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Published Friday, Jan. 11, 2008 | 5:50 p.m.
Updated Monday, Nov. 17, 2008 | 1:32 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.
Sierra Pacific and Big Coal are represented by RnR advertising in Nevada, and it's a shame that their head man is Obama's key advisor here. For them to pass the costs of polluting our air on to low income people, seniors on fixed incomes, and other rate payers is a gad dang scandal disguised as business as usual. Someone needs to stand up to them.
Of course the cost of a power plant is going to be passed on to the consumer (rate payer). Power plants are the tools the power company uses to produce their product. Is there any company that doesn’t pass the cost of their “tools” on to their consumers through the price of their product? Assume a power company could get the financing to build enough renewable energy infrastructure to replace the production of a plant this size, don’t you think the cost of that infrastructure would still be passed on to the consumer? At the present time you would be looking at least ten times the infrastructure cost for renewables, just think how much the rates would increase then. Someone has to pay for the cost of producing electricity, it’s not a charity.
Thanks "Educateyourself" for pointing out Economics 101. Not sure why so many aspects of the general media love to twist basic info to make a point and get people mad. Here's another Econ 101 lesson. The article comments on the "...more than 100 percent increase in electric rates over the last two decades..." as being a bad thing. Housing costs typically double on average every 10 years. Vegas saw housing prices double in the last 5. Prices go up. It's a fact of life. According to the article, it took 20 years for power rates to double. That's a much slower rate of increase than just about any other major commodity. How much did you pay for a gallon of gas 20 years ago?
I guess they don't require so called "journalists" to take any business classes. Not sure why Sweet, P. chooses to write about business when her article make’s it obvious that she either doesn’t know anything about business or thinks is just OK to ignore all the fundamentals of economics just to try and make her point.
Dear Sweet, please try to make it a little harder next time for us to pick apart your article. This was a little too easy. Better yet, try writing a gossip column or about anything other than business that doesn't require facts.