her statement helped to clarify the issue.

 

Assemblywoman Giunchigliani inquired whether Mr. Wadhams had a concern about the written agreement because it did not really say “contract.” 

 

Mr. Wadhams responded in the negative.  He clarified a written agreement was a contract.  The problem, he said, citing line 6 of A.B. 70, was that the language provided for “any health services.”  Yet, despite the language, he said if he was covered under a managed care contract and received cosmetic surgery, he would not be covered under his managed care contract even though the hospital and the doctor he used might have been in a contract with his managed care company.

 

Assemblywoman Giunchigliani stated that would be for that particular health care service, but added managed care always had their exclusions noted, so it would be an exception to the contract and they would be able to bill.

 

Mr. Wadhams advised that the language needed to be more carefully scrutinized.

 

Assemblywoman Giunchigliani stated she had gone through the minutes from the 71^st Session and no one had raised those issues.  She said the issue from the previous session was the audit component, so she expressed satisfaction that they were now getting into the “meat and potatoes” of the bill.  She advised she would be agreeable to working with Mr. Wadhams on the language of the bill.

 

Assemblyman David Brown asked Mr. Wadhams what a practitioner would bill who had not entered into a written agreement to accept any payment or reimbursement from an insurer of a patient, and what would he have to do in order to do that.  He asked if that could be gleaned from the bill.

 

Mr. Wadhams responded in the negative but stated that implicit in A.B. 70 was that a provider, physician, or hospital without a contract could bill the retail rate for that service, and balanced billing would not apply.  Mr. Wadhams stated the downside of balanced billing only occurred if a provider was seeking money beyond that to which he was entitled by the written contract.  He opined that was probably what had triggered Mr. Bache’s problem in the last legislative session.  He said the additional issue was people who did not adhere to their contracts.

 

Assemblyman Brown stated that he understood the issue and wanted to review it further.  He added that he had not looked beyond the bill in terms of what the statute said, but thought it almost read that if a physician/practitioner had not entered into an agreement, he was able to charge the retail rate.  He said it seemed to read as though that was only possible when a physician/practitioner had informed the patient of that fact as provided in Section 1, subsection 1, subsection b of A.B. 70.  He asked whether he was misreading that or whether Mr. Wadhams had a similar interpretation.

 

Mr. Wadhams responded that he thought the language in subsection b, on page 2, lines 7 and 8, did impose a requirement that a provider advise a patient when they were not under a contract.

 

Assemblyman Brown inquired whether this was just so a physician/practitioner could bill the patient his normal billing.

 

Mr. Wadhams responded in the affirmative. 

 

Assemblyman Brown asked whether a provider would not have the right to bill his normal rate if he did not first provide that information.

 

Mr. Wadhams said he did not interpret the bill to preclude the billing because it said “whenever practicable,” but added “obviously that is good fodder for us lawyers’ cannons” in our private practice, particularly if that procedure happened to be rather expensive.  He suggested that a patient might very well challenge the bill and say he was not informed ahead of time that there was no coverage under his insurance contract.

 

Assemblyman Brown suggested the language “whenever practicable” needed to be reworked for anything except an emergency as defined or might be implied on lines 7 and 8.  He concluded, however, that he agreed with the intent of the bill.

 

Chairman Goldwater asked for any further questions or individuals to testify on A.B. 70.  There were none.  Mr. Goldwater acknowledged and welcomed the Assembly’s former colleague, Debbie Smith, in the audience.  He closed the hearing on A.B. 70 and asked the sponsor and Mr. Bache in Las Vegas whether they would work with some of the witnesses to refine the language, and the Committee would then review the bill in a work session.

 

Chairman Goldwater said the agenda for Wednesday’s Committee hearing was short and that there was no hearing scheduled for Friday.  He asked the Committee to please encourage the sponsors of the bills and the agencies advocating bills that had been referred to this Committee to get their items scheduled expeditiously.

 

With nothing further before the Committee, Chairman Goldwater adjourned the meeting at 3:43 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Sharee Gebhardt

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman David Goldwater, Chairman

 

 

DATE: ___________________________________