Behind the Bar: Stablecoin, utility regulator fines, abolishing K-12 commissions and more compensation for the wrongfully convicted

Behind the Bar is The Nevada Independent’s newsletter devoted to comprehensive and accessible coverage of the 2021 Legislature. 

In this edition: A bill on “Stablecoin” that is totally not related to Innovation Zones, increasing utility regulator fines, changes to wrongful conviction compensation and heartburn on abolishing education-focused commissions, including one created by beloved former Assemblyman Tyron Thompson.

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I want to hear from you! Questions, comments, observations, jokes, what you think we should be covering or paying attention to. Email me at rsnyder@thenvindy.com.


I’ve spent a lot of time this week thinking about Texas.

Everyone is generally aware of the massive power grid failures that left millions of Texans without reliable electricity, natural gas service, or even clean water in the midst of a massive winter storm. Dozens of deaths have already been reported and the toll is expected to rise.

I’ve avoided commenting on much of the news in Texas because I’m just not an expert in ERCOT, natural gas pipeline infrastructure or the wild confluence of factors that led to the greatest forced blackout in American history (I also have to write this newsletter). There have been some great breakdowns of what exactly happened to the Texas power grid, as well as some not-so-great ones.

But back in 2017 and 2018, I spent probably too much of my time following the debate and issues around potential implementation of a similar retail energy market in Nevada, in the form of Question 3. It would have amended the state’s Constitution to require that Nevada set up a retail electric market similar to the one in Texas and a handful of other “choice” states (I wrote a long story about why the measure failed).

Even if Question 3 had passed, Nevada would still be in a much different position than Texas. ERCOT, the grid manager for Texas, isn’t connected to any other state’s grid in order to avoid federal regulation. Nevada also has a much different mix of fuel resources than Texas, a different geographical layout and different weather conditions and patterns that affect electric supply and demand in different ways.

I don’t want to get too far in the weeds on retail choice states and what happened to Texas last week, again because this is nominally a newsletter about the Legislature and not Riley’s Thoughts About Electric Markets.

One universal takeaway from last week is this: our lives are governed by increasingly complex systems, whether it be the electric grid, health insurance, unemployment insurance or even the operations of the state government and Legislature. At the same time, expertise in those areas is harder to find, and people tend to apply their political priors to complex systemic issues.

It’s why I’m glad to work in a newsroom where I have the flexibility to spend a few days digging into regulatory filings for a more-than-surface level dive into resource adequacy and how worried Nevadans should be about a California or Texas-size grid disaster happening next summer.

I think there’s real value in reporting on complex issues that is not only deep and accessible, but free to the general public. So while stories on utility regulatory filings aren’t going to get the same attention as a story on which players the Golden Knights have signed, there is a real public service in digging into these issues before they reach the catastrophe phase.

— Riley Snyder

Assemblywomen Claire Thomas, left and Daniele Monroe-Moreno during the first day of the 81st session of the Legislature in Carson City on Monday, Feb. 1, 2021. (David Calvert/The Nevada Independent)

Conine prepares Stablecoin bill, says it’s not related to Innovation Zone run on Stablecoin

Treasurer Zach Conine wants to prepare Nevada government agencies to accept the cryptocurrency Stablecoin as payment — although he insists his bill on the subject is unrelated to Blockchains LLC’s well-publicized proposal to create an entire “Innovation Zone” that secedes from the surrounding county and brings in tax revenue through a Stablecoin product.

Conine discussed the concept on Wednesday as SB39 at a hearing in the Senate Committee on Government Affairs, where he fielded a question about the polarizing Innovation Zone concept.

“The way I'm interpreting this bill is that it is connected to this innovation city. And this is a foundational piece for it to work,” said Democratic Sen. Dina Neal.

“It's not connected,” Conine retorted. “So the ability for us to take payment in the form of Stablecoins — and Innovation Zones, at least to the extent that I understand them — have nothing to do with each other.”

Stablecoin is a type of cryptocurrency that is tied to a reference point such as the U.S. dollar, in contrast to cryptocurrencies such as Bitcoin that don’t have such a peg and are much more volatile. Conine’s bill authorizes government entities to accept Stablecoins as payment in government transactions, just like they can accept credit cards.

“Now one of the reasons we want to put it into statute versus, say, just doing it in the same way that we don't necessarily contract a new piece of statute when we do PayPal or Zelle or something like that, is because we want companies to know that Nevada is open for business, to try and attract businesses that do this kind of thing to try it here,” Conine said.

Stablecoin operators, like credit card companies, can charge a fee for transactions using their Stablecoin. Blockchains LLC envisions creating its own Stablecoin to power “Painted Rock Smart City” and also be circulated well beyond the semi-autonomous Innovation Zone, according to a draft presentation of the proposal obtained by The Nevada Independent.

As previously reported in this newsletter, a PAC registered to Conine and his wife Layke has taken $60,000 from Blockchains LLC founder Jeff Berns. But it’s also not the first time Conine has tried his hand at solving byzantine monetary conundrums (see: his ongoing attempt to solve marijuana banking).   

“In today's connected world, technology changes rapidly and government is often the last to keep up,” Conine said. “Senate Bill 39 presents an opportunity for the state to not only keep up, but to forge a path ahead.”

— Michelle Rindels

Utility regulators seek update to fining powers largely unchanged for four decades

Last year, the California Public Utilities Commission assessed a $200 million fine against Pacific Gas & Electric Company for its role in the deadly 2018 Camp Fire that left 85 people dead.

But if a similar tragedy happened in Nevada, caused by negligence by one of the state’s utility companies, the Nevada Public Utilities Commission would likely only be able to assess a much smaller fine — somewhere in the ballpark of $100,000.

That’s the reason the PUC filed SB18, which was heard Thursday in the Senate Committee on Growth and Infrastructure. PUC officers said that updating the fine amounts (many of which were set up to 40 years ago and never updated) would give the regulatory body the ability to levy fines that would be more than a flesh wound to the massive, investor-owned utilities like NV Energy or Southwest Gas that the commission currently oversees.

“Ultimately, the purpose of this bill is to empower the PUCN to impose fines that are concerning to those companies,” PUC Executive Director Stephanie Mullen said during the hearing. “We don't want the maximum fine amount to be something that they're comfortable paying, nor do we want the fine framework to be so prescriptive that it allows for companies to engage in a cost benefit analysis as to whether it makes business sense to comply with the law.”

For violations of rules and laws covering natural gas storage facilities and pipelines, the legislation (per a proposed PUC-backed amendment) would raise the fine amounts from up to $1,000 per day to $200,000 per day, with a maximum fine set at $2 million (previously set at $200,000). PUC General Counsel Garrett Weir said those amounts were in line with existing federal standards.

The bill would also create an administrative fine category — anyone who provides the PUC information which is “inaccurate or misleading and which the person knew or should have known was inaccurate or misleading.” Doing that, or violating any rulings or orders of the PUC, could now be punishable by a fine of up to $100,000 per day (up from $1,000) and a top-line limit of $10 million (up from $100,000).

It would also raise the fine amount for the unusual crime of operating a public utility without first obtaining a certificate of public convenience (or failing to file a report required by the Commission) from a modest $500 penalty to a maximum fine of no more than $50,000. 

Fines are remitted to the state’s general budget account and not kept by the PUC.

A cadre of business organization and utility representatives — Southwest Gas, Nevada Resort Association, Nevada Taxpayers Association, Vegas Chamber — testified against the bill, with a general concern that the fines were being raised too much. A lobbyist for NV Energy testified in neutral, saying that the utility agreed the fines should be raised but thought they should be tied to inflation rates.

Weir said the commission was willing to work on adjusting the administrative fine scale, but he noted existing law requires the PUC to consider the appropriateness of the fine to the size of the business and other mitigating factors. A larger fine maximum would give the PUC more flexibility in punishing bad, but not the worst, behavior.

“I think the commission struggles with determining what to fine an offense where, say, $100,000 is the maximum, is appropriate, but you don't want to send a message that that's an egregious violation, as something where there's loss of life, or some sort of terrible outcome,” Weir said. “So it's really a struggle. You hope to have that larger range to assess an adequate penalty when something is bad, but not the worst possible type of violation.”

— Riley Snyder

Advocates seeking more compensation for those wrongfully convicted

Public defenders and criminal justice advocates are concerned that a bill to revise the law on compensation for wrongful convictions does not include provisions accounting for the time that a person spends behind bars prior to their conviction.

“As the bill is drafted, it says you would receive compensation only after the time you were wrongfully convicted,” John Piro, of the Clark County public defender’s office, said during a legislative hearing on Friday. “However, there is time that you spend in jail waiting for your case to go to trial, and those are years of your life that you lose, as well.” 

Assembly Judiciary Committee Chairman Steve Yeager (D-Las Vegas), primary sponsor of the bill (AB104), said he thinks opposition for the bill comes from a good place and that he would “probably love to give even more compensation” to those who have been wrongfully convicted. But he also said he was unsure of the proposals from those opposing the bill as it stands.

“The request really is to compensate folks for pre-conviction incarceration,” Yeager said during the meeting. “And as many of you know, people are incarcerated, right or wrong, they're incarcerated all the time before they get to trial. And right now, if you're incarcerated before you get to trial, and you go to trial, and a jury acquits you, the state doesn't compensate you for that time.”

Nobody testified in support of the bill during the hearing. Yeager said that he would continue to work out issues with the legislation before taking it to a committee vote.

The proposed measure builds off of another bill from 2019, AB267, that makes Nevada one of 35 states allowing people who were wrongfully convicted to collect payment from the state as compensation for the time they lost while behind bars.

Since the establishment of AB267 in Oct. 2019, seven individuals have filed wrongful conviction compensation complaints, and the state has settled four cases resulting in aggregate payouts of $7.69 million, including nearly $1 million approved this month for Reginald Mason. That cost could continue to rise, however, as the law includes a provision for reimbursement for other continuing costs such as health care or housing assistance.

— Sean Golonka

Mentoring panel championed by Tyrone Thompson may be spared in commission clean-up

A bill proposed by the Nevada Department of Education would revise and abolish commissions and advisory councils that are no longer in use, inefficient or have overlapping duties, but there is a chance that some on the chopping block — such as the Commission on Mentoring — could be spared. 

State Superintendent Jhone Ebert presented the bill, SB76, to the Senate Education Committee on Wednesday. It states that the duties of the proposed-to-be abolished commissions, councils, and training programs would be transferred to the Department of Education.

The department hopes that eliminating the committees would make the agency more efficient, as it is difficult to recruit to fill seats on the panels and meet quorum. Abolishing the committees would not get rid of the work the department already does in those topic areas, Ebert said.

The Nevada Commission on Mentoring (NCOM), established by the late Democratic Assemblyman Tyrone Thompson, was on the list of being abolished, but Ebert said that the bill would be amended to keep it because it is the only place in state law that details mentoring issues in the education landscape. The bill language is expected to be changed so the mentoring commission remains in statute, but the Department of Education would not be providing the administrative support, which allows the commission to operate independently.

Karl Catarata, a youth commissioner in the Commission on Mentoring, commented in support of amending the bill. He said his experience with the commission has come “full circle,” as he was mentored by Thompson and he is now part of the commission. 

“I hope that you all consider keeping the state entity that regularly brings together mentoring leaders across our state and vote in the affirmative for the...amendment this session,” Catarata said. “The commission is always willing to work with you all on this committee and the Department of Education to continue successful mentoring outcomes, while being frugal and efficient about resources for our throughout the state.”

Some boards, commissions and councils currently set for elimination include the State Financial Literacy Advisory Council, the Commission on Educational Technology, the Council to Establish Academic Standards for Public Schools and the Statewide Council for the Coordination of the Regional Training Programs. 

Sen. Roberta Lange (D-Las Vegas) suggested that the Education Committee should look at each commission that is proposed to be abolished and have a more in-depth discussion on whether to keep it or not. 

— Jannelle Calderon

Bill would stave off court fees for more people facing eviction 

Lawmakers are considering a bill that could help Nevadans facing eviction by simplifying a process to avoid court fees.

When someone is given an eviction notice, they must file a summary eviction notice with the court, which costs $71 in Clark County. During a legislative hearing on Friday of AB107, Bailey Bortolin, policy director for the Nevada Coalition of Legal Service Providers, said the fee can pose a hardship for those facing eviction.

“That's a real impediment if the reason that you're there is because you didn't have enough money to pay to pay your rent in the first place,” Bortolin said.

The state already has a law in place that allows Nevadans to waive the fees required to prosecute or defend a civil action, but Bortolin said that that law is inadequate.

“By and large, our fee waiver system allows many people, thousands of people, every year to proceed, but it's not specific in who that should apply to,” Bortolin said. “And so what we've found is really just inconsistent results across the state.”

The bill would expand and broaden the qualifications for who can apply to have their fees waived, including any client of a legal aid program, any recipient of a state or federal program for public assistance, or anyone who “has expenses for the necessities of life that exceed his or her income.” 

Bortolin also noted that the courts would not bear the burden of waived fees and that the fees for the civil action filings would be paid by the legal aid providers in the state.

Criminal justice advocates noted during the hearing that the bill would make it easier to dispute evictions at a time when many Nevadans are struggling financially. 

“Poverty should never be punished by forcing unequal access to justice,” Liz Davenport of the ACLU of Nevada said during the meeting. “Existing law does not provide Nevada's courts a clear and objective standard for granting fee waivers and further does not provide an applicant with clear guidance.”

— Sean Golonka

DARK SKY SANCTUARY BILL ADVANCES

The Senate Committee on Natural Resources unanimously passed SB 52 on Tuesday, which would establish a voluntary state-based program for “dark sky” designations. The bill authorizes the state’s Division of Outdoor Recreation to create a voluntary program designating certain parts of the state as “dark sky” areas, which are remote parts of the state not affected as much by light pollution. The photo above was taken south of the Massacre Rim Wilderness Study Area, one of two areas in the state certified as a Dark Sky Sanctuary by the International Dark-Sky Association. (Joey Lovato/The Nevada Independent)

What we’re reading

Our legislative fundraising overview and breakdown.

Sens. Jacky Rosen and Catherine Cortez Masto will each get their own Senate subcommittees. Turns out that being 86th and 80th in Senate seniority can pay off!

The Assembly Republicans revealed their 2021 legislative priorities on Thursday. The caucus has also said its official position is that the 2020 election, where Republicans picked up three Assembly seats, was not “fraudulent.” 

Nevada Attorney General Aaron Ford’s office is backing a bill to ban no-knock warrants, made infamous through the police killing of 26-year-old Breonna Taylor.

A very technical clean-up bill on the state’s unemployment system usually wouldn’t get a lot of public attention, but DETR nonetheless remains in the spotlight.

Connecting released inmates with Medicaid benefits (Nevada Current)

More details on the bill to curtail debt-based suspension of driver’s licenses (Nevada Current)

Update on the “tainted voter rolls” lawsuit filed by former AG Adam Laxalt (Associated Press)

About one-third of the Nevada Supreme Court budget is based on administrative assessments, which have gone down greatly since the start of the pandemic. (Nevada Appeal)

More national coverage on the ‘Innovation Zones’ (The New Republic)

Sen. Ben Kieckhefer is planning a bill that would create an esports regulatory body (Las Vegas Review-Journal)

UPCOMING DEADLINES

Days to take action on Initiative Petitions before they go to the 2022 ballot: 18 (March 12, 2021)

Days Until Legislator Bill Introduction Deadline: 21 (March 15, 2021)

Days Until Sine Die: 98 (May 31, 2021)

'Alternative' rate-making bill would overhaul electric pricing structure for NV Energy

An array of solar panels at the Copper Mountain Solar 3 facility

Nevada’s long-standing system for setting and regulating the price of electricity is likely to be substantially overhauled in the form of a bill that’s gathered little public attention but could have major implications for NV Energy and its customers.

In its first hearing since lawmakers adopted a substantial amendment entirely replacing the original version of SB300, bill sponsor Democratic Sen. Chris Brooks told members of the Assembly Growth and Infrastructure Committee on Thursday that the measure was an attempt to align the business structure of NV Energy with new renewable mandates and technologies.

If approved, the measure would authorize the Public Utilities Commission to adopt regulations allowing for “alternative” ratemaking — a slew of mechanisms and triggers that automatically adjust rates based on performance and other metrics, and could possibly end the normal three-year cycle for the setting and adjustment of rates.

Although lawmakers asked few questions on the bill during the hearing, such a change would have a major effect on the business model of NV Energy, the state’s largest utility, as well as the structure of power bills paid by every resident and nearly every business in the state. Brooks said the measure was brought forward in light of bills passed by the Legislature raising the state’s Renewable Portfolio Standard and other requirements such as energy efficiency or storage that didn’t necessarily fit nicely into the traditional operating model and financial structure of electric utilities.

“We end up coming to odds with our policy initiatives and their business model as defined in current statute,” he said during the hearing. “So ultimately, we must look for ways to redesign the business model of utilities.”

Historically, electric rates are set based on a utility’s cost of service, a formula that spits out rates for utility customers after determining costs — everything from taxes, operations and depreciation of power plants — plus an authorized rate of return for shareholders (9.7 percent in 2017 for NV Energy). In Nevada, rates are set every three years in a general rate case held by the Public Utilities Commission.

But several states have opted to move away from normal ratemaking procedures to use such alternative ratemaking mechanisms, aimed at improving the “mixed incentives” that utilities face under the normally costly and lengthy ratemaking process. That process can lead utilities to face significant regulatory “lag” that drifts their actual earnings either above or below what is authorized by regulators. Such a “lag” results in either the utility operating at a loss or to customers paying more for electricity than they should.

Although there are various types of ratemaking “tools” identified in the bill, Brooks said the intent was to allow the commission to set up a structure where new technologies — such as energy storage, electric vehicle infrastructure, or distributed generation in the form of rooftop solar — could be baked into the utility’s rate structure.

“These are all the future of energy in Nevada,” he said. “The future is coming fast, and we are obligated to embrace it.”

As written, the bill requires the Public Utilities Commission to draft regulations setting a framework for alternative ratemaking tools, tying them to nine public policy goals identified by the Legislature, including rate stability, renewable energy development, electrical grid efficiency and security and ensuring customers benefit from lower administrative costs.

From there, the bill lays out a process wherein electric utilities (NV Energy) can file an application for the alternative ratemaking plan, which must be approved within 210 days by the commission and include one consumer session. The regulatory body has the ability to deny the application based on if the application is in the public interest, results in “just and reasonable” rates and protects consumers.

The bill also allows any such alternative ratemaking plan to waive or extend the requirement that a rate case is held every three years.

The change to the rate-making process was lauded by NV Energy lobbyist Tony Sanchez, who said the bill establishes a “framework for reform” that would allow the utility to better align itself with services desired by customers.

“With this type of flexibility, the commission can act nimbly; it can anticipate, rather than react to, changes and adopt plans that deliver value to electric customers, whether that value comes in the form of enhanced customer service, new pricing plans or more renewable energy,” he said.

Garrett Weir, the general counsel of the PUC, said the regulatory body was neutral on the bill but that the prospect of alternatives to traditional ratemaking could bring benefits for both the utility and its customers.

“Traditional cost of service regulation rewards utilities for investing in large capital-intensive projects, projects that may be less needed as renewable energy and distributed energy resources become more prevalent, available and affordable,” he said. “But traditional cost of service regulation also does not always promote consumer-centered choices by the utility.”

The bill presented by Brooks on Thursday contained several changes from the version approved unanimously by the Senate last month. It would require the commission to consider requiring a cost-of-service study and the difference in rates under a normal rate application and the alternative rate application as part of any approved alternative ratemaking application.

It also changes language requiring any benefits from the change in ratemaking go to all customers, not just fully-bundled — an inclusion that affects the large businesses and casinos that have left the utility’s electric service but still use it for transmission services.

Notably, the amendment would also repeal a section of state law approved in 2017 requiring the PUC to open an investigatory docket aimed at determining what impact, if any, net metering for rooftop solar has on the rates charged to other customers. That law set an initial 2020 deadline for the report, and the commission yet to create it.

Brooks said that section of law was included as a compromise in the bill passed last session and that there was broad agreement that the current net metering system was working, so no study was needed.

“We’re here to say that it worked out really well, and there doesn’t seem to be a lot of desire or need to do that study now,” he said.

Brooks also said an amendment submitted by Southwest Gas that would also apply the bill’s provisions to gas utilities wasn’t welcome.

“This is very narrowly tailored to an electric utility, and just not the appropriate vehicle for that concept,” he said. “And while I do support the concept that they’re trying to achieve, I just don’t want it in this bill.”

The bill does not require any specific ratemaking mechanisms to be adopted by the commission, but gives several definitions of potential programs or tools that can be used by the commission, including:

  • Performance-based rates, which are set or adjusted based on certain performance metrics such as service outages, employee safety or customer service set by a public utilities commission
  • Formula rates, which use a pre-specified formula to automatically adjust rates to keep a utility’s rate of return at or near its authorized profit margins, with periodic reviews
  • Multi-year rate plans, which would allow for rate cases beyond three year periods with built in rate adjustments based on factors such as inflation or capital investments which wouldn’t require a full rate case
  • Subscription pricing, which creates a special set subscription rate for electric customers  based on a fee — and can include other conditions
  • An earnings sharing mechanism, which would require the utility to share earnings with customers above a specific percentage of return on equity
  • A decoupling mechanism, which separates a utility’s financial performance and results from the sales of electricity — designed to encourage energy efficiency and remove incentives to increase sales