Las Vegas Sun

March 19, 2024

Nevada consumer advocate formally responds to audit

CARSON CITY -- State Consumer Advocate Tim Hay said Tuesday the deceptive trade and anti-trust units in his office have been a moneymaker for the state and they should not be pulled out from under him.

Hay filed his formal response to an audit by the state Division of Internal Audits that recommended these two programs be transferred to the criminal division in the state attorney general's office.

Hay is also under the jurisdiction of state Attorney General Brian Sandoval, and there have been reports of a growing rift between the two.

But Sandoval said Tuesday there is no controversy between him and Hay. Asked if he wanted Hay to leave, Sandoval sidestepped and said, "All I want is for him to do the best job he can possibly do."

Sandoval said the audit examined all of the consumer agencies including insurance and Medicaid and did not single out the Bureau of Consumer Protection. The audit of Hay's agency was prompted by questions by the Legislature, the attorney general said.

Hay was appointed by former Attorney General Frankie Sue Del Papa, a Democrat, and his term runs until 2005. He can be removed only for cause.

Sandoval said once the audit becomes public, he will sit down with Hay and determine what changes, if any, should be made.

The audit concentrated on Hay's office. It suggested that Hay spends too much money on private consultants for utility rate cases and should move his office closer to the headquarters of the attorney general.

In answering the recommendation to shift the deceptive trade and anti-trust units out of his office, Hay said these two had a total four-year budget of $5 million. Yet during that period they won more than $8 million in restitution for Nevada consumers and state agencies. And they returned $2.8 million to the state's general treasury "for a net benefit to the state of over $5 million during the period."

Hay said the audit incorrectly suggests that Sandoval could administratively shift the deceptive trade and anti-trust units away from the consumer protection bureau. He said that must be done by the Legislature.

The audit said putting the deceptive trade unit in the criminal division would lead to more productive prosecution. And it said the law does not prohibit the attorney general from shifting the unit.

The audit was scheduled to be released last week at a meeting of the Executive Audit Committee headed by Gov. Kenny Guinn with Sandoval as a member. But Hay said he has not had enough time to answer the recommendations in the audit. He was given until this week to file his response. The audit is not expected to be made public until later this year.

The audit was considered confidential but the Las Vegas Sun obtained a copy.

The audit also said it would be more cost efficient if Hay hired more permanent staff than using private consultants in utility rate cases. It said the agency spent $539,000 for these private consultants.

Hay has already said the agency was created on the theory it would have a small staff and used private consultants in specialized fields to fight proposed rate hikes by the utilities.

He said Tuesday he uses these consulting services in only limited instances.

He said Nevada Power Co., in pushing for a big rate increase in one case, spent more than $4 million in legal and technical consulting services, in addition to the salaries for its in-house attorneys and technical staff.

The audit said the private consultants are paid anywhere from $75 to $210 per hour. "These charges exceed the average cost of a Bureau of Consumer Protection employee, which is $42 to $55 per hour," said the audit.

Hay said Tuesday the private consultants are only used occasionally and in very specialized fields such as rate design, depreciation studies, the prudence used by utilities in buying power and the restructuring of the electric and telecommunications industries.

Sandoval said there is a "valid concern" about the money being spent to hire private consultants.

The audit recommended Hay move his offices from a private building back to a state building, for a savings of $60,000. But Hay said his office needs to be at the present location because it is next to the state Public Utilities Commission, where most of the staff's activity takes place.

Sandoval supports the move, saying there is a floor vacant in a building next to his main office and there would be a savings.

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