Assembly Bill No. 581

Assembly Bill No. 581-Committee on Government Affairs

(On Behalf of the Public Service Commission)

June 10, 1997
____________

Referred to Committee on Government Affairs

SUMMARY--Makes various changes concerning certain transactions relating to public utilities. (BDR 58-424)

FISCAL NOTE: Effect on Local Government: Yes.

Effect on the State or on Industrial Insurance: No.

EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.

AN ACT relating to public utilities; prohibiting certain transactions relating to public utilities without the prior authorization of the public service commission of Nevada; specifying the process by which the commission may authorize such transactions; specifying items that must be considered by the commission in determining whether to authorize the transfer of a certificate of public convenience and necessity; providing a penalty; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1 Chapter 704 of NRS is hereby amended by adding thereto the provisions set forth as sections 2, 3 and 4 of this act.
Sec. 2 1. Except as otherwise provided in subsection 2, no public utility, subsidiary or affiliate of a public utility, or a corporation that holds a controlling interest in a public utility may purchase, acquire, take or hold the capital stock of another public utility in this state, or of a corporation which holds a controlling interest in a public utility in this state, without first obtaining authorization from the commission pursuant to section 4 of this act. An assignment or transfer, or a contract or agreement for the assignment or transfer, of capital stock in violation of this section is not valid for any purpose.
2. This section does not apply to an assignment or transfer, or to a contract or agreement for the assignment or transfer, of the capital stock of a public utility in this state, or of a corporation that holds a controlling interest in a public utility in this state, if:
(a) The effect of the assignment or transfer would not change the corporate control of the public utility or corporation; or
(b) The assignment or transfer involves not more than 15 percent of the capital stock of the public utility or corporation.
Sec. 3 1. Except as otherwise provided in subsection 2, no person may merge with, acquire through a subsidiary or affiliate, or otherwise acquire control of a public utility in this state, or a corporation that holds a controlling interest in a public utility in this state, without first obtaining authorization from the commission pursuant to section 4 of this act. A merger or acquisition in violation of this section is not valid for any purpose.
2. This section does not apply to a merger with or an acquisition of a public utility in this state or a corporation that holds a controlling interest in a public utility in this state, if:
(a) The effect of the merger or acquisition would not change the corporate control of the public utility or corporation; or
(b) The merger or acquisition does not involve more than 15 percent of the capital stock of the public utility or corporation.
Sec. 4 1. The commission may authorize a transaction described in section 2 or 3 of this act if it finds that the transaction is in the public interest.
2. In determining whether to authorize a transaction, the commission shall:
(a) Consider whether the transaction will:
(1) Maintain or improve the financial condition of the resulting public utility.
(2) Maintain or improve the quality of service provided by the resulting public utility.
(3) Maintain or improve the quality of the management of the resulting public utility.
(4) Be fair and reasonable to the majority of the affected shareholders.
(5) Be beneficial to the affected local economy and the economy of this state, and to the community that will be served by the resulting public utility.
(6) Preserve the jurisdiction of the commission and the ability of the commission to regulate and audit the operations of the resulting public utility.
(7) Provide measures to mitigate any adverse effect which may result from the transaction, including, without limitation, an adverse effect on competition.
(8) Provide short- and long-term economic benefits to the affected customers.
(9) Adversely affect competition among the public utilities in this state. A transaction shall be deemed to affect competition adversely if the resulting public utility will be able to increase its rates beyond those which existed before the transaction or would exist if the transaction did not take place.
(b) Consider all reasonable options to the transaction that are recommended by other persons, including, without limitation, the denial of authorization for the transaction.
3. The person who seeks to have a transaction authorized by the commission has the burden of:
(a) Proving that the transaction is in the public interest; and
(b) Producing evidence that is required to be considered by the commission pursuant to subsection 2.
4. The commission may:
(a) Hold a hearing regarding the transaction. If the commission determines that such a hearing should be held, the hearing must be noticed and conducted in the same manner as other hearings before the commission. The commission may dispense with a hearing if, upon the expiration of the time fixed in the notice thereof, no protest to the proposed transaction has been filed by or on behalf of any interested person.
(b) Make such amendments, restrictions or modifications to the transaction as the public interest requires.
Sec. 5 NRS 704.410 is hereby amended to read as follows:
704.410 1. Any public utility subject to the provisions of NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act, to which a certificate of public convenience and necessity has been issued pursuant to NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act, may transfer the certificate to any person qualified under NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act, but the transfer is not valid for any purpose until a joint application to make the transfer has been made to the commission by the transferor and the transferee, and the commission has authorized the substitution of the transferee for the transferor.
2. The commission may [direct that] hold a hearing [be had in the matter of] regarding the transfer. If the commission determines that such a hearing should be held, the hearing must be noticed and conducted in the same manner as other hearings before the commission.
3. The commission has the sole discretion to [direct that] determine whether a hearing be held if the application seeks to transfer the certificate from a person or partners to a corporation when the officers of the corporation will be substantially the same person or partners.
4. The commission may dispense with a hearing if, upon the expiration of the time fixed in the notice thereof, no protest to the proposed transfer has been filed by or on behalf of any interested person.
5. In determining whether the transfer of a certificate of public convenience and necessity to an applicant transferee should be authorized, the commission [must] shall take into consideration:
(a) The utility service performed by the transferor and the proposed utility service of the transferee [;] , including, without limitation, the effect of the transfer on the:
(1) Quality of the service provided to the affected customers.
(2) Quality of the management of the proposed utility service.
(3) Rates charged for the proposed utility service.
(4) Local economy and the economy of this state, and on the community that will be served by the proposed utility service.
(b) Other authorized utility services in the territory for which the transfer is sought . [; and]
(c) Whether the transferee is fit, willing and able to perform the services of a public utility and whether the proposed operation will be consistent with the legislative policies set forth in NRS 704.005 to 704.751, inclusive [.] , and sections 2, 3 and 4 of this act.
6. The commission may make such amendments, restrictions or modifications in a certificate upon transferring it as the public interest requires.
7. No transfer is valid beyond the life of the certificate transferred.
[8. No transfer of stock of a public utility subject to the jurisdiction of the commission is valid without prior approval of the commission if the effect of the transfer would be to change corporate control of the public utility or if a transfer of 15 percent or more of the common stock of the public utility is proposed.]
Sec. 6 NRS 704.640 is hereby amended to read as follows:
704.640Any person who:
1. Operates any public utility to which NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act, applies without first obtaining a certificate of public convenience and necessity or in violation of its terms;
2. Fails to make any return or report required by NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act, or by the commission pursuant to NRS 704.005 to 704.751, inclusive [;] , and sections 2, 3 and 4 of this act;
3. Violates, or procures, aids or abets the violating of any provision of NRS 704.005 to 704.751, inclusive [;] , and sections 2, 3 and 4 of this act;
4. Fails to obey any order, decision or regulation of the commission;
5. Procures, aids or abets any person in his failure to obey the order, decision or regulation; or
6. Advertises, solicits, proffers bids or otherwise holds himself out to perform as a public utility in violation of any of the provisions of NRS 704.005 to 704.751, inclusive, and sections 2, 3 and 4 of this act,
shall be fined not more than $500.
Sec. 7 This act becomes effective on July 1, 1997.