Caution urged in power changes

Thursday, July 25, 1996 | 11:59 a.m.

While large electricity users such as mines and hotels are pushing for competition in the power industry, Assemblyman Pete Ernaut said he won't rush Nevada into that unknown territory.

Ernaut, R-Reno, listened to testimony Wednesday from experts studying the impact on large and small customers when and if power companies, the last monopolies, go the way of the telecommunications industry.

"This is a marathon, not a sprint," Ernaut said during a break of the Legislative Commission's subcommittee studying the issue. He is chairman of the subcommittee that met in Las Vegas.

While 20 states have plans to open the electric energy business to competition, Nevada is taking a cautious approach. When the state Legislature meets in 1997, Ernaut and his subcommittee will help shape the state's energy future.

"Nobody knows what will happen," Ernaut said. "To go too quickly could spell disaster for all classes of customers."

Officials say that while the theory of competition is that rates go down, there's no guarantee that will happen in the power industry, especially for the average homeowner.

At the federal level, the House and Senate have introduced bills to spur competition among energy companies and give consumers a shopping list for buying their electricity. But the proposed legislation won't be ready until 1998.

Ernaut and others on the subcommittee expressed concern about the shift to federal regulation in the House version, preferring more state control of power companies.

California's push to open energy markets prompted the Nevada Legislature and the state Public Service Commission to begin studying the issue.

The PSC has already produced a look at the avenues open to the state in a report, "The Structure of Nevada's Electric Industry: Promoting the Public Interest."

PSC Commissioner Judy Sheldrew told the subcommittee that Nevada has to offer all customers a transition period between strict regulation and the free market.

"It's like throwing someone who's never, ever been in a swimming pool before and expecting them to compete against an Olympic swimmer," she said.

For the short term, transmitting and distributing electricity probably should remain regulated monopolies, Sheldrew said, with Nevada Power Co. handling the duties in Southern Nevada and Sierra Pacific Corp. in Northern Nevada.

Generators and those offering power contracts, services and billing and collection services could be deregulated, she said.

Flexibility is the key. "Nevada needs to hedge its bets and not put all its eggs into one power basket," Sheldrew said.

Customers most likely to suffer as power markets open are those who don't want to plunge into competitive services.

Still, 'today's service is a one-size-fits-all that does not serve all of Nevada's consumers," Sheldrew said.

The PSC experienced deregulation when giant Ma Bell broke up and consumers had to educate themselves about phone rates. The commission set up a Consumer Division as a resource for information and complaints, Sheldrew said. "We have had some experience with this," she said.

"The PSC is trying to point out how difficult the balancing act will be between large customers and residents without options," Sheldrew said.