Referred to Concurrent Committees on Elections, Procedures,
and Ethics and Ways and Means
SUMMARY--Makes various changes in preparation for transition from traditional system of regulation to competitive market for electric service. (BDR 17-1296)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to energy; creating the legislative committee on energy and regulatory affairs; requiring the committee to develop a comprehensive long-range plan for the transition to an open competitive market for the provision of electric service; requiring certain state agencies to submit certain information to the legislative committee; and providing other matters properly relating thereto.
Whereas, The economy of the State of Nevada and the quality of life of all Nevadans are dependent upon the availability of reliable, low-cost electricity; and
Whereas, Electric bills are a significant part of family budgets and of the costs incurred by Nevada businesses to produce goods and services; and
Whereas, Legislation is pending in Congress that would mandate federal reformation of state regulation of electric service to provide for increased competition in the marketplace if individual states fail to address the issue; and
Whereas, Allowing retail customers of electric generation to have open access to a competitive market for the retail sale of electricity is being considered by a majority of the states, and has already been mandated by at least one neighboring state; and
Whereas, Competition in the wholesale market and the prospect of competition in the retail market for electric service have already resulted in decreases in the cost of electric service; and
Whereas, Competition in the retail market for electricity will have long-term benefits for the economy of the State of Nevada, including lower prices for electrical service to customers, more efficient use of resources, innovation in service and supply and a more diverse and decentralized system for the supply of electricity; and
Whereas, It will be detrimental to this state and its residents if there is not active preparation for the onset of competition in the retail market, including the development of a plan for the transition from the traditional high level of regulation of the electric industry to an open and competitive market that is designed to secure the benefits from such competition while minimizing any potential adverse effects; and
Whereas, Consumer education is critical to the success of this transition and it is imperative that confusion for customers be minimized by furnishing customers with accurate and adequate information to ensure that they are aware of their new rights and responsibilities to choose a provider of electric service so that they may make informed decisions; and
Whereas, During the past 24 months, the Legislature and the Public Service Commission of Nevada have conducted analyses and reviews of issues related to the restructuring of the electric industry, and, to ensure that public and private resources are used in the most efficient and effective manner, these independent efforts must continue to be integrated and coordinated; and
Whereas, The creation of a statutory legislative committee on energy and regulatory affairs will allow the Legislature to consider and propose appropriate policies for this state during this transitional period; and
Whereas, It is appropriate for the Legislature to provide tools and reasonable guidance to the Public Service Commission of Nevada, the Office of the Consumer's Advocate and the Department of Business and Industry to ensure an orderly transition to a competitive market for the retail sale of electricity; now, therefore,
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Chapter 218 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 8, inclusive, of this act.
Sec. 2 1. There is hereby established a legislative committee on energy and regulatory affairs consisting of:
(a) Three members appointed by the speaker of the assembly, at least two of whom served as members of the assembly standing committee on government affairs during the immediately preceding session of the legislature;
(b) Two members appointed by the minority leader of the assembly, at least one of whom served as a member of the assembly standing committee on government affairs during the immediately preceding session of the legislature;
(c) Three members appointed by the majority leader of the senate, at least two of whom served as members of the senate standing committee on commerce and labor during the immediately preceding session of the legislature; and
(d) Two members appointed by the minority leader of the senate, at least one of whom served as a member of the senate standing committee on commerce and labor during the immediately preceding session of the legislature.
2. The speaker of the assembly and the majority leader of the senate shall jointly designate the chairman and vice chairman of the committee from among its members. If no agreement can be reached, the speaker and majority leader shall draw lots to determine who is authorized to designate the chairman for the biennium. The person who did not so designate the chairman is then authorized to designate the vice chairman.
3. Any member of the committee who is not a candidate for reelection or who is defeated for reelection continues to serve until the convening of the next session of the legislature.
4. Vacancies on the committee must be filled in the same manner as original appointments.
5. The chairman of the committee may appoint an advisory committee or otherwise solicit advice and information from all interested persons and governmental entities. The members of an advisory committee appointed pursuant to this subsection serve without compensation.
Sec. 3 1. The legislative committee on energy and regulatory affairs shall meet at least monthly and at times and places specified by a call of the chairman.
2. Six members of the committee constitute a quorum, and a quorum may exercise all the power and authority conferred on the committee.
3. Except during a regular or special session of the legislature, the members of the committee are entitled to receive the compensation provided for a majority of the members of the legislature during the first 60 days of the preceding regular session, the per diem allowance provided for state officers and employees generally and the travel expenses provided pursuant to NRS 218.2207 for each day or portion of a day of attendance at a meeting of the committee and while engaged in the business of the committee. The salaries and expenses of the members of the committee and any other expenses incurred by the committee in carrying out its duties must be paid from the assessments collected pursuant to NRS 704.033 for the use of the public service commission of Nevada.
4. The director of the legislative counsel bureau shall assign employees of the legislative counsel bureau to provide clerical, legal and operational assistance as the functions and operations of the committee may require. The legislative counsel bureau shall regularly submit to the committee reports of relevant ordinances or other evidence of activity by local governments. The state librarian shall serve as a technical adviser to the committee regarding the dissemination of related educational materials to the public. The dean of the college of business administration of the University of Nevada, Reno, and his colleagues may provide technical assistance to the committee.
5. To ensure that the public has ample opportunity to remain well informed about issues relating to a transition to a competitive market for the provision of electric service, the state librarian shall create and maintain an informational data base and collection of related documents relating to this issue. The state librarian shall prepare and transmit to each public library in this state a comprehensive collection of informational materials on this issue that contains:
(a) All related state statutes and regulations;
(b) Related dockets of the public service commission of Nevada;
(c) Materials submitted to and produced by the committee or the public service commission of Nevada at workshops or meetings on this issue, including, but not limited to, minutes of the workshops and meetings;
(d) Related federal laws, regulations and rulings;
(e) Reports of significant actions across the country;
(f) Any additional material suggested for inclusion by the committee; and
(g) Any additional material the state librarian deems appropriate.
The state librarian shall supplement each such collection monthly and shall ensure that, to the extent possible, the contents of the collection are available to the public on the Internet from the web site of the state library and the legislative counsel bureau.
Sec. 4 The legislative committee on energy and regulatory affairs shall:
1. Review and monitor federal, regional, state and local policies regarding energy.
2. Submit, on or before November 15, 1998, to the director of the legislative counsel bureau for transmittal to the legislature, the initial version of the comprehensive long-range plan prepared pursuant to section 5 of this act. The committee shall similarly prepare and submit subsequent revised versions of the plan before each regular session of the legislature.
3. Hold hearings in connection with carrying out its duties.
4. Take such actions as are appropriate to ensure that the public has ample opportunity to remain fully informed regarding the transition to a competitive market for the provision of electric service and the choices that each individual customer will be required to make to obtain electric service in a competitive market.
5. Consider any other issues regarding energy and related regulatory matters deemed appropriate by the committee.
Sec. 5 1. The legislative committee on energy and regulatory affairs shall develop the initial version of a comprehensive long-range plan for the transition to a competitive market for the provision of electric service in accordance with the following general principles adopted by the subcommittee of the legislative commission appointed pursuant to File 172, Statutes of Nevada 1995, at page 3049:
(a) Where effective competition exists, retail electric services should be provided on a competitive basis.
(b) The rules that govern market activity should apply to all buyers and sellers in a fair and consistent manner in order to maintain a level playing field and guarantee a fully competitive market.
(c) Reliable electric service must be maintained.
(d) All customers and shareholders should have the opportunity to share in the benefits of increased competition.
(e) No classification of customers should be worse off after the restructuring process.
(f) Services and rates should be unbundled to provide customers with choice and clear price information on the cost components of generation, transmission, distribution and ancillary charges.
(g) Electric service is essential and should be available and affordable to all customers.
(h) The market framework for electric services should maximize reliance on ordinary business transactions and minimize reliance on the administrative regulatory process.
(i) Nondiscriminatory open access to the transmission system and distribution facilities should be promoted for all transactions.
(j) Electric utility restructuring must, in no event, result in the degradation of environmental quality. Increased competition should support and further the goals of environmental improvement.
2. The comprehensive plan must carry out the following public policies:
(a) The provision of electric service in a competitive market must include sufficient information and options for customers to make informed decisions and have legitimate choices relating to their purchase of electricity.
(b) Taxes and fees imposed by the government must not give any seller of electric service an unfair advantage in the competitive market for electric service.
(c) Utilities are entitled to recover prudently incurred, net verifiable stranded costs and investments, as determined by the public service commission of Nevada in accordance with applicable statutory factors and time schedules.
(d) The transition to a competitive market for electric service must not result in a decrease of the general environmental quality in this state. The methods and sources approved for the provision of electric service in a competitive market must be consistent with the measures and goals to maintain or improve the environment of this state. Creative partnerships between the public and private sectors must be encouraged to promote the development of renewable resources and stability in the use of renewable sources of energy.
(e) Programs that subsidize the cost of electric service for customers with low incomes provide a necessary service and must be retained in some form after the transition to a competitive market for electric service.
(f) Universal electric service is essential in a competitive market and should be available and affordable to all customers.
(g) The manner and extent of regulation that applies to the various cooperatives created pursuant to the laws of this state to generate, transmit or distribute electric energy should not be changed except for circumstances in which a cooperative changes its intrinsic nature and pursues customers in the retail market.
(h) A specific date should be set for the transition to a competitive market for electric service. During the transitional period, it is imperative that the rates charged for electric service remain stable and certain.
(i) The market for the provision of electric service should maximize a reliance on business transactions and minimize a reliance on administrative or regulatory processes. A competitive market is the most efficient way to lower prices, increase value for customers and reduce the cost of regulatory oversight.
3. The comprehensive plan must include, but is not limited to:
(a) A statement of policy regarding the availability and use of energy in this state.
(b) A statement of vision for a competitive market in this state for the provision of electric service.
(c) A schedule for the transitional process that assumes a date, not later than July 1, 2001, for the commencement of competition in the market to provide electric service unless:
(1) A revised date, if any, is set by the legislature of this state during a regular session; or
(2) A different date is required by federal law.
The schedule must include an analysis of the costs and benefits to the residents and businesses in the State of Nevada of expediting or delaying the stated date.
(d) A determination of the legislation, if any, that is necessary to address federal, regional, state and local policies regarding energy.
(e) An assessment of regional activities and policies that will affect the provision of electric service in the State of Nevada.
(f) A description of the public and private programs in this state that assist in the provision of electric service to customers with low incomes and determination of how to provide appropriate state support after a transition to a competitive market for electric service.
(g) A statement of policy regarding the commitment of this state to encourage the use of energy produced from renewable sources. The policy must require a separate charge on the customer's billing to identify the costs, if any, that are related to programs to maintain or improve the environment of this state through the use of energy produced from renewable sources. The policy must include, but is not limited to:
(1) A statement of vision regarding the conservation and development of the energy resources in this state;
(2) An estimate of the costs involved and the effect of alternative energy policies on employment, economic growth and economic development in this state;
(3) An evaluation of sources of solar, wind, geothermal and biomass energy in each county;
(4) An estimation of the costs of generating electricity from these renewable sources of energy and the effect from the use of these forms of energy on the economy in this state generally and on the residents of this state collectively;
(5) Recommendations for encouraging creative partnerships between the public and private sectors to promote the development of renewable resources; and
(6) An evaluation of whether or the extent to which:
(I) Requirements should be established regarding the use of renewable resources and programs for demand-side management; and
(II) The diversity of fuel, the methods of generation or any economic or environmental factors should be considered in determining the optimum combination of generation resources that will meet the requirements for electric energy in this state.
(h) An assessment of the adverse effects on employees of electric utilities that may result from the transition to a competitive market and recommendations, as necessary, regarding the establishment of programs to assist the employees who are dislocated.
4. As used in this section, "effective competition" means, with respect to a particular service, a market structure and a process under which, as a result of:
(a) The number of sellers of the service;
(b) The size of each seller's share of the market;
(c) The ability of the sellers to enter or exit the market; and
(d) The price and availability of comparable substitutes for the service,
an individual seller is not able to influence significantly the price of the service.
Sec. 6 The department of taxation shall cooperate with the legislative committee on energy and regulatory affairs in the performance of the duties of the committee. The department shall, on or before June 1, 1998, submit to the committee:
1. A report of the amount of revenue that is received by this state and each local government in this state from taxes and fees specifically levied on and paid by regulated electric utilities.
2. Recommendations regarding the assessment of real and personal property owned by electric utilities in a competitive market.
3. Recommendations regarding any appropriate changes in taxes, assessments and fees paid to the state or local governments by electric utilities in a competitive market. Any such recommendations must place comparable tax burdens upon all providers of electric service.
The department may request the assistance and participation of the committee on local government finance when preparing the submissions required by this section. The recommendations made pursuant to this section must be designed to result in a revenue-neutral effect on the governmental entities and electric utilities.
Sec. 7 The advocate for customers of public utilities, the public service commission of Nevada and the department of business and industry each shall develop a strategic plan for their respective operations upon the completion of a transition to a competitive market for the provision of electric service in this state. The agencies shall submit their respective plans to the legislative committee on energy and regulatory affairs not later than June 1, 1998. Each plan must include, but is not limited to:
1. A statement of vision for the agency in addressing the transition to a competitive market for the provision of electric service and the appropriate role of the agency in the competitive market.
2. A statement of mission for the agency to follow in establishing and fostering a competitive market for the provision of electric service in this state and identifying the basic responsibilities of the agency in the process of the transition.
3. Goals that indicate the focus of the functions and resources of the agency toward the achievement and support of a competitive market for the provision of electric service in this state, including the primary issues that will challenge the agency. The goals must be consistent with the major functions of the agency as described in its statement of vision.
4. Objectives that include the interim steps the agency will take toward the achievement of the goals and mission of the agency. The objectives may be quantified to measure the effectiveness and degree of completion by the agency during a specified period.
5. Strategic methods that the agency will use to achieve the identified goals and objectives. These methods must be the most efficient use of the resources appropriated to the agency by the legislature.
6. An annual report on the achieved status of the goals and objectives of the agency relating to the transition.
Sec. 8 In addition to the requirements set forth in section 7 of this act, the department of business and industry shall report to the legislative committee on energy and regulatory affairs:
1. A list of the businesses in this state that generate electricity from renewable sources of energy.
2. The location of each such site of generation.
3. A list of the purchasers of the electricity generated from renewable sources of energy in this state and the price charged for the electricity.
4. A notation of whether each such purchaser is required by statute or regulation to purchase the electricity from a generator using a renewable source of energy and the citation to the applicable requirement.
5. A notation of the length of any such contract for the purchase of electricity generated from a renewable source of energy in this state and the date each such contract expires.
6. A summary of the results of a survey of these generators regarding the manner in which the generators are preparing for a transition to a competitive market.
7. A statement of the federal, state and local governmental assistance available to support the generation of electricity from renewable sources of energy.
8. A description of each program to encourage the conservation of energy in this state.
9. The number and types of programs that encourage the conservation of energy which are required by federal, state or local statutes, ordinances or regulations, and the citation to each such requirement.
10. A summary of the federal financial support available generally to support programs to encourage the conservation of energy.
Sec. 9 1. This act becomes effective upon passage and approval.
2. Sections 1 through 8, inclusive, of this act expire by limitation on January 1, 2003.