Survey finds Nevada Power name recognized by consumers

Monday, Nov. 9, 1998 | 11:21 a.m.

CARSON CITY -- Chairwoman Judy Sheldrew of the State Public Utilities Commission is chiding Nevada Power Co. for what she considers unfair public statements on a controversy over deregulation of the electric industry.

Sheldrew told company attorneys Friday she was "disappointed" with the comments by Nevada Power executives on the proposed regulation to prohibit the utility from giving an affiliate a name and logo similar to Nevada Power's. The affiliated company would sell power to the public in the upcoming era of competition.

These company spokesmen, whom Sheldrew did not identify, are failing to tell the whole truth about the position of the Commission. And that's not fair to the Commission, she said.

Nevada Power wants to use the name of Nevada Power Energy Co. for its affiliate. This new company would use the logo of Nevada Power. Company officials say they may go to court to overturn the proposed Commission regulation barring use of that name.

Sheldrew says this similar name will confuse the public and lead consumers into believing it is the same company with the same regulations and protections for ratepayers.

Nevada Power will be a distributor of electricity for alternate sellers that will merchandise the energy to the public. These alternate sellers will not subject to the strict price regulations that now govern utilities.

"We are not going to be doing rate cases for these guys all the time to figure out if they should adjust their rates," she said.

"We can find no clear reason why the company wants to use that name, other than because the consumers are confused and think it is Nevada Power Co.," she said.

In its proposed regulation, the Commission will require the new company to have a dissimilar name but it may include a tag line in its advertisement that it is an affiliate of Nevada Power Co.. but with separate management and employees.

Sheldrew said the company, in its criticism of the PUC, is not disclosing it will be able to use the tag line.

"I'm frustrated that there is miscommunication in what the rule allows," she said after a Friday hearing on the regulation.

The regulation on limiting names will be submitted by Sheldrew to the full commission for consideration late this month or early in December.

To support its position that consumers would be confused by similar names, the commission hired Manoj Hastak, an associate professor of marketing at American University in Washington, D.C., to conduct a study.

Hastak employed Consumer Research of Las Vegas to question 400 people in a mall to find out if there was confusion because of the similar names. Those interviewed were shown fictitious advertisements for Nevada Power Energy Co. and for the mythical Horizon Energy Company.

The results were that 69.4 percent would choose Nevada Power Energy and many associated the firm with Nevada Power Co. Many of those questioned said they were satisfied with Nevada Power Co. and wanted to continue.

Hastak then showed those polled advertisements between Horizon Energy and another fictitious company called Ultima Energy, which would be an affiliate of Nevada Power. The advertisement had the tag that Ultima was an affiliate of Nevada Power.

When consumers were asked to choose between Horizon and Ultima, 42 percent selected Horizon and 36 chose Ultima. Hastak said "there is clear evidence (both direct and indirect) that consumers confuse Nevada Power Energy Co. with Nevada Power Co."

There would still be consumer confusion, although lower, if Nevada Power Energy Co. placed a disclaimer in its advertisements, Hastak said.

Donald Brookhyser, associate general counsel for Nevada Power, questioned the study, saying it failed to demonstrate there was a confusion that cannot be overcome by adequate disclosure.

"I also noted some of the information he (Hastak) brought out, that he characterized as confusion, I think simply demonstrated customers wanted to retain their relationship with Nevada Power Company or its affiliate.

"It appeared some of the respondents were pleased with service from Nevada Power Co. and wanted to use that experience on which to base their decision who to choose," Brookhyser said.

"We have always stated that we thought the fact of that affiliation was an important piece of information for consumers to have when making their decisions," Brookhyser said. "The name and logo are important symbols of that affiliation."

Brookhyser, in his questioning of Hastak, indicated he didn't think a selection of 400 people in a shopping mall would be a sufficient sample. But Hastak said the 400 were adequate numbers for this study.

Sierra Pacific Power Co. of Reno also objected to the limitation on the name regulation but not as strong as Nevada Power. These two major utilities are merging and will distribute the power to the alternate sellers, including their affiliated companies.