TESTIMONY OF JAYNE HARKINS, P.E. EXECUTIVE DIRECTOR OF THE COLORADO RIVER COMMISSION OF NEVADA BEFORE THE ASSEMBLY COMMITTEE ON COMMERCE AND LABOR

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1 1 TESTIMONY OF JAYNE HARKINS, P.E. EXECUTIVE DIRECTOR OF THE COLORADO RIVER COMMISSION OF NEVADA BEFORE THE ASSEMBLY COMMITTEE ON COMMERCE AND LABOR IN SUPPORT OF SENATE BILL Good Afternoon Chairman Bobzien and Members of the Committee. I am Jayne Harkins, the Executive Director of the Colorado River Commission of Nevada (CRC). The CRC holds and protects the rights of the State of Nevada to its share of Colorado River water and hydropower, and represents the state before federal agencies, other states, and other countries in a wide range of issues affecting the management and operations of the Colorado River. The CRC is the state agency responsible under Nevada Revised Statutes (NRS) Chapter 58 for managing Nevada s interests in hydropower generated on the Colorado River, including the hydropower generated at Hoover Dam. I. Background of S.B. 8 Today I appear before you to seek your support for Senate Bill (S.B.) 8. This legislation clarifies that the CRC can re-finance the high interest debt associated with the Hoover Dam Visitor Center and other capital improvements at Hoover Dam. Currently, the CRC s customers are repaying the Hoover Dam Visitor Center debt through the year 05, with interest at a rate of 8.06%. Enactment of S.B. 8 will enable the CRC to pay off Nevada s share of this debt with bond proceeds, at a substantially reduced interest rate, saving the CRC s Hoover hydropower customers approximately $ million over a 0 year period. 1

2 Since the construction of Hoover Dam, the CRC s customers have paid all of Nevada s share of the costs of construction, capital, operations and maintenance costs of Hoover Dam, and they continue to do so today. The CRC s customers pay these costs in proportion to their individual allocations of Hoover hydropower. The CRC is customer funded, receiving no General Fund monies from the State for operations. Taxpayers have not been burdened with any Hoover Dam debt repayment. Enactment of S.B. 8 will enable the CRC to flow through to its customers the benefit of reduced interest payments on the Hoover Visitor Center debt. These customers include: NV Energy, Lincoln County Power District No. 1, Overton Power District No. 5, Valley Electric Association, Southern Nevada Water Authority, the City of Boulder City, and the companies at the Basic Management Industrial Complex near Henderson. About 50 percent of the CRC s Hoover hydropower is delivered to NV Energy so any cost savings from refinancing this debt will proportionally benefit a broad sector of consumers in southern Nevada II. Why is S.B. 8 Needed? For many years the CRC has had broad bonding authority, which the agency uses in cooperation with the State Treasurer under NRS In the 1980 s Congress authorized substantial construction at Hoover Dam to increase the capacity of the powerhouse and to construct the Hoover Dam Visitor Center. The costs associated with the construction of the Hoover Dam Visitor Center were pre-funded through appropriations by Congress subject to full repayment to the U.S. Treasury by Hoover customers in Arizona, California and Nevada. The CRC is seeking enactment of S.B. 8 on the advice of the State Treasurer s bond counsel Mr. John Swendseid, who developed the language of the initial legislative proposal that C-

3 1 5 provided the basis for this bill. Enactment of S.B. 8 will provide a legislative declaration that bonds issued to re-finance the Hoover Visitor Center debt are eligible for the Nevada Constitution s exemption of natural resources bonds from the bond cap in Section of Article 9 of the Nevada Constitution, just as other Hoover Dam bonds have been exempted from the cap in the past. 6 7 III. The Provisions of S.B. 8 Section Subsection 1: Provides a legislative declaration that bonds issued under this new law qualify for the natural resources exemption authorized under the second paragraph of Section of Article 9 of the Nevada Constitution which allows such bonds to be issued outside of the bond cap in Section of Article 9 of the Nevada Constitution. Subsection : Authorizes the CRC to borrow up to $5 million through issuance of bonds to prepay the cost of electrical capacity and energy generated at Hoover Dam to pay, finance or refinance a portion of the capital costs which contribute to the ongoing costs of operating Hoover Dam. The subsection authorizes the CRC to issue these new bonds by June 0, 08, in the form of General Obligation Securities payable from taxes and additionally secured with pledged revenue or Special Obligation Securities payable from pledged revenue, or a combination of both. Subsection : Authorizes the CRC to determine the amount and timing of issuance of such securities subject to the described limitations. C-

4 1 Subsection : Assures that the limitations in subsection do not apply to any securities which are issued by the CRC for the purpose of refunding the securities issued pursuant to subsection. 5 Subsection : Assures that provisions of the State Securities Law and NRS apply to the issuance of securities pursuant to subsection. 6 7 Subsection 5: Provides definitions of key terms. It also should be noted that the form of this legislation follows the form utilized by the 8 9 legislature the last time the CRC sought to address its bonding authority, in 198. A copy of the 198 legislation is attached to my testimony as Exhibit A IV. Conclusion The CRC submitted its legislative proposal to the Senate Committee on Government Affairs. The Chairman of that Committee, Senator David Parks, and the other members of the Committee assisted the CRC by introducing S.B. 8, which then was referred to the Senate Committee on Natural Resources chaired by Senator Aaron Ford. Under Senator Ford s leadership, S.B. 8 was approved by the Natural Resources Committee and on the floor of the Senate. We greatly appreciate the support of Senator Parks, Senator Ford, and the other Senators for this legislation, and will work closely with this Committee to seek passage of S.B. 8 by this Committee and the full Assembly. I will be pleased to answer any questions this Committee may have. Thank you for your time and attention. 1 [Attachment: Exhibit A 198 CRC Bond Legislation] C-

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PROPOSED HOUSE OF REPRESENTATIVES AMENDMENTS TO _.B. (Reference to printed bill) "Section 1. Section , Arizona Revised Statutes, is amended to

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