MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
February 19, 2003
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend at 8:09 a.m., on Wednesday, February 19, 2003, in Room 2135 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.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Michael Schneider
Senator Maggie Carlton
COMMITTEE MEMBERS ABSENT:
Senator Joseph Neal (Excused)
GUEST LEGISLATORS PRESENT:
Senator Dina Titus
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Kevin Powers, Committee Counsel
Makita Schichtel, Committee Secretary
OTHERS PRESENT:
Thelma M. Clark, Member, Nevada Silver Haired Legislative Forum, Las Vegas
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General
Ernest K. Nielsen, Washoe County Senior Services
Jan Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada
Terry Graves, Lobbyist, Basic Management Incorporated, and Pioneer Chlor Alkali Company, Incorporated
Raymond Bacon, Lobbyist, Nevada Manufacturers Association
David Noble, Assistant General Counsel, Public Utilities Commission of Nevada
Kathleen Drakulich, Lobbyist, Nevada Power Company
Mary E. Henderson, Lobbyist, Nevada League of Cities and Municipalities
Steven D. King, Assistant City Attorney, City of Fallon
Robert H. Erickson, Lobbyist, City of Fallon
We will begin by introducing three bill draft requests (BDRs) to be heard by the floor. They include BDR 53-337, BDR 54-497, and BDR 53-466.
BILL DRAFT REQUEST 53-337: Revises provisions relating to industrial
insurance. (Later introduced as Senate Bill 167.)
BILL DRAFT REQUEST 54-497: Revises certain fees related to licensure of
hearing aid specialists. (Later introduced as Senate Bill 169.)
BILL DRAFT REQUEST 53-466: Revises provisions governing industrial
insurance. (Later introduced as Senate Bill 168.)
SENATOR O’CONNELL MOVED TO INTRODUCE BDR 53-337, BDR 54 497, AND BDR 53-466.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
We will now open the hearing on Senate Bill (S.B.) 102.
SENATE BILL 102: Revises provisions relating to the Public Utilities Commission of Nevada. (BDR 58-968)
Thelma Clark, Member, Nevada Silver Haired Legislative Forum:
As the Public Utilities Commission of Nevada will change to five members on October 1, 2003, I would like to see this bill final by that date. I would also like to propose a few changes. Under section 2, subsection 2, paragraph (a), I recommend adding the word “and” so the experienced commissioners have the same five requirements, subparagraphs (1) to (5), as the other commissioners.
Chairman Townsend:
To clarify, you want the public commissioner to have a background in either accounting, business administration, finance, administrative law, or professional engineering?
Ms. Clark:
Yes, they should be qualified in any one of those fields. Preferably business administration, but it could be in the other fields. In the section titled “Text of Repealed Section,” I would ask that section remain with one addition. I would like to see pecuniary interest listed as a cause of dismissal. This bill states a commissioner cannot be appointed if he has a pecuniary interest, so it should apply also that anyone could be removed for this cause.
Chairman Townsend:
You would ask a commissioner recuse himself if he has a conflict?
Ms. Clark:
Yes. The Governor should also have the power to make this call. In section 3, we could delete subsection 1. A commissioner who represents the public may not be the best person to be chairman.
Chairman Townsend:
The Governor currently chooses the chairman. The people could still choose the chairman out of the general membership. They could choose the general public representative or anyone else on the commission.
Ms. Clark:
They could choose if we did not specify the public representative had to be the chairman. I have another concern. In section 6, subsections 2 and 3 conflict. A commission should always have a majority to act. I do not want one remaining commissioner to act on any matter, particularly a rate case for any utility.
Chairman Townsend:
Senator O’Connell chairs the Senate Committee on Government Affairs, and she has a bill addressing a minority group of elected officials making decisions when a number of the members have to disqualify themselves. When people who recuse themselves are removed leaving less than a majority to make a decision, is that good public policy? Your point is a good public policy debate, not just for the Public Utilities Commission of Nevada (PUCN), but for all boards and commissions.
Ms. Clark:
I think there should be a majority vote in every commission. As in the Nevada Power Company rate case, I do not want one person to make that decision for me.
Section 6, subsection 2 states if only one commissioner remains, he has full power to act. Subsection 3 says a person can be appointed to fill the vacancy. If one person can act, why would an acting commissioner be appointed? I think these contradict.
Chairman Townsend:
Mr. Powers, does subsection 1 supercede subsection 2? If two people are disqualified and one person remains, can he act until the Governor appoints an acting commissioner?
Kevin Powers, Committee Counsel:
Mr. Chairman, there is a distinction to be drawn between a vacancy in office and a disqualification from office. The provisions of subsection 2 Ms. Clark is referring to apply when there is more than one vacancy in office. A vacancy means there is no person serving in that position. An official amendment would be needed to ensure the one person remaining could not act.
Chairman Townsend:
Is that what you are asking, Ms. Clark? Regardless of a vacancy or a disqualification, you do not want a single person acting, correct?
Ms. Clark:
Yes. If they are sick, on vacation, disqualified, or whatever the reason, I do not want an individual making decisions that affect me. There was a petition brought to the Legislature that created a five-member commission. I am not sure what happened to that petition, but I would like to see that occur, especially during deregulation. Deregulation has done nothing but increase our rates, as when Sierra Pacific Resources bought the Nevada Power Company.
If the Governor appointed an acting commissioner, it seems they would be appointed for more than one matter since agenda meetings often cover 20 items.
Chairman Townsend:
I think it was written that way in the event commissioners recuse themselves for a specific matter for conflict of interest, then the acting person could act on that one matter.
We have notified Dr. Lynnville in the Governor’s office that he may be filling in as an acting commissioner. He is amply qualified. There may not be a lot of people volunteering for the PUCN.
Ms. Clark:
Yes, I agree it is difficult to serve on the PUCN, and I think the current staff is due an increase in salary. Regarding the five-member commission, could we, upon passage and approval of this bill, address a five-member commission?
Mr. Powers:
“On October 1, 2003, by statute, the commission will expand from three to five members based on passage of A.B. No. 661 of the 71st Session.”
.
Chairman Townsend:
I understand, but Ms. Clark is asking for a more immediate change. We could accelerate that date. To clarify the issue of section 6, you do not want one person making those decisions. You wish to accelerate the October 1 date to coincide with the passage of this bill to show an increase from three to five members acting on a commission. Are there any other issues?
Ms. Clark:
Just my concern that subsections 2 and 3 under section 6 conflict.
Chairman Townsend:
We will keep your intent in mind as we work on this bill, to ensure no one person can make these decisions. You have to separate the issue of making administrative decisions versus decisions about rate cases affecting utilities. We do not want a person available who cannot make scheduling decisions.
Ms. Clark:
I am addressing the powers of the commission and not the administration aspect. Someone has to be able to chair and make decisions. If someone has a conflict of interest, that person should be removed. If a conflict of interest arises once a commissioner is appointed, the Governor should be able to remove them. This is to protect consumers.
Senator O’Connell:
Are you talking about five people at all times voting on an issue? If one of those five has a conflict, then a temporary person is appointed?
Ms. Clark:
I just asked for a majority of the commission to vote on all matters. I did not ask that all five members vote.
Senator O’Connell:
Where does the temporary person come in?
Senator Townsend:
When you do not have a majority. If we had a three-person commission and two people recused themselves, the Governor would be required to appoint at least one additional person to make a majority.
Senator O’Connell:
Would that be a temporary appointment?
Chairman Townsend:
Yes, it would be a temporary appointment for that specific recusal only.
Senator O’Connell:
The preparation time for hearing a case sometimes takes months. The temporary person would have to know early on so they could be prepared.
Chairman Townsend:
It would be commensurate with a rotating judge. This person would have to meet the qualifications outlined, have a background in these issues, and have immediate notification of a recusal.
Senator O’Connell:
I wonder if a person could take time away from their job to accommodate this type of request?
Chairman Townsend:
We need to be prepared if no one listed to fill in is available. If no one is qualified under the statute to be appointed, then what?
Ms. Clark:
You can call me.
Chairman Townsend:
When we talk to council to make sure we understand the intent and draft new language, we will notify you, Ms. Clark, right away.
We will refer this bill to work session and close the hearing on S.B. 102. We will open the hearing on S.B. 121.
SENATE BILL 121: Eliminates exemption to payment of universal energy charge for electricity used in electrolytic-manufacturing processes. (BDR 58-38)
Senator Titus:
This is a simple bill meant to eliminate a special exemption to A.B. No. 349 of the 71st session, which passed. That bill established a universal energy charge to help low-income families and seniors meet energy costs. This exemption includes one company involved in electrolytic manufacturing in Henderson. The assistance program saves us taxes in the long run. It prevents illness, homelessness and additional social welfare services. Assembly Bill No. 349 of the 71st session spreads the burden of assisting these low-income people across all retail customers of power and gas purchased from for-profit utility companies. Small homeowners may pay a few extra cents a month, where large companies may pay $25,000 a year. Everyone pays a fair share, with the exception of this one company. Why should this one company be exempt from contributing to this worthwhile program? This exemption places a burden on the average citizen and other businesses to make up the difference. Please remove this exemption and treat all Nevadans fairly.
Chairman Townsend:
Can you tell us the status of this program in terms of money raised, accessibility, and success level?
Senator Titus:
I have a handout with those statistics, “Welfare Division Low Income Home Energy Assistance Program” (Exhibit C).
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General:
When the Universal Energy Charge (UEC) was adopted, a cap was proposed for large users like gaming and mining. Only the electrolytic manufacturers received the exemption. The largest electricity consumers in northern Nevada are the mines. It is equitable to cap those quarterly payments to the UEC at $25,000. The electrolytic manufacturers should also pay their fair share as other large industries. We are in support of this bill.
There are proposals to change or eliminate the UEC. In 2002, there were about $7 million collected in the UEC. Our figures indicate 30 percent of consumers qualify for UEC assistance. We are on the right track. We need to increase awareness of the program to eligible consumers.
Chairman Townsend:
A bill has been introduced asking that the UEC be repealed. This has been rescheduled. It is important to this committee to hear a total report covering the status of UEC. We also need to address the funding for this program. The money collected should be used as intended. I am not sure if this is a State or county issue. We need to be assured the program is efficient. I would hate for a qualified consumer to be unaware of the program and not receive help. The program needs to be accessible.
Mr. Hay:
There is a backlog of applications unprocessed by the Welfare Division. It is not necessarily the fault of the welfare system; there are some billing system problems within Nevada Power Company, as well as other integration issues that remain unresolved.
Chairman Townsend:
Let us look at this from a company perspective. If a company is due money from someone who cannot make that payment, it is not the fault of the company. The company is put in a bad position and forced to send collection letters. Everyone seems to be trying to do the right thing. We need to make sure the qualified applicants receive money so they can pay their bills. Generating electricity is not free, so we need to ensure the electric companies receive their revenue.
Senator Titus:
This is working. The program served a total of 15,665 low-income households in 2002, compared to 9025 in 2001, for an increase of 73.5 percent. It is getting better although we need to do more, and we are helping a significant number of people.
Chairman Townsend:
Yes, and we understand even a well-intended program needs adjusting to ensure efficiency.
Senator O’Connell:
Does your handout show if payments are subsidized or made in full? Do we have any means of testing for the customers? Do we know which fund is tapped first?
Senator Titus:
I believe this handout will answer some of your questions. It may be helpful to get specifics from the Welfare Division that administers this program. We receive funds from the federal government to supplement. The handout breaks the recipients down by category on page 3.
Chairman Townsend:
Is this statewide or by county?
Senator Titus:
Statewide.
Mr. Hay:
If I could respond to Senator O’Connell’s question, the means of testing is done at 150 percent or less of the federal poverty level depending on the size of the family. If you make more than 150 percent of the federal poverty level, then you are excluded from the program.
Senator O’Connell:
What is the current poverty level?
Mr. Hay:
It depends on the size of the family. I believe the range is $1100 maximum monthly income for a household of one to $3000 for a maximum monthly income for a household of six. Those figures represent 150 percent of the federal poverty level.
Senator O’Connell:
Does that also cover the fund available through Nevada Power Company?
Mr. Hay:
I believe the two programs use voluntary contributions distributed to local service-based organizations. The intent of these programs is to give a one-time grant to families who have unusual circumstances. Those funds are independent of the State program, which is driven by formula.
Ernest K. Nielsen, Washoe County Senior Services:
We support this bill. There should be no exemptions. It should be a system to which everyone contributes. Last year we said there were approximately 150,000 households eligible for this assistance program. The current funds based on the payments received would only allow for 30,000 of those households to receive help. Another issue is the Housing Division side of the UEC, which provides for additional weatherization and energy efficiency. The utilities and the Housing Division are collaborating well. These groups are working hard to make this program effective.
Jan Gilbert, Lobbyist, Progressive Leadership Alliance of Nevada:
We support eliminating any exemptions to the universal energy charge. We believe the cap will keep a company from becoming unduly injured. We wish to protect all industries from being unfairly charged. The UEC serves a great number of people.
The Welfare Division has had a busy year. They had a great increase in caseloads, including a 54 percent increase on Temporary Assistance for Needy Families (TANF). They have experienced a lack of staff, funding, and a great increase in workload. This may be the cause for the slow implementation and backlog of applications for UEC. There are 120,000 people eligible for this program. I urge you to support this bill. It will make a difference and make the system of assistance fair.
Chairman Townsend:
I had a disturbing conversation with a corporate executive officer of a large gaming company in southern Nevada. I asked him how his company was doing. He reported they are laying off one to two people per department. He said the September 11, 2001terrorist attacks, which reduced travel, negatively impacted his industry. When you hear about the rise in demand of TANF, these types of situations are creating that growing need. This committee is sensitive to these issues.
Terry Graves, Lobbyist, Basic Management Incorporated, and Pioneer Chlor Alkali Company, Incorporated:
I am testifying in opposition to S.B. 121. I will read my testimony (Exhibit D). In response to those supporters of the bill, this exemption was not meant for one company, but any electrolytic processes. This varies from other manufacturing processes in that electric energy goes directly into the product. It is a raw material, as stated in the Internal Revenue Code. The proper thing to do is to exclude all basic manufacturing processes from the UEC. I ask that you reject S.B. 121.
Raymond Bacon, Lobbyist, Nevada Manufacturers Association:
This economic recession is impacting the manufacturing sector. From July 1 to December 31, 2002, the manufacturing job loss was about 1.5 million jobs, and is now over 2 million jobs nationally. For every manufacturing job lost, an additional 3½ secondary jobs are lost. Nevada led the nation with a growth of 700 jobs, while 47 states were downsized. California has lost approximately 200,000 jobs in the manufacturing sector. Some of the highest paying jobs in the State are found in the manufacturing industry, at the BMI complex, and in electrolytic operations. We can take away their UEC exemption, but those jobs become at risk. Once those jobs go away, they probably do not come back.
When we look at tax burden on the western states, Nevada is in sixth place, among the lowest in the western states, with California in second place. As far as electrical energy burden and the cost of doing business, Nevada was second behind California. We have a high burden of energy costs, as we are somewhat dependent on California. The California index for the cost of doing business is 132, Nevada is at 93, so we have a 40-point advantage. If we adopt S.B. 121, we will take that margin away which encourages new businesses to move to Nevada. We talk about diversification. We have made it a Nevada mantra for 20 years. This bill and other similar bills will make it difficult for our State to remain competitive. We need to encourage companies to come here for diversification.
Chairman Townsend:
Senator O’Connell and I have been working on economic development issues. We look at high-paying jobs that pay medical benefits and do not pollute or use a lot of water. Trying to find the correct policy for the State has been a struggle. We have found that high-paying jobs require highly educated people. Our friends in manufacturing are encouraged to work more closely with the higher education professionals to help businesses move to Nevada and expand their businesses. Universities should be open to business demands and workforce needs when creating curriculums. I saw in an industry magazine that Toyota chose to build their next plant in Texas. Although they chose Nevada to get a banking license to provide financial services to their dealerships, they did not choose to build a new plant here. Those well-paid jobs and community‑oriented companies, such as Toyota, are not easily acquired. The problem is our lack of revenue. We have missed opportunities to acquire those types of companies and jobs. In Las Vegas, however, construction is a constant. We do need diversification in our job market. We have to consider all the above issues when we look at economic development.
Mr. Bacon:
This association spends a great deal of time on quality of education issues. We want kids to be able to read, write, compute, think, and work. Public schools need to redefine those five areas to continue improvement in education. There is a program created to bridge the gap between higher education and K-12. We started that program in northern Nevada. The pilot was partially university funded and partially industry funded. That has narrowed the gap. However, this year we had to turn down students due to lack of space and resources in the College of Engineering. If we are serious about economic development and expansion, we cannot afford to deny any student interested in a college program. There is a resource issue and we are inefficient in how we do things. We could make drastic improvements.
Senator O’Connell and I attended a conference in Denver, which introduced a new technology that allows every child to answer every question in the classroom. The teacher immediately knows which students are behind. That technology is not outrageously expensive. For a teacher to immediately know when a student falls behind changes the entire process of public education. This technology has the potential to take us from a teaching-based school to a learning-based school.
The electrician’s union adopted that technology as the universal standard. They do this because of the disparity of skill level of applicants. While tracking may not work in public education, the private sector and unions use this tool to gauge progress.
Chairman Townsend:
Will you schedule a time to present this idea to the committee?
Mr. Bacon:
Yes. The chairman of the board will be available as well. Also, a bill has been introduced which allows the State to make the appropriations so that high school proficiency tests will become automated. The 6-week waiting period for results would now be available the same day as the test. We could use this system in the classroom and for every other test in the State.
Senator O’Connell:
The great part of the system is a child’s marks go directly into the teacher’s grade books. This saves the teacher’s time.
Senator Schneider:
How much does this program cost?
Senator O’Connell:
It costs $3000 per classroom for 32 different stations or children per classroom.
Senator hardy:
The comment I heard, from a teacher in Colorado who had access to this system, was he saved between 200 and 300 hours of his time the first year.
Mr. Bacon:
If we funded education closer to the national average, we could afford this. I have a bill on this issue.
Senator Carlton:
What is the capitated rate? Also, what is the impact on people and companies who pay this?
Chairman Townsend:
The capitated rate is $25,000 a quarter, $100,000 a year. Mr. Graves, do you have the numbers of those affected by this bill?
Mr. Graves:
Those figures are correct. My clients feel the $100,000 cap gives them a disproportionate share of that burden. They are one of the smallest entities that hit the $100,000 cap. Some of the companies that hit the cap in gaming and mining were allowed to leave the system, which is a form of deregulation. They could save millions of dollars in purchasing energy. My clients did not have that option. The money would come off my clients’ bottom line and, given the market condition, they could not even pass this cost through. One such company has gone into bankruptcy, come out of bankruptcy, and is still in a fragile financial position, as are most electrolytic manufacturers in the State. These are key manufacturing facilities. Titanium metals once produced about 50 percent of the free world titanium. Pioneer Chlor-Alkali Company, Incorporated is the only chlorine caustic soda hydrochloric acid producer in the southwest and provides water treatment chemicals to most of that area. The loss to these businesses would hurt society.
Senator Carlton:
Have any of the larger gaming properties or other entities that have had the opportunity to leave the market done so yet? There have been applications which have been withdrawn or dismissed.
Mr. Graves:
Not yet, but they have the opportunity.
Chairman Townsend:
We will close the hearing on S.B. 121, and open the hearing on S.B. 125.
SENATE BILL 125: Revises provisions relating to certain final orders and permits for public utilities. (BDR 58-488)
David Noble, Assistant General Counsel, Public Utilities Commission of Nevada:
We developed S.B. 125 in response to problems in our daily operations. One concern deals with notice and interventions for permits for construction of utility facilities. Currently the intervention period is 30 days after the applicant serves a copy of the application to local governments, and 30 days after he publishes a notice of that application in a local newspaper. That second intervention period deals with a natural person residing in the affected county. We have varying intervention dates. The service and notice of application does not have a docket number. Often we receive these with deficient information, at which point they are rejected. We propose tying the intervention date with the commission’s notice of the application so there is one intervention date for all. Then we know we have an active application that has not been rejected. Our administrative staff can be clear on who is timely. There will be less confusion.
The second concern deals with the commission’s deadline for issuing an order on exit cases. These are applications submitted by eligible customers to exit the system. Currently the deadline is set at 90 days. The commission has found the 90-day deadline is not working. If the commission does not have enough information and time to process applications, they reject them. Applications have been withdrawn and resubmitted to restart the 90 days. The applications seem to come in bunches. We now have 12 pending exit cases, which required a lot of resources in a short amount of time. This is why we wish for an expansion from 90 days to 150 days to review these applications.
Chairman Townsend:
Have you talked to the parties making applications about this concern?
Mr. Noble:
I have not talked directly to the applicants. I have spoken with staff and heard about their dealings with the applicants. Also I have observed the process from the general counsel’s office. The deadlines are often missed. We have a provision to waive deadlines. This provision has been used frequently.
Chairman Townsend:
We want to accommodate the commission as well as all parties involved.
Kathleen Drakulich, Lobbyist, Nevada Power Company:
We have been able to work with the 90 days. On A.B. No. 661 of the 71st session, we took those directions seriously. We have taken input from the Public Utilities Commission of Nevada, Bureau of Consumer Protection, and all departing customers. We have accommodated that 90-day deadline. In one instance, the commissioner advised an applicant if he wanted to file correctly within the time frame, he needed to withdraw and refile. That worked, and only added about 25 days to the process. I can understand the concern from the office of general counsel for the commission when applicants come in 11 and 12 at a time. We are sympathetic to Mr. Noble’s concerns, but we have been able to work within the existing time frame.
Chairman Townsend:
The applicants who come to exercise their rights under A.B. No. 661 of the 71st session are all large companies. They all affect the PUCN. I want to make sure you are not overwhelmed based on this one public policy. I do not want to tighten the time lines so closely that not only the PUCN, but the companies that have to respond to these date requests are inconvenienced.
Ms. Drakulich:
We are not getting many data requests because all the parties are cooperating. There is a provision in the law for an impact charge to be calculated. What are the benefits and detriments to this customer’s departure to all customers who remain with the Nevada Power Company and Sierra Pacific Power Company? This requires a huge amount of detailed information. We are on the generating end and Mr. Noble is on the receiving end.
Chairman Townsend:
We want to accommodate people to ensure they are not thrown out by an arbitrary date. Although cooperation is good, we want to give people flexibility. They should not need to withdraw and reapply.
Ms. Drakulich:
That may be an issue because the law states if the application is not processed completely by the commission, that issues an order within that 90-day time frame, the application is deemed granted.
Chairman Townsend:
We will close the hearing on S.B. 125 and open the hearing on S.B. 126.
SENATE BILL 126: Exempts retail customers who purchase energy from certain municipal utilities from payment of universal energy charge.
(BDR 58 -344)
Mary E. Henderson, Lobbyist, Nevada League of cities and municipalities:
Senate Bill 126 was brought forward by the Nevada League of Cities and municipalities on behalf of its municipalities that provide electric service to their customers. At the end of last session, A.B. No. 661 of the 71st Session was processed. Some exemptions were applied to rural electric cooperatives, general improvement districts, and nonprofit groups. Normally, an incorporated city that provides these services would be included. The municipalities seem to be inadvertently left out. This has caused municipal providers under PUCN regulation to be singled out. We ask that an exemption be put in place to include them with the three groups mentioned, and to allow them not to participate in the universal energy charge. This bill deals only with incorporated cities. We have two incorporated charter cities, Boulder City and Caliente that would like to be included. We want to make sure every municipality is included, mainly the municipalities of Boulder City, Caliente, and also Fallon.
Chairman Townsend:
How would a person living in one of these jurisdictions receive help with energy assistance, if residents in that community are not paying into this fund?
Ms. Henderson:
Normally, the city council is accountable to make sure the citizens are helped. Boulder City has programs in place to help in addition to the UEC. The benefit is the money comes directly back into the community.
Chairman Townsend:
Once we identify all groups, what if we allowed these groups to make their own decisions? It is fine to exempt these groups, but we need to ensure the citizens are being helped. People will expect help from the community when their elected officials are on these boards. If the UEC survives, then a statement of public purpose might be a good idea.
Ms. Henderson:
I think in this one area we are under PUCN regulation.
Chairman Townsend:
We want to be consistent.
Steven D. King, Assistant City Attorney, City of Fallon:
The City of Fallon has a program in place for low-income assistance. We believe it was an oversight municipal electric utilities were not included in the exemption. We think other small public power entities such as City of Fallon should have the same exemption. The City of Fallon has had its own electric utilities since 1912. It has 8300 residents and three city councilmen. Those three city councilmen serve in the same capacity as the three public utility commissioners. They have direct-elected accountability to the people. They approve all contracts for power and transmission. The City of Fallon, Boulder City and Caliente have existing plans in place to assist low-income residents having difficulty paying their electric bills. The City of Fallon has an integrated utility system including electric, water, garbage, and sewer. The city utilities work together to integrate assistance to low-income residents. Our concern is public utility oversight. We are required to report to the Public Utilities Commission of Nevada (PUCN). Out of the general city fund, we show $14,458 given to the Churchill County social services during the past 12 months. These funds were dispersed to 365 city residents out of 8300 residents. I believe this is a larger percentage going to those who need help than the funds from State welfare under the UEC. We ask to have the same exemption in place as other small public power utilities in the State.
Ms. Henderson:
Boulder City has a program providing a ten percent discount on sewer, water, and electricity based on State guidelines.
Robert H. Erickson, Lobbyist, City of Fallon:
The City of Fallon is budgeted $20,000 per fiscal year toward this assistance fund. Only $14,000 in the year 2000 was funded. We have actually funded $30,000 of the $40,000 budgeted. No applicant has been turned down. We assist in utility and natural gas service. We are meeting the citizens’ needs. The social services director in Churchill County said that without our assistance program, his programs might have run out of funds by August or September. We feel we are getting double charged. The citizens of the city are the shareholders of these utility companies. Because the people who receive the services are also the owners of the company, we feel the needs are being well served.
Senator O’Connell:
Do you fall under the PUCN’s jurisdiction in this one area, or do you operate within a broad scope in working with rate cases?
Mr. Erickson:
This is the only area we are involved in with the PUCN, I believe, besides a reporting requirement.
Senator O’Connell:
Do you believe you should be treated differently than the private companies?
Mr. King:
Yes. This is the first and only time municipal electric utilities have had any PUCN oversight. We believe small public power and electric utilities have been a valuable asset to the shareholders of the city. The direct accountability displayed by just three city councilmen for 8300 people sets us apart for different treatment.
Ms. Henderson:
Senator O’Connell, we are looking at utilities that have been in place since 1912. They have always been included with the exemptions group. This is the only time they have fallen under PUCN regulation.
Mr. Erickson:
I have served as city councilman and as major for the city of Fallon. I understand the operations of the city. When there has been a rate increase, we have aggressively advertised in the local newspaper. The three city councilmen have faced huge crowds in council chambers when dealing with these rate increases. The citizens are well represented. The three councilmen are accessible, both in council chambers and in the local donut shop. The citizens’ concerns about rate issues are handled the same as they are handled in our budget process. We feel the citizen has ample opportunity to comment on rates and operations of services. To fall under PUCN regulation would be costly for us. We would need additional operational funds for staff reports and legal preparation for hearings.
Senator O’Connell:
Have you ever had a situation where a member had to recuse himself or herself and a temporary person had to replace them?
Mr. Erickson:
I do not remember that happening in the City of Fallon.
Senator O’Connell:
Have you not experienced any commissioner with a pecuniary interest that might ethically affect his vote?
Mr. Erickson:
I do not believe we have had a recusal based on those issues, although I have been out of office for some time.
Senator O’Connell:
It is interesting that such a small town would not have some connection.
Senator Hardy:
How involved was Boulder City in drafting this legislation? Are they in support?
Ms. Henderson:
Boulder City wanted to be included. When the bill draft came out, they felt they were not as involved. We would like to work with your staff to ensure they are included, as does Caliente.
Chairman Townsend:
Ms. Henderson, you are the designated person to work on the language for this bill. You will also want to speak with Senator O’Connell. We close the hearing on S.B. 126. This meeting is adjourned at 10:02 a.m.
RESPECTFULLY SUBMITTED:
Makita Schichtel,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: