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<title>Nevada Authorizes Retail Choice By Year 2000</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<td width="70%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u>
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<br>
August 1997</u><br>
</b><big><big><big><strong><font face="Arial">Nevada Authorizes Retail
Choice By Year 2000<br>
</font></strong></big></big></big><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
05/98</em>)</font></p><p><font face="Arial">Recently, the Nevada state legislature enacted legislation
establishing a December 31, 1999 target date for customer access to alternative sellers of
generation, aggregation and other competitive electric services. The legislation, Assembly
Bill 366, also provides for the restructuring of the Nevada Public Service Commission,
resulting in a three member Public Utilities Commission. The Commission is authorized to
determine which electric services are potentially competitive and to phase-in different
services within different geographic areas at different times.</font></p>
<p><font face="Arial">Prior to the commencement of retail competition, the Commission is
to conduct rulemaking proceedings to establish licensing procedures for alternative
sellers, unbundle electric rates, identify and approve stranded costs and adopt certain
consumer protection measures and disclosure standards. The Commission may require an
alternative seller to satisfy conditions related to safety and reliability of service,
financial and operational fitness, billing practices and customer service to become
licensed to sell competitive electric services.</font></p>
<p><font face="Arial">Non-competitive services, such as transmission and local
distribution, must be provided on an open and non-discriminatory basis to alternative
sellers under the legislation. The state’s vertically integrated utilities may
participate in the new competitive markets only through separate affiliates, if
appropriate safeguards are implemented and approved by the Commission.</font></p>
<p><font face="Arial">The legislation contemplates that there will be a provider of last
resort to furnish electric service to customers who do not exercise their right of choice.
The Commission is authorized to designate existing vertically integrated utilities to
provide such "backstop" service. Alternatively, it may directly assign customers
to alternative sellers or utilities or it may conduct a competitive bid process for
providers of such service. In those markets where effective competition does not develop,
the Commission will also have the right to establish methods for determining the prices
and terms of service by the relevant service utility.</font></p>
<p><font face="Arial">A multi-year cap on residential rates is imposed, subject to
necessary adjustments, so that vertically integrated utilities may recover their just and
reasonable expenses. The state’s existing utilities are also directed to minimize
layoffs and other adverse effects on their employees.The legislation authorizes full
recovery of those utility stranded costs that are approved after Commission review. While
the Commission will effectively require utilities to mitigate their stranded costs, there
are no specific provisions regarding power purchase contracts with qualifying facilities
or other independent power producers, nor is securitization of stranded costs provided for
in the bill. The Commission is authorized to determine the method of and period for direct
and unavoidable recovery of the ratepayers’ portion of utility stranded costs. The
legislation sets portfolio standards for electricity derived from "renewable energy
resources", including wind, solar, geothermal and biomass energy sources. The
renewable energy portfolio requirement increases from 2/10 of 1% in 2001 up to a target
standard of 1% of the total amount of electricity consumed in the state by 2009. One-half
of all of the electricity derived from such renewable energy resources must be from solar
energy systems. The Commission is authorized to establish a system of tradeable renewable
energy credits which may be used by market participants to satisfy the portfolio
standards. Electric utilities and alternative sellers must file annual compliance reports
with the Commission documenting satisfaction of the renewable energy portfolio standards,
and annual information filings regarding other competitive market activities.</font></p>
<p><font face="Arial">With respect to property taxes, the legislation includes a new
provision that the state Tax Commission may establish an appropriate valuation and
apportionment among counties for property used by more than one party to perform separate
functions collectively required to deliver electric service to final customers, if such
property would otherwise be centrally assessed if owned by one company. The proportion of
such taxes levied upon the property by each county will be based on the valuation of the
contribution of each party to the aggregate valuation of the property. This new tax
valuation and apportionment section does not apply to qualified facilities constructed
prior to July 1, 1997.</font></p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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