THE EIGHTH DAY
Carson City(Monday), February 12, 2001
Senate called to order at 11:05 a.m.
President Hunt presiding.
Roll called.
All present except Senator Titus, who was excused.
Prayer by the Chaplain, Reverend Elaine Morgan.
Almighty God, we give You thanks for the privilege of being here to serve the people of this beautiful part of Your creation—our beloved State of Nevada. Help us always to make decisions that are moral, just and equitable to all those for whom we have been elected to serve. Help us always to do those things which are in accordance with Your divine law. Finally, we pray that You keep us mindful that we are here, not to be served, but to serve those who have entrusted us with great responsibility. We ask this in Your Holy Name, our Lord and Creator.
Amen.
Pledge of allegiance to the Flag.
Senator Raggio moved that further reading of the Journal be dispensed with, and the President and Secretary be authorized to make the necessary corrections and additions.
Motion carried.
MESSAGES FROM THE ASSEMBLY
Assembly Chamber, Carson City, February 9, 2001
To the Honorable the Senate:
I have the honor to inform your honorable body that the Assembly on this day concurred in the Senate Amendment No. 1 to Assembly Concurrent Resolution No. 1.
Patricia R. Williams
Assistant Chief Clerk of the Assembly
INTRODUCTION, FIRST READING AND REFERENCE
By Senator Shaffer:
Senate Bill No. 98—AN ACT relating to elections; requiring a candidate for public office to submit with his declaration or acceptance of candidacy a disclosure of any arrest that occurred in the previous 10 years for committing a felony or gross misdemeanor and the final disposition of the charge resulting from the arrest; prohibiting certain campaign materials intended to deceive or confuse the voters; and providing other matters properly relating thereto.
Senator Shaffer moved that the bill be referred to the Committee on Government Affairs.
Motion carried.
By Senator O'Connell (by request):
Senate Bill No. 99—AN ACT relating to insurance; revising provisions governing the prompt payment by insurers of approved claims to providers of health care; revising the rate of interest applicable to the late payment of such claims; prohibiting the assessment of fees against providers of health care to be included on a list of providers of health care; establishing an administrative fine against insurers who do not substantially comply with the provisions requiring prompt payment of approved claims to providers of health care; and providing other matters properly relating thereto.
Senator Townsend moved that the bill be referred to the Committee on Commerce and Labor.
Motion carried.
By Senator Neal:
Senate Bill No. 100—AN ACT relating to gaming; requiring gaming licensees to pay a person who operates a gaming device to make a wager regardless of the malfunction of the gaming device unless the person making the wager intentionally caused the malfunction; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Judiciary.
Motion carried.
By Senators Neal and Wiener:
Senate Bill No. 101—AN ACT relating to gaming; authorizing a facility that provides social or recreational activities for senior citizens to conduct bingo under certain circumstances; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Judiciary.
Motion carried.
By Senator Neal:
Senate Bill No. 102—AN ACT relating to leases of motor vehicles; limiting the amount a short-term lessor may charge a lessee for a waiver of damages and optional insurance; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Transportation.
Motion carried.
By Senator Neal:
Senate Bill No. 103—AN ACT relating to school police officers; revising the provisions governing their authority; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Human Resources and Facilities.
Motion carried.
By Senator Neal:
Senate Bill No. 104—AN ACT relating to gaming; requiring the secretary of state to include on the ballot for the next general election advisory questions relating to an increase in the state license fee based upon the highest tier of the gross revenue of gaming licensees; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Taxation.
Motion carried.
By Senator Neal:
Senate Bill No. 105—AN ACT relating to gaming; increasing the state license fee based upon the highest tier of the gross revenue of gaming licensees; and providing other matters properly relating thereto.
Senator Neal moved that the bill be referred to the Committee on Taxation.
Senator Neal requested that his remarks be entered in the Journal.
Madam President, the majority leader has determined Senate Bills Nos. 104 and 105 should be referred to Taxation. I do not understand, but I will move that each bill be referred to the Committee on Taxation.
Motion carried.
UNFINISHED BUSINESS
Signing of Bills and Resolutions
There being no objections, the President and Secretary signed Assembly Concurrent Resolution No. 1.
REMARKS FROM THE FLOOR
Senator Neal requested that his remarks be entered in the Journal.
Madam President, I have been following the electrical deregulation issue in Nevada, and I am deeply concerned by the lack of knowledge in this area. Many people throughout the State, and even some of our legislators, do not have an understanding as to what has happened with deregulation in Nevada. There seems to be a lack of knowledge as to what brought us to this point of increased rates of electricity. I have read many newspapers and listened to many commentators who still do not understand what is going on with deregulation. A few weeks ago, I was invited to Elko to participate on a panel on this issue, and I noted a lack of knowledge about the rates of electricity and the increases.
When the Legislature was first introduced to deregulation by A.B. No. 366 in 1997, the current electricity pricing difficulties we read about in Nevada and California were not occurring.
An amendment to the Federal Energy Act of 1935, an act created by the Roosevelt administration in response to the high prices of energy, was passed in the United States Congress in 1992. This amendment deregulated the transmission of electricity. In 1992, 73 percent of utilities owned their transmission facilities in the industry. The market for that electricity was $217 billion. The amended Federal Energy Act of 1935 allowed non-utility investors to transmit electricity. It was thought that banks and telephone companies would enter into the energy market. This did not happen. Instead, a group of individual power companies out of TexasReliant Energy, Enron, Dynergy, Duke Power and Calpine—went from state to state to weaken their regulatory structures. Enron made an attempt in Nevada in 1997 to help pass laws to weaken regulatory structure and to have Nevada investor-owned utilities divest themselves of the generating capacity or the transmission facilities. They did not succeed, and the issue was forwarded to the Public Service Commission to act upon at such time when the market in Nevada was ready for competition.
In California, they deregulated everything. When an investor-owned utility divests itself of transmission facilities or generating facilities, load pockets, or underserved areas, are created. The five energy companies, referred to previously, bought many of the generating facilities in these load pockets, or underserved areas, in California. This allowed them to sell the energy back to the transmission line as deregulated energy. This was a classic “squeeze play” between those individuals who own the transmission of electricity and the ratepayers because the deregulated legislative-mandated rate caps could not pass on any rate increases. The cost has exceeded over $12 billion. Nevada must be careful not to find itself in the same situation.
There was a merger in 1999 between Southern Nevada Power and Sierra Pacific Power. Sierra Pacific Power pressed for the divestiture of certain generating facilities to get money to buy transmission facilities. The Public Utilities Commission allowed this to happen. This opened the door to deregulation in Nevada. A global settlement followed this action. This was actually a fake lawsuit challenging the constitutionality of S.B. No. 438, which was passed by the Nevada Legislature in 1999. The Public Service Commission negotiated a settlement allowing energy costs to rise from 1 percent to 1.8 percent per month. The settlement called for the increase to occur within three years of up to 64 percent. This settlement agreement allowed Sierra Resources, the merged company, to have rate increases which were not justified by A.B. No. 366 of 1997 or S.B. No. 438 of 1999.
In conclusion, the Attorney General’s office has challenged the settlement and the divestitures. It is important for the public to understand what is occurring with deregulation.
Senator Townsend requested that his remarks be entered in the Journal.
I appreciate the time my distinguished colleague has taken to familiarize himself with the complexities of this issue. I agree the public needs to be involved. There are many things the State has no control over which dictate the direction deregulation takes. I would be happy to provide back-up documentation with regard to the following issues.
There are five key components to deregulation in California. The first development was the creation of the Power Exchange. This was the bureaucracy into which the wholesaler power producers were required to sell and from which retailers were required to buy. When it was deregulated, prices were determined by an auction and any amount could be charged. The problem occurred when participants realized prices could be increased if supplies were bid into the auction at the last minute.
The second component was the Cal ISO, the independent system operator. The first year of operation cost $330 million for a bureaucracy to oversee independent power producers and equal access to the system.
The third component was a rate roll back of 10 percent, frozen for five years.
Fourth, California allowed everyone to leave, including residential, commercial and industrial customers.
Fifth, the utilities were allowed immediate, total recovery of stranded costs.
These are the five, key components that led to the total failure of deregulation in California. Nevada does not have any of these five elements in any of its bills. Nowhere in either of the two bills previously passed by the Legislature—A.B. No. 366, generated under a former administration and chairman of the Public Utilities Commission, and S.B. No. 438, generated under the current administration and the current Public Utilities Commission—will there be found any of the problems found in the California plan. None of the elements in either bill have been implemented. The Governor has delayed implementation of the legislation.
It is important to note the Legislature has no control over natural gas rates. Senator Neal is correct in pointing out that the problems did not develop in the last few years. It goes back many years. With the Energy Policy Act of 1992, things changed. Unfortunately for Nevada, which had some of the lowest electric rates in the southwest for 15 years, the 1992 Act was not an advantage. We are now responding to the global market place. As natural gas prices go up, so do our costs. In 1983, the Legislature passed the Integrated Utility Resource Planning Act. This legislation required individuals who wanted to build power plants to provide energy for the future to justify that expenditure. For the past 15 years, it has been better for consumers to have utilities buy power on the open market because prices were lower than if the utilities had generated themselves. Approximately 50 percent of the power in Nevada is purchased on the open market. For 15 years, Nevada received a benefit. Now, there is a struggle because Nevadans are using more energy; there are more people in the State. As a result, demand and supply have met head-on. Prices are beginning to skyrocket.
The issue in California was fairly simple. They froze retail rates and deregulated wholesale rates, but the retail rates did not reflect the actual cost. They did not build more power plants to accommodate the increasing demand for electricity.
This is a serious issue before us today, and we need to solicit public response. The issue cannot be solved tomorrow, but our role as policy makers is to see that the issue of deregulation is resolved in the near future.
GUESTS EXTENDED PRIVILEGE OF SENATE FLOOR
On request of Senator Amodei, the privilege of the floor of the Senate Chamber for this day was extended to Ryanne Amodei and Erin Amodei.
On request of Senator McGinness, the privilege of the floor of the Senate Chamber for this day was extended to Norman Fret and Susan Frey.
On request of Senator Raggio, the privilege of the floor of the Senate Chamber for this day was extended to Codi Vines and Joseph M. Bozsik.
On request of Senator Rhoads, the privilege of the floor of the Senate Chamber for this day was extended to the following Future Farmers of America members: Joe Buffington, Andrea Paris, Brian Santistevan, Jessica McKay, Donny Frey, Chuck Whitmer and Kati Robertson.
Senator Raggio moved that the Senate adjourn until Tuesday, February 13, 2001 at 11 a.m.
Motion carried.
Senate adjourned at 11:42 a.m.
Approved:Lorraine T. Hunt
President of the Senate
Attest: Claire J. Clift