Thursday, Oct. 2, 2003 | 11:04 a.m.
CARSON CITY -- A draft of a confidential audit suggests that the state Bureau of Consumer Protection be stripped of some of its duties and also stop spending so much money on private consultants used to battle increases in power and other utility rates.
The examination, performed by the state Division of Internal Audits, was to be released Wednesday. The release was delayed to give state Consumer Advocate Tim Hay more time to respond to the recommendations.
The audit is expected to add fuel to a simmering battle between Attorney General Brian Sandoval and Hay. The examination, which was obtained by the Las Vegas Sun, is supposed to be confidential until submitted to the Executive Branch Audit Committee headed by Gov. Kenny Guinn. It was pulled from the agenda Tuesday and the next meeting of the committee isn't for several months.
Sandoval requested the audit of divisions under his wing several months ago and this report focuses on the consumer protection bureau that was created as an independent agency by the Legislature.
Hay was named to the job by former Attorney General Frankie Sue Del Papa, a Democrat, and he has a term appointment until June 2005. He cannot be replaced except for cause but he now reports to Sandoval, a Republican. The law says Sandoval could remove Hay for "inefficiency, neglect of duty or malfeasance in office."
Hay said today he is in the process of preparing a response to "uninformed observations by the auditors."
Hay also said that Sandoval sits on the audit committee and may have had "inordinate influence" over the findings of the auditors who criticized Hay's office.
Sandoval was in Washington D.C. today meeting with President Bush and could not be reached for comment.
Copies of the draft audit say the consumer advocate should reduce his reliance on private consultants used in challenging the rate increases of such companies as Nevada Power and Sierra Pacific Power Co.
The advocate's office, which handles utility cases, is supported by an assessment on the power bills of consumers. It spent $539,000 on consulting contracts last fiscal year and that ranks the office as one of the 10 highest in spending on such services in the United States.
Consultants charge $75 to $210 an hour and the audit said the average cost of bureau employment ranges from $42 to $55 per hour.
The issue arose recently at a meeting of the state Board of Examiners when Secretary of State Dean Heller questioned contracts going to private consultants and why the advocate's staff was not doing this work.
Hay told the examiners board he wants to keep a small staff and rely on the private consultants to supplement the staff. And when the cases pile up, the private consultants complete the work by the deadline.
While Hay is still forming his response to the audit, Sandoval has accepted the recommendation and hopes to evaluate the staffing and use of consultants by April 2004.
The division of internal audit, headed by William Chisel, recommends that the deceptive trade practices unit under Hay be transferred to the criminal justice division in the attorney general's office.
The audit says Hay believes the deceptive trade unit should continue under his bureau because it's mission is to protect the public -- the same job that is being done in the utility field.
But the Chisel audit said, "Deceptive trade cases would be more efficient and effective with increased oversight and input from management experienced in criminal actions." He said Hay "primarily focuses on representing the citizens during rate hearings for utility companies."
The audit said the deceptive trade staff frequently goes to the criminal justice division for advice now. Of the 15 states surveyed, none of the deceptive trade practice units are in a division also performing utility casework.
There's been a tug-of-war between Sandoval and Hay for several months about where the consumer bureau should be located. It is now housed in a private building adjacent to the offices of the state Public Utilities Commission, where most of its work is located.
It has easy access to the records and the hearings of the PUC. But Sandoval wants the Hay staff to move from the private offices in the east part of Carson City to the downtown offices where the central staff is located.
Hay, according to the audit, believes the present location is more efficient. The law says the consumer advocate "may lease or make other suitable arrangements for office space," but the rental contract must be approved by the state Board of Examiners if it extends beyond one year.
The audit sides with Sandoval, saying the present rent paid by the consumer advocate would be reduced by $10,000 in the new downtown quarters. The consumer advocate would also be using the money it receives from assessments to pay the rent, thus saving the state's general fund $50,000.
"In total, this move would benefit the state by about $60,000 annually, assuming no future increases in the commercially leased space," said the audit. But Hay has told auditors that the move would require his staff to make daily trips of about two miles to the Public Utilities Commission, a waste of time and money.
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