Nevada debates new electrical service rules

CARSON CITY -- The state wants to stop electricity "slamming" and other crimes against consumers before Nevada ushers in competition in the power industry at the end of 1999.

"Because of the lessons learned from the telephone industry, we are establishing up-front prohibitions," said Public Utilities Commission Chairwoman Judy Sheldrew, referring to the abuses when consumers had their long distance companies switched without their knowledge or permission.

A week of hearings by the commission is under way in Carson City on three regulations to get Nevada ready for the end of the electricity monopolies.

The rules establish the qualifications for the new sellers of electricity; set up guidelines for the dealings between these new companies and Nevada Power of Las Vegas and Sierra Pacific Power Co. of Reno -- which are merging and will be distributing the electricity; and toughen protections for residential and small business consumers.

For instance, a consumer will have to agree in writing before his or her power supplier is changed from one company to another. The consumer must acknowledge a fee may be charged for changing companies.

The customer will have the right to cancel any agreement with a seller of power within three business days of receiving the terms of the agreement.

"In the telephone industry, they were not prepared for it when it happened," Sheldrew said, referring to "slamming." "I hope by establishing the do's and don'ts, we can nip it in the bud."

There's a section that prohibits new companies from selling the names of their customers and other data for commercial purposes. The new companies, to be called "alternate sellers," will be prohibited from collecting customer deposits in excess of 150 percent of the estimated average monthly bill. And penalties for late payments by customers shall be limited to 1.5 percent per month.

Customers are entitled to an explanation if an alternate seller refuses service. There must be a toll-free telephone number customers can call for questions or complaints about their bills.

Alternate sellers must meet certain standards and post certain bonds.

"We don't want to have California's experience," Sheldrew said. "It doesn't do any good to have flakos to come in here. Thus far, we've seen good big companies show some interest," in selling power to residents and businesses.

Not everybody agrees with the proposed regulations. The Senior Law Project of Washoe County feels there's not enough protection for elderly and the poor in the new era of competition. Nevada Power, on the other hand, objects to the rules on advertising, saying they are too restrictive.

The Southern Nevada Water Authority wants the regulations changed to allow big users to bypass alternative sellers and deal directly with the distribution companies, such as Nevada Power. The authority said that would be cheaper and benefit its customers.

In pre-filed testimony, Ernest Nielsen of the senior law project says the regulation on customer deposits should be clear to give the consumer the right to pay in installments and to prohibit a company from requiring a deposit if the customer meets credit requirements.

The regulations, Nielsen said, are not adequate to avoid discrimination. "Clearly residential customers with small (electric) loads, who have low incomes, who may live in low-income census tracts or who have poor credit records may be unattractive to alternative sellers. The Senior Law Project is disappointed that the commission did not explicitly prohibit alternative providers from denying services for these reasons."

There is nothing in the regulation, Nielsen said, to stop an electric supplier from turning off the power when there may be a danger to the health of the citizen. The commission, Nielsen said, should require sellers to provide information about power, such as the mix of fuel and where it is generated.

"Nevadans may want to encourage generation in Nevada because that will have a positive economic impact for Nevada. Nevadans may not want to pay for nuclear generation," he said.

Hugo Van Nispen, an expert in electric utility restructuring who represents Nevada Power, said the commission is too restrictive in setting the rules for advertising. The commission is requiring all advertisements be in plain, easily understood language that includes short words, sentences and paragraphs. Technical terms should not be used. Double negatives should be avoided and disclosures must be in 10-point type size.

Van Nispen said the commission should not assume the role of "managing editor" in approving advertisements. "Consumers will respond positively to quality advertising campaigns and shun poorly presented or deceptive ads. Truth-in-advertising regulations currently exist to provide legal guidance on such issues."

Robert Marshall of the Southern Nevada Water Authority said there's no doubt small users need protection in dealing with the new alternative sellers of electricity.

But he said, "Forcing large customers to deal through one or more alternative sellers rather than dealing directly with the distribution company will no doubt increase the cost of obtaining distribution service."

Sheldrew said these regulations are a "balancing act" to protect the consumer but at the same time not to discourage good companies from coming to Nevada to sell electricity.

After the hearings this week, the commission will review the testimony and if there are major changes in the regulations, another public hearing will be held. Sheldrew hopes to get the regulations approved by November.

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