NAC704.7898. Business relationship between distribution company and affiliate: Requirements; restrictions.

     1. An affiliate shall:

     (a) Be a separate corporate entity from the distribution company;

     (b) Operate independently from the distribution company;

     (c) Maintain books, records and accounts in the manner prescribed by the Commission;

     (d) Keep its books, records and accounts separate from the books, records and accounts kept by the distribution company;

     (e) Not have officers, directors or employees in common with the distribution company, except that the chair of the distribution company or of the holding company of the distribution company may serve on the board of directors of the affiliate;

     (f) Not have any member on its board of directors who is also an employee or officer of the distribution company, except as otherwise provided in paragraph (e);

     (g) Not obtain credit pursuant to an arrangement that would allow a creditor, upon default, to have recourse to the assets of the distribution company; and

     (h) Not use office space, office equipment or office services provided by the distribution company, unless the affiliate executes with the distribution company a contract that is approved by the Commission. The affiliate and the distribution company must:

          (1) File the contract with the Commission as a joint application not later than 6 months before the effective date of the contract; and

          (2) Demonstrate to the Commission that the contract:

               (I) Does not circumvent the provisions of NAC 704.789 to 704.792, inclusive;

               (II) Preserves an arm’s length business relationship between the affiliate and the distribution company;

               (III) Does not interfere with the development of effective competition;

               (IV) Will result in minimal risk of anticompetitive behavior by the affiliate or distribution company; and

               (V) Will result in minimal regulatory expenses to prevent anticompetitive behavior.

Ê The contract must not become effective until the Commission approves the contract. Unless the Commission determines otherwise, all office space, office equipment and office services provided by the distribution company pursuant to the contract are subject to the provisions of NAC 704.7901.

     2. A distribution company shall document and report quarterly to the Commission each occasion that:

     (a) An employee of the distribution company becomes an employee of an affiliate; or

     (b) An employee of an affiliate becomes an employee of the distribution company.

     3. An employee of a distribution company who is hired by an affiliate:

     (a) Shall not remove proprietary property or information from the distribution company;

     (b) Shall not provide the affiliate with proprietary property or information of the distribution company;

     (c) Shall not use proprietary property or information of the distribution company on behalf of the affiliate; and

     (d) Shall, before he or she becomes an employee of the affiliate, sign a statement indicating that the employee has read and will abide by the restrictions set forth in this section and understands that a violation of a provision of this section could subject him or her to the penalties set forth in NAC 704.7919.

     (Added to NAC by Pub. Utilities Comm’n by R087-98, eff. 2-3-99)