MINUTES OF THE
JOINT Subcommittee on
Public Safety/Natural Resources/Transportation
of the
Senate Committee on Finance
AND THE
Assembly Committee on Ways and Means
Seventy-second Session
March 25, 2003
The Joint Subcommittee on Public Safety/Natural Resources/Transportation of the Senate Committee on Finance and the Assembly Committee on Ways and Means, was called to order by Chairman Dean A. Rhoads at 8:15 a.m. on Tuesday, March 25, 2003, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Senate COMMITTEE MEMBERS PRESENT:
Senator Dean A. Rhoads, Chairman
Senator Sandra J. Tiffany
Senator Bob Coffin
Assembly COMMITTEE MEMBERS PRESENT:
Mr. David R. Parks, Chairman
Ms. Christina R. Giunchigliani
Mr. Joshua B. Griffin
Ms. Sheila Leslie
Mr. John W. Marvel
Mr. Richard D. Perkins
STAFF MEMBERS PRESENT:
Steven J. Abba, Principal Deputy Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Mark Krmpotic, Senior Program Analyst
Brian M. Burke, Senior Program Analyst
Jim Rodriguez, Program Analyst
Joyce Garrett, Program Analyst
Tracy Raxter, Program Analyst
Mindy Braun, Education Program Analyst
Julie Walker, Committee Secretary
OTHERS PRESENT:
Jeff Fontaine, Deputy Director, Nevada Department of Transportation
Virginia Lewis, Director, Department of Motor Vehicles
Chuck Conner, Data Processing Manager, Motor Vehicle Information Technology Division, Department of Motor Vehicles
Juan Palma, Executive Director, Tahoe Regional Planning Agency
George Caan, Executive Director, Colorado River Commission of Nevada
Douglas Beatty, Finance and Administration Chief, Colorado River Commission of Nevada
The meeting will open with a review of the Nevada Department of Transportation budget account (BA) 201-4660.
Transportation Administration – Budget Page NDOT-1 (Volume 3)
Budget Account 201-4660
Jeff Fontaine, Deputy Director, Nevada Department of Transportation:
The mission of Nevada Department of Transportation (NDOT) is to efficiently plan, design, construct, and maintain a safe and effective transportation system for Nevada’s economic, environmental, social, and inter-mobile transportation needs.
My budget presentation for the biennium (Exhibit C) is made up of the Highway Fund revenue, consisting of state gas and diesel taxes, motor vehicle fees, federal aid, and other miscellaneous revenue. The Nevada Department of Transportation expenditures include the core of the program, consisting of payments to highway construction contractors, engineering consultants, and acquisition of rights-of-way. There are disbursements to other agencies as well, including the Department of Public Safety (DPS), Department of Motor Vehicles (DMV), and bond repayments. The Nevada Department of Transportation does not control the State Highway Fund, but receives what is left over after all disbursements are made. The Nevada Department of Transportation receives $200 million per year in federal funding.
The current highway reauthorization of the Transportation Equity Act for the Twenty-First Century (Tea-21) will expire September 30, 2003, and I hope there will be a 20 percent increase, or $40 million per year, over the next 6 years in reauthorization of that federal bill. The largest expenditure for NDOT is land, buildings, and building improvements; the second largest category is personnel, followed by operating expenses. Approximately one-third of the operating expense category is for materials used on the highways, such as fencing, culverts, and chips, plus payment for a contractor who operates the freeway service patrol.
Assemblyman Parks:
Is there a charge for the freeway services?
Mr. Fontaine:
The contractor does not charge because it is a service funded by NDOT.
Senator Rhoads:
Could you provide a funding schedule that shows the federal fund allocations?
Mr. Fontaine:
I will be happy to do that. If you will look at page 2, you will see the 2002 State Highway Fund revenue sources. Page 3 includes the expenditures of NDOT for 2002.
Senator Rhoads:
Did you take the increase of fuel into consideration when preparing the budget?
Mr. Fontaine:
It was not taken into consideration because fuel had not been escalating significantly at the time the budget was prepared.
Senator Rhoads:
How will you accommodate increases in the cost of fuel?
Mr. Fontaine:
The cost of fuel will be tracked and if increases continue, NDOT will request additional funding. There is also a work program to account for the increased fuel costs for the current fiscal year.
Page 3 shows you how the highway fund expenditures are broken down. NDOT’s construction program is what remains after the disbursements from the Highway Fund are made to the other agencies and NDOT’s fixed costs are paid.
Assemblyman Marvel:
How much would be taken away from NDOT’s funding by raising DMV’s administrative cap from 22 percent to 29 percent?
Mr. Fontaine:
That calculation has not been done.
Assemblyman Marvel:
I am concerned about the rising cost of fuel and the impact it would have on NDOT’s funding.
Senator Rhoads:
The reserves for NDOT have decreased from $262 million in fiscal year (FY) 1997 and 1998 to an estimated $102 million in FY 2004–2005. Is that a concern to the department?
Mr. Fontaine:
It is not a concern to the department because it was the goal of the department to keep $100 million in reserves for paying out the contracts over a 2-month period. When a project is advertised for construction, money is not necessarily put into the bank for that construction. A detailed cash-flow analysis on a bi‑weekly basis is done, and a determination is made on all of the projects going out for construction based upon the ability of the department to pay for each project. With a fund balance of $100 million, there would be sufficient reserve to cover the department’s liabilities at any given time.
Senator Rhoads:
How is the declining trend in the Highway Fund balance going to affect the State of Nevada in the next 2 years?
Mr. Fontaine:
The declining trend in the Highway Fund balance is something that is analyzed very closely and the program is adjusted accordingly. If a decline is seen in revenues, advertising for certain projects will be deferred.
Senator Rhoads:
What projects will be cut back first?
Mr. Fontaine:
NDOT will delay advertising projects. Projects will not be cut out of the work program. The projects needed to maintain the system will not be delayed.
M-101 Inflation - Page NDOT-3
M-300 Fringe Benefit Changes – Page NDOT-3
M-630 Tea-21 – Page NDOT-4
E-175 Increase Non-Gaming Business – Page NDOT-4
E-275 Working Environment & Wage – Page NDOT-4
Within the M-180 decision module adjustments are made for changes in various cost allocations and for increases in the contract for the departments consultant. Decision unit M-300 accommodates changes in the fringe benefits paid for workers’ compensation and unemployment benefits. Decision M-630, Tea-21, contains funding for the Nevada Bicycle Advisory Board, which is funded by a small fee on the driver’s license, and is based on a revenue projection. Decision unit E-175, requests additional highway funds to match projected increased federal funds for highway projects. Decision unit E-275 contains the department’s request for funding for 42 new positions to address the state’s growth and impact upon the transportation system. I will hand out (Exhibit D) on the 42 new positions requested with some information regarding justification and prioritization of those requests. Of the positions requested, 19 would be in Las Vegas, 6 in Reno, 1 in Elko, and 16 in Carson City. Approximately 21 would be in maintenance, 11 would be engineers, 9 would be technical or clerical, and 1 assigned to the right-of-way division. The workforce would be increased from 1675 full-time equivalents (FTEs) to 1717 FTEs with the addition of 42 positions.
Senator Coffin:
I spoke to you earlier on the subject of where people will be located and what particular kinds of positions they fill regionally. Are there any design positions requested for the Las Vegas area and, if so, how could the ratio of people in Las Vegas be improved?
Mr. Fontaine:
The Nevada Department of Transportation has been looking at ways to address the needs in southern Nevada, particularly in the design area. The best way to address the issue is to have people move or relocate to southern Nevada and work with the local entities on stewardship projects paid for with pass-through funds from NDOT. The local entities have the authority to do certain design projects using federal funds.
The department’s number one priority requested in the list of 42 positions is the request for a position located in southern Nevada to work with local entities on these projects. The Nevada Department of Transportation is hopeful that people who live in Las Vegas and work for NDOT will be overseeing design consultants. Instead of moving entire design squads to Las Vegas, it would be more efficient to have senior project managers who are located there to work with Las Vegas-based consultants.
Senator Coffin:
I believe there should be more people in Las Vegas who actually live there and could notice design defects.
Mr. Fontaine:
I agree there is a need to take a closer look at the designs to be sure they are effective. However, there are currently 350 employees working at the district office in Las Vegas, and they drive the roads every day. I feel that the people who are there should be taking more responsibility for noticing problems.
Senator Coffin:
You have made objections in the past for relocation. Could you put your objections for relocating people on the record?
Mr. Fontaine:
My concern about relocating people to Carson City regards the organizational structure and how you remove discrete units from an integrated department. It would be necessary for us to create redundant systems that would not be functionally practicable. I am also concerned about retaining people in Las Vegas because the pay scale is approximately 30 percent below the public sector and other entities.
Assemblyman Parks:
I would like to suggest that the committee be provided with a schedule showing the project, consultant, location, and other pertinent details.
Mr. Fontaine:
I will be glad to do that.
Senator Rhoads:
Do you believe the Tea-21 reauthorization after September 30, 2003, will be increased?
Mr. Fontaine:
An increased level of funding is being supported for the highway program, and the best way to get an increase would be to see the highway program grow nationally.
Senator Rhoads:
Do you believe the .08 blood alcohol is significant to the Highway Fund?
Mr. Fontaine:
The .08 blood alcohol is supported. Although I do not have the figures before me, If believe the penalty for the State not adopting the .08 standard approximately $4 million per year in federal funding the State would not receive.
assemblyman marvel:
Is there a significant use of the highway system by the military?
Mr. Fontaine:
I cannot address that other than to say that there certainly would be use of the highways. In terms of homeland security and defense, the highways are critical.
assemblyman marvel:
Do you believe the audit was helpful?
Mr. Fontaine:
The audit helped NDOT improve procedures, property management, and rights‑of‑way.
Senator Rhoads:
Do you anticipate further arbitrage concerns with the current level of bonding?
Mr. Fontaine:
I do not anticipate arbitrage concerns for the coming biennium. The Nevada Department of Transportation will only sell bonds if they are needed. This fiscal year $199 million in bonds are scheduled to be sold, and $325 million is proposed for the next biennium.
Senator Rhoads:
Do you foresee any problems with any of the projects associated with the requested bonding?
Mr. Fontaine:
There is a schedule of projects that will be advertised for construction in the next 90 days, then again in the next 6 months. The major projects scheduled to go out over the next 3 to 6 months all look good. Beyond those, we feel confident that we will be able to get the projects out.
Senator Rhoads:
Could you comment on the E-851 decision unit? I do not see the logic of spending nearly $700,000 out of $800,000 for project management over the biennium.
E-851 Special Projects – Page NDOLT-7
Mr. Fontaine:
One component of the E-851 decision module requests funding to build-out of the 800 megahertz communication system and some additional radios to replace old equipment. Also, funding for two major information projects are requested, including one as a result of the audit. The right-of-way information is old and must be compiled, inventoried, and automated to improve the efficiency of internal processes and make the material more available to the public. The other major project included in the E-851 decision module is an automated data information and management system that will tie all of the department’s various pieces of planning and designing projects together into a single integrated system.
Senator Rhoads:
Could you tell us about the building modification plans for the Carson City and Elko headquarters?
Mr. Fontaine:
There is a request in the budget to begin the planning and design of an addition to the headquarters building in Carson City. The building would accommodate an additional 250 people, and there are 520 people in the building now. There are 130 people located in buildings acquired for the Carson freeway and all of them will have to be demolished or sold. The building of the headquarters will have to be revisited in the second year of the biennium to reevaluate the needs. The existing facility in Elko is still currently under evaluation, and the construction of an equipment shop is on hold pending resolution of what will happen in Elko.
Senator Rhoads:
Why is $700,000 being proposed for project management for an $800,000 system? Perhaps you could meet with our staff later and explain the reasons.
Assemblyman Parks:
Is NDOT on track with acquisitions and right-of way work?
Mr. Fontaine:
Consultants are being hired to help with right-of-way projects as a complete turn-key operation for their responsibilities. They do appraisals, meet with property owners, address relocation issues, and make offers, and it has been a very successful process. Consultants will be hired for a number of other projects and I feel the right-of-way work is basically fairly easy with residential right-of-way. Problems occur more frequently with businesses and undeveloped commercial property.
Senator Coffin:
In the past we have asked questions and have been told that we could not get the information because it would require “manual extraction,” or it was too labor-intensive. Would the department’s proposed integrated management information system allow you to do the things you said you could not provide in the e-mail of February 24 to me?
Mr. Fontaine:
The Nevada Department of Transportation wants to develop a system that fulfills that function, and I believe it will provide support for providing information that would otherwise be too labor intensive to produce.
Assemblywoman Giunchigliani:
Is there any anticipated environmental impact with issues related to right-of-way within the budget you presented?
Mr. Fontaine:
I do not believe NDOT has authority to go beyond the right-of-way needs for projects; however, NDOT would be sensitive to environmental issues and neighborhood concerns. We are trying to balance right-of-way projects and environmental and neighborhood issues.
Assemblywoman Giunchigliani:
Why are you requesting an upgrade to 800 megahertz in E-85I?
Mr. Fontaine:
The 800 megahertz was completed in southern Nevada and any money left was to replace radios; however, the 800 megahertz and replacement is not a significant part of the request. The major part of the request is for the build-out of the system in Districts 2 and 3.
Assemblywoman Giunchigliani:
Is there any correlation between the Nevada Highway Patrol (NHP) budget and NDOT with regard to the 800 megahertz? I suggest that the NHP budget should be reviewed within that correlation to avoid a duplication of lines.
Mr. Fontaine:
The Nevada Department of Transportation is aware of the issues of NHP, but NDOT’s system needs to be completed.
Assemblyman Parks:
Could you furnish us with a breakdown on bond sales by project?
Mr. Fontaine:
The Henderson spaghetti bowl, the Reno-Carson City freeway extension, U.S. Highway 95 widening projects, I-15 widening to Primm, and the Carson City bypass are all projects where bond sales could be used. I will provide a list to the committee.
Senator Tiffany:
Why is 800 megahertz still being used?
Mr. Fontaine:
There is no cell phone coverage in many parts of Nevada.
Senator Tiffany:
A tower is still needed for transmission of 800 megahertz.
Mr. Fontaine:
In disaster conditions, cell phones do not work.
Senator Tiffany:
On the project management item, when you say access is needed for consultants and other personnel, is that going to be Web-based?
Mr. Fontaine:
It will be designed to be Web-based.
Senator Rhoads:
Please provide a priority listing of requested positions, such as the 42 new ones, and identify those needed for critical functions versus those needed for expansion of services.
Mr. Fontaine:
I will be glad to provide you with a list.
Senator Rhoads:
What is your position on the radios with NHP in correlation with NDOT?
Mr. Fontaine:
NDOT is now on the 800 megahertz system while NHP is on a 150 megahertz system. I believe there is a way, not radio-to-radio, to communicate between the two systems.
Senator Rhoads:
There seems to be a lack of increase in management. How will you deal with the bigger projects in that regard?
Mr. Fontaine:
The department would continue to use technology.
Senator Rhoads:
Has NDOT been doing more contracting outside of the department?
Mr. Fontaine:
The use of consultants is balanced with the use of staff for projects.
DMV, Automation – Budget page DMV-94 (Volume 3)
Budget Account 201-4715
Virginia (Ginny) Lewis, Director, Department of Motor Vehicles:
Are there questions on this budget?
Senator Coffin:
Your gave us some figures on how revenue would be increased by increasing fees for drivers’ licenses; could you elaborate on those figures?
Ms. Lewis:
The numbers sent to you indicate that for a first-time registration there is a significant amount of potential revenue if the fees are increased. The data sent to you concerning vehicle registration is for a first-time registration and does not isolate new residents moving into the state. There is no way to track new residents to Nevada; however, the University of Nevada, Las Vegas can offer some data to be applied on that question, but I caution that one line item on the registration is first-time registration. That would include people buying a vehicle for the first time as well as people moving into the state.
Senator Rhoads:
Why is the project to correct redundant names and addresses for individuals and businesses necessary if you have made efforts to implement edits and controls over entry screens?
Chuck Conner, Data Processing Manager, Motor Vehicle Information Technology Division (MVIT) Department of Motor Vehicles:
There could be three or four records on the system. The project is to consolidate those records into one record. It is not yet complete.
Senator Rhoads:
Could you address the move to integrate motor carrier business into DMV’s production application?
Ms. Lewis:
The motor carrier system is handled by a contractor and is not on the DMV application. If you have to control processes and be responsible for them, the best approach is to have them within daily control. A study is being done, but I have not seen the results yet, to report the feasibility of moving that system to DMV. If that could be done and handled by DMV, it would mean a significant savings. I feel a decision could be made within the next 6 months.
Senator Rhoads:
How many programmers would be assigned to the project?
Mr. Conner:
Five programmers will be assigned.
Senator Rhoads:
How will the project impact DMV’s ability to expand services on the Internet?
Ms. Lewis:
The project is within the motor carrier area and it does not affect the general motoring public who already has access to the Internet. However, on the motor carrier side, carrier renewals can be accomplished on the Internet. The project is to move the automation side to DMV control as opposed to having a contractor control it.
Assemblyman Parks:
What is the implementation time for the project?
Ms. Lewis:
I cannot answer the question because there are too many unknown factors at the present time. I believe it could be in the next 4 to 5 years. Critical projects affecting the motoring public should receive first priority.
E-301 Maximize Internet & Technology – page DME-97
Senator Rhoads:
Could you discuss the E-301 storage area network project?
Mr. Conner:
Unit E-301 is to consolidate many files into one unit enabling movement between the files in one central repository from anyplace in the DMV.
Senator Rhoads:
Why was the greater portion of time spent on maintenance and not in enhancements?
Mr. Conner:
I would say that is because maintenance solves current problems and enhancements are project requests.
E-302 Maximize Internet & Technology – Page DMV-97
Senator Rhoads:
What does the E-302 enhancement include?
Mr. Conner:
Unit E-302 is allocated to the interactive voice response (IVR) system and phone system. I received a letter from the Department of Information Technology (DoIT) informing me that the manufacturer will not support the IVR system after April 2003, and a new system will be needed to replace the 1999 system.
Senator Rhoads:
How will the upgrade to the call center system reduce talk time by 25 seconds?
Mr. Conner:
That is not my area, and I do not have the numbers.
Ms. Lewis:
The current IVR system supports the call center in Carson City, handling all the incoming calls from the public for questions about the department, and it has an extensive information menu. The goal is to provide as much information initially to customers so they get the information and do not have to talk to an operator. The other component is the ability for the public to renew their driver’s license or registration through the IVR system. That, too, would eliminate a staff member’s duty to answer the question personally. The system being considered has enhancements to allow for greater call distribution for different areas of the department, providing Spanish to Hispanic callers, greater menu flexibility, and greater data for management.
Assemblyman Parks:
Is the estimate of cutting down a call by 25 seconds a study done by the department, or is it an estimate by a sales person who is marketing the new system?
Ms. Lewis:
That cost was given by the vendors of the system.
Senator Tiffany:
I would like to see a correlation between the 14 new positions the department requested and the expanded Internet service. Will the 14 programmers be dedicated to the Internet services?
Mr. Conner:
The 14 positions are continuation, not new, positions. A core group of 3 people is the basis for the Web group and people are pulled as needed from different areas including registration, drivers license, and business in order to accomplish projects.
Senator Tiffany:
How many people would be involved in the Web applications and what would be the priorities in that case?
Mr. Conner:
At any one time approximately 5 or 6 people would be involved.
Senator Tiffany:
What would be a schedule timeline on a calendar year basis?
Ms. Lewis:
An evaluation would have to be made at the end of the session. Motor Vehicle Information Technology (MVIT) has 36 bills that could affect it, and after session more will be known about what can be accomplished.
Senator Tiffany:
Is MVIT assessed a charge from DoIT for the IVR system?
Ms. Lewis:
There is a telecommunications fee as part of the DoIT costs. I cannot say what the reduction in the DoIT costs for the IVR would be if it was purchased and supported as opposed to DoIT performing that function. That is a study, which would have to be done.
Senator Tiffany:
I am reading from the budget, “implementation of the personalized identification number scheme.” What does that mean?
Mr. Conner:
It ensures that the person at the other end of the computer is the person they say they are for security and identification. It is the same principal as the automatic teller machine (ATM); you request a personal identification (PIN) number and it is sent to your address.
Senator Tiffany:
Is that PIN different from a digital signature?
Mr. Conner:
I do not know.
Ms. Lewis:
The PIN numbers would eliminate false accessing of one’s records, including a change of address.
Senator Tiffany:
I believe that digital certificates should be issued instead.
Senator Coffin:
It is easy to steal mail, and if someone can get into the system by using a PIN number, there is a flaw.
Mr. Conner:
I agree that, although you could not get into the system by that action, you could get to the record of another individual, but that would be as far as you could go.
Tahoe Regional Planning Agency, Budget Page CNR 162 (Volume 3)
Budget Account 101-4204
Juan Palma, Executive Director, Tahoe Regional Planning Agency (TRPA):
The sources for my budget are the states of Nevada and California. The State of Nevada provides one-third of the funding and the State of California provides two-thirds. Added together, the two provide 60 percent of the budget. The other 40 percent of the budget comes from grants, fees, and contributions.
Senator Rhoads:
Who determines the shares each pays?
Mr. Palma:
The California budget is presented every year. The budget was cut in California last year by 10 percent because of the state’s financial difficulties, and Nevada’s portion was cut commensurately. The budget was reduced in 2003 by 10 percent, or $470,000, and that decrease is being carried over to the budget for 2003 through 2004 and beyond. The base total for the coming biennium is $7.5 million, which is a decrease from the present $8 million. For the 2003‑2005 biennium that is a $3.4 million budget for Nevada and $6.8 million for California. The TRPA employs approximately 75 FTEs, including seasonal individuals that work in the summer.
Senator Rhoads:
Is California committed to the $400,000 threshold research/Pathway 2007?
Mr. Palma:
California is committed because it uses that as a baseline in the budget. I would like to discuss enhancements E-377 and E-710. TRPA’s 20-year regional plan is due in 2007. Step one of the plan is to collect information, and the collection is being done by independent entities such as Desert Research Institute (DRI), University of Nevada Reno, and the University of California at Davis. The money provided for the studies by those entities is given to the institutions. The information is condensed, summarized, and translated. After that the third step is to develop the next regional plan. The first phase is already completed.
Senator Rhoads:
Are all research projects in the last session completed?
Mr. Palma:
The projects for FY 2002 are completed. There is a problem with the projects for FY2003, and I am asking for increased authority to use the committed funds that were not expended during FY 2003 to complete the project for that year. The TRPA also requests authority to use FY 2004 project funding in both FY 2004 and FY 2005.
E-710 Replacement Equipment – Page CNR-164
In conclusion, I will just mention that E-710 involves the computer software. Some of the contracting needs of TRPA were reduced and expenditures on vehicles were cut back.
Senator Rhoads:
Could you tell me the difference between the 20-year plan, mentioned in TRPA’s summary in the 71st session, and the 10-year plan envisioned in Assembly Bill (A.B.) 285 of the 70th Session?
Mr. Palma:
The first 10 years focused investment on water clarity. We know that there is much more work that needs to be done. This is included in the 20-year timeframe, which will require a $1.4 billion investment.
Assemblywoman Giunchigliani:
Could you tell me the impact on your agency if Assembly Bill (A.B.) 305 is passed?
ASSEMBLY BILL 305: Provides for withdrawal of State of Nevada from Tahoe Regional Planning Compact. (BDR 22-801)
Mr. Palma:
Lake Tahoe is subject to the rules and regulations of the federal government, two states, and five counties. Assembly Bill 305 is intended to help makes things more consistent and resolve some of the conflicting issues
Colorado River Commission, Budget Page CRC-1 (Volume 3)
Budget Account 296-4490
George Caan, Executive Director, Colorado River Commission of Nevada:
I just passed out a handout (Exhibit E), which summarizes information requested by the committee on a previous occasion. Rather than go over my presentation again, I would be happy to answer any questions this committee might have.
Assemblyman Parks:
It appears that two of the positions you request were approved last session. These are the power facilities engineer and the power facilities electrician. What are the factors driving the need for eight new positions if two identical positions might be a duplication.
Mr. Caan:
Page 1 reveals a list of the positions. Appropriate levels of staffing are called for to ensure the safety of the control, communication, and transmission systems, so the positions are similar, but due to the increased volume of activity and increased constructions at the various sub-stations, additional staff is required. Ratio information will be provided to the staff to answer questions about the similarities in the two positions. The two positions were used for the territory in operation from Lake Mead to the Henderson area. The staff was small and specialized, because the job called for that type of position. The similar positions requested are natural resource analysts and technicians. The two major efforts over the next 2 years are implementation of an environmental program to provide for endangered species on the lower Colorado River, and an increased level of activity with respect to ensuring that Nevada has a solid supply of water for the southern area of the state. The environmental program is not scheduled to be implemented immediately and the positions are being asked in advance of the implementation. The seven basin states, country of Mexico, federal government, and others will be involved in the increased efforts to ensure an adequate supply of water. The positions allocated to this effort would not to be filled immediately, but rather when called for.
assemblyman marvel:
Is power imported?
Mr. Caan:
The Colorado River Commission (CRC) power supplies are purchased from the federal government from hydropower projects, and from power on the open market to serve the Southern Nevada Water Authority (SNWA). Approximately 125 megawatts of power are purchased for the SNWA for their treatment and transmission facilities.
assemblyman marvel:
Where is it purchased?
Mr. Caan:
As a member of the Western Systems Power pool, the CRC is given ability to buy power from any provider in the western United Stated that has available power. It is delivered to the Mead sub-station outside Boulder City, then delivered to the CRC over the facilities it has constructed. It is purchased from the vendor providing the best terms and conditions. No one particular provider is used. The provider must make sure the delivery is at the Mead sub-station.
Senator Rhoads:
Is water currently being stored in Arizona?
Mr. Caan:
The question would more properly be addressed to the Southern Nevada Water Authority (SNWA).
Senator Rhoads:
Can you explain the E-375 item that was apparently left out of the agency budget account?
E-375 Environmental Policies & Programs – Page CRC-4
Douglas Beatty, Finance and Administration Chief, Colorado River Commission of Nevada:
Unit E-375 reflects the transfer legislation. Within the transfer legislation, SNWA agreed to fund two specific amounts for research and development projects, water augmentation, and water quality studies and efforts. It was an authorization to allow the commission to pursue some of the opportunities as they come up. Until a contract is entered into, there is no charge to the SNWA. There are environmental issues with Mexico related to the delivery of water in the Gulf of Mexico, in the delta area, and activities in the future are looking at what might they be able to do to mitigate those activities or deal with environmental issues along the river. Those might be part of what the funds could be used for in the future.
Senator Rhoads:
Is the Colorado River Commission the principal in the negotiations with California and Arizona as to who gets our share of the water?
Mr. Caan:
It is a shared responsibility between the SNWA and the CRC. They are partners.
Senator Rhoads:
What is the status of negotiations between Nevada and California at the present time?
Mr. Caan:
The California parties and the CRC continue to have a dialog between the states and federal government to try to work toward solutions.
Senator Tiffany:
Will the marketing fund be procuring power from Overton?
Mr. Caan:
It will not be buying power from Overton because Overton is not a generator.
Senator Tiffany:
What is being done to ensure that Nevada is not at risk in the future by buying from anyone else?
Mr. Caan:
Today’s portfolio that the CRC holds for the Southern Nevada Water Authority is able to supply water for the next 4 years. The current products we have already purchased should suffice; however, there will be times that we will have to purchase power from other providers.
Senator Rhoads:
Could you explain the 47 percent increase in travel expenditures over the base year?
Mr. Beatty:
The increase is a reflection of the staff’s anticipated workload related to the projects in which they are currently involved. When the budgets are put together, travel is reviewed and taken to the customers we have met with to detail the particular trips and their relationships to the projects. They meet with each individual customer group, so the hydropower customers are met with separately from the water customers. Although every meeting scheduled in the budget may not be held, plans for the meetings are made as deemed necessary.
Senator Rhoads:
Would you discuss E-720?
E-720 New Equipment – Page CRC-5
Mr. Beatty:
This enhancement unit represents computer-related facilities for the Colorado River Commission. I had discussions with staff and it is for both replacement equipment and new equipment. The two are not segregated. The major project of the CRC is a system called I-Star, the power tracking and procurement system operation. When procurement is made, it is entered into the system, with the contract price, the duration, and all of the particulars. It has been expanded to capture all of the transactions brought on in the last few years.
Senator Rhoads:
Could you elaborate on E-377?
E-377 Environmental Policies & Programs – Page CRC-4
Mr. Beatty:
It is a symposium that the water department put together. We would like to bring the participants of the Colorado River Basin together to educate them on Nevada’s problems and needs. This has not been done before, and a particular date has not been selected for the meeting, but it would be held in Las Vegas and the participants would be all of the water participants in all of the Colorado River Basin states, their departments of water, and state engineers. A publication would be put together after the meeting.
Power Delivery System, Budget Page CRC-13 (Volume 3)
Budget Account 502-4501
Power Marketing Fund, Budget Page CRC-17 (Volume 3)
Budget Account 502-4502
Mr. Caan:
Budget account 4501 provides for both hydropower customers the delivery of the federal hydropower from Hoover, Parker, Davis, and Glen Canyon Dams. The other fund, 4502, is the power fund we use to procure power supplies for the SNWA.
assemblyman marvel:
Why does the revenue fluctuate so much?
Mr. Beatty:
The revenue was a derivative of the cost of energy that was procured. The two funds are pass-through funds so they are not funded through a rate. Whatever the cost of the electricity is to the customer, that is what is billed. Costs escalated as the power markets went wild in those years, and the revenue comes in at the same rate.
Mr. Caan:
The fluctuations in price for the federal hydropower are much less than fluctuations for the power bought over the outside market.
Senator Rhoads:
What kind of increase in load has there been over the last 4 years?
Mr. Beatty:
The increase in load has been steadily climbing on the SNWA side. It increased because the treatment and transmission facilities are coming on line. We anticipate serving 200 megawatts for the SNWA by 2006.
Senator Rhoads:
Could you elaborate on E-351?
E-351 Service At Level Closest to People – Page CRC-14
Mr. Beatty:
Those are the costs related to S.B. No. 211 of the 71st Session to allow any purveyor members of the SNWA to be provided electric power service by the CRC. It was the estimate at the time of how much that load would cost. The S.B. No. 211 of the 71st Session customers continue to come on board, but at this time no one is on board because of transmission issues with Nevada Power Company. However, there are seven member agencies who are potential customers for water and waste water treatment operations.
Senator Rhoads:
With regard to E-375, does the CRC have a statutory requirement to develop renewable energy resources?
Mr. Beatty:
There is no statutory requirement. The primary customer, SNWA, has expressed a desire to follow along with those recommendations and has issued a formal statement. There is currently a small hydropower project in the design phase, built within the SNWA’s water system, a valve that limits the flow of water. It is a waste of energy to have a valve to shut down water when a turbine could be put in and recover some of it. A solar dish and thermal hydropower are being investigated, and windmills have been discussed.
Senator Rhoads:
Could you discuss M-200? There is a significant increase in the budget compared to actual power sales revenue in the base year.
M-200 Demographics/Caseload Changes – Page CRC-18
Mr. Beatty:
This involves supplemental power purchases and this fund deals with the hydropower customers and supplemental purchases for them over and above their hydropower allocation. All of the supplemental purchases are done on the outside market, and this represents the increase in costs that we have seen related to those supplemental purchases from the outside contracts. A substantial portion of this is related to the current contracts held with the suppliers through 2006. We believe most of the needs have been captured up through 2006 by various procurement options, but most are long-term contracts.
Senator Rhoads:
Could you explain the Basic sub-station costs of $691,000 in M-201?
Mr. Beatty:
Those are the costs related to the current administration of the Basic sub-station. The federal government owned and operated the Basic substation as part of the Parker-Davis system, and the Legislature granted bonding authorization years ago to buy and take over this system to get it off the Parker‑Davis rate and to be able to own and operate it. The bonding authorization was never used, and the customers have rebuilt the sub-station using their own financing and turned that sub-station over to CRC to operate. The $691,000 is the cost for that. It is now completed, and energized and is now operated for the customers and off the federal system.
Senator Rhoads:
The budgets for the Office of the Military and the Department of Corrections will be rescheduled. This meeting is adjourned at 10:35 a.m.
RESPECTFULLY SUBMITTED:
Julie Walker,
Committee Secretary
APPROVED BY:
Senator Dean A. Rhoads, Chairman
DATE:
David R. Parks, Chairman
DATE: