Cost, not coal may be plant’s main issue

By Phoebe Sweet

Friday, Jan. 11, 2008 | 5:50 p.m.

The environmental virtues, or lack thereof, of plans to build a large, coal-fired power plant near Ely have been debated at length.

But the financial arguments over whether Sierra Pacific Resources, owner of Nevada Power Co., should build the plant could prove to be more interesting -- and perhaps more effective for opponents.

The Sun has reported that the plant's cost -- $3.8 billion by current estimates -- and the price of any future pollution controls or taxes will be passed on to consumers.

It turns out that Sierra Pacific's investors might be counting on that.

The Nevada Clean Energy Campaign, a coalition of environmental groups, reported this week that Sierra Pacific Resources' largest investor, Wall Street firm Horizon Asset Management, has long made foisting risk onto consumers part of its strategy.

Horizon, which owns more than 25 percent of Sierra Pacific Resources' outstanding shares, has a history of investing in distressed utilities close to bankruptcy.

"In describing its techniques for hedging investments in distressed utilities, Horizon boasts that 'there seem to exist a virtually limitless array of strategies to ... place risk upon someone else,'" according to the report released Tuesday. (Horizon also is a 6.5 percent owner of Dynegy/LS Power, which is proposing

a 1,590-megawatt coal-fired plant outside Ely, near Sierra Pacific Resources' proposed plant.)

According to Sierra Pacific Resources' own 2007 filings with the U.S. Securities and Exchange Commission, the company predicted that "increased compliance costs, increased construction costs or additional

operating restrictions, could have a material adverse affect on our financial condition," unless those costs are passed on to consumers.

With the cost of potential carbon legislation unknown and the price of construction materials on the rise, it seems Las Vegas ratepayers who have long lamented the more than 100 percent increase in electric rates over the last two decades soon may have even more to complain about.