PSC says threat of predators prompted natural gas probe

Monday, Oct. 28, 1996 | 11:59 a.m.

CARSON CITY -- The state Public Service Commission says it wanted to help, not over-regulate, Southwest Gas Corp. when it opened an investigation into the natural gas industry in Nevada.

Commission Chairman John Mendoza told a legislative committee he was concerned about "predators" or other companies coming to Nevada to compete with Southwest Gas. Other firms would not have to comply with the same regulations as the public utility.

"We wanted to level the playing field," Mendoza told the Legislative Committee on Competition in the Electric Industry. Natural gas is a partially regulated industry.

Some legislators are concerned about the power wielded by the PSC and how it might perform if the electric industry is deregulated. Some lawmakers are worried that the PSC might still try to regulate when open competition arrives.

But rather than an adversarial session last week, as some expected, the meeting took on a conciliatory tone.

Assemblyman Pete Ernaut, R-Reno, chairman of the study committee, said there was a "lot of confusion circulating" about the operation of the PSC. One of the big questions, he said, is the role for the PSC if the electric industry is set free.

"We (the Legislature and PSC) cannot be adversaries if we want to make good public policy," Ernaut told Mendoza and Commissioner Don Soderberg.

Southwest Gas first approached another legislative committee looking into the regulation of business and voiced concerns about the laws in this era of competition. Mendoza said he then decided to open a "docket," or an investigation, into the industry.

"There seems to be a need to look at the involvement of other companies that come in and compete against local utilities and are not required to meet the same issues," Mendoza said.

He said the investigation is still going on and is backed by Southwest Gas. Most of the concerns are about utility laws, something only the Legislature and not the PSC can change, Mendoza said.

They include limiting advertisement, drafting an "integrated resource plan" detailing future needs and where the natural gas will come from, and whether the utility is required to serve everybody in these days of open competition.

Mendoza said while the federal government has stopped its regulation of the transportation of natural gas, laws still exist in Nevada regarding the distribution of the gas.

He said even with open competition, there will be a need for the PSC to see that the "people are not defrauded."

Assembly Co-Speaker Joe Dini, D-Yerington, wondered if consumers have benefited since the federal government took its regulations off the transportation of natural gas. Mendoza said he did not know but would get the answer to Dini later.

There is also a study under way of the PSC to see how it will have to change under deregulation.

Asked what is wrong with the current system, Soderberg said it takes too long to get a decision. Mendoza said the commission has developed into a quasi-court that is required to give due process to citizens and to follow the rules of evidence. This bogs down the process, he said.