Nevada Power boss decries legislation

Thursday, April 1, 1999 | 2:07 a.m.

"If the amendments come as a package in that bill, they're absolutely unworkable for Nevada Power and our customers," said Michael Niggli, chief executive officer of the Las Vegas-based utility.

"It would place us in huge financial jeopardy, and it is unacceptable," Niggli added Wednesday.

Niggli referred to additions to SB438 that are proposed by Sen. Randolph Townsend, R-Reno, chairman of the Senate Commerce and Labor Committee.

"We respect his position that he doesn't like anything in the bill," Townsend said. "When you don't like something, come up with something constructive."

Nevada Power and Niggli "have difficulty thinking outside of the monopoly bubble," said Consumer Advocate Fred Schmidt.

"Mr. Niggli is scared to death, and he should be, because that's what having competition does to business executives," Schmidt added. "But it also causes them to act efficiently."

Townsend wants to freeze residential and small commercial rates for five years to protect these customers from rate increases while casinos and other large customers an opportunity to buy power from competitors.

The committee chairman also suggested an end to energy rate cases.

One controversial provision would stop Nevada Power recently from filing rate cases for changes in the cost of fuel used to run its generation plants and in the cost of wholesale power from others.

"If we have to sell our power plants and are going to do so to allow competition and yet someone doesn't allow us the right to pass through (energy rate cases), they want us to fix our rates," Niggli said.

"We have no way to hedge that fixing of rates without owning those (power plants)," he added.

Niggli compared the position of Nevada Power to a gasoline station that has its retail prices rates frozen at $1.10 a gallon during a period of wholesale price increases.

"What happens and how fast will you go bankrupt when your supply price goes up to $1.20 to $1.30 per gallon?" Niggli asked.

"In this bill, we don't have the right to stop selling," Niggli said. "We think that is a very unfair provision."

Schmidt said the provision no different than the position of independent power producers who entered long-term contracts to provide electricity to Nevada Power at fixed rates.

While Nevada Power has increased rates by $80 million in the last 18 months for fuel and purchased power costs, Sierra Pacific is in the fourth year of a five-year rate cap, Schmidt said.

Sierra Pacific will be giving its customers in northern Nevada half of its profits that exceed 12 percent return on equity, the consumer advocate added.

The bill would allow the investor-owned utilities to keep merger savings and gains from sale of power plants. The legislation requires them to use the funds to offset the cost of long-term contracts with independent power producers.