Editorial: So much for lower power bills

Tuesday, Dec. 7, 1999 | 9:39 a.m.

Advocates of electric industry deregulation contend that unleashing the forces of competition will create more efficient companies and, ultimately, result in lower prices for consumers. But, as Nevadans are finding out, putting this theory into practice will not be easy. Power deregulation in Nevada is set to begin in March 2000, but already there are warning signs that lower costs for residential consumers may be illusory.

A recent development sparking this worry is a pricing plan offered by the companies that own the power lines -- Nevada Power in Southern Nevada and Sierra Pacific Resources in Northern Nevada. Both want to charge retail electricity providers a flat monthly rate for each of the new customers they sign up. A flat rate would be a dramatic departure from the current practice of charging each customer based on how much electricity they use per kilowatt hour, a policy that now rewards frugality.

The state of Nevada's consumer advocate, Fred Schmidt, told the Sun's Richard Velotta in a story published last Friday that he will oppose the plan, which he said is "the most radical price change that I've seen proposed in the 20 years I've been in this business." If these rates were passed on to consumers in this form, customers who live in single-family homes would have to pay $24.74 a month for distribution, while customers living in apartments and mobile homes would be assessed $17.72 a month. This rate would apply only to the distribution component of the monthly electricity bill and would be in addition to all the other costs, such as transmission, the costs of power production, billing, meter reading and other services.

The law permitting competition freezes rates for three years after derergulation begins, but if the prices that the distribution companies charge are too high, then there is no incentive for new electricity providers to enter the market. If this happens, the affiliated companies of Nevada Power and Sierra Pacific Resources will have an unfair advantage in retaining their customers.

While deregulation will mean less interference by government, the Nevada Legislature fortunately did give the state Public Utilities Commission some authority to oversee what prices the distribution companies, such as Nevada Power, can impose on electricity providers. The state Public Utilities Commission has the final say on this proposal and will hold hearings today. This is a pivotal moment. The Public Utilities Commission should reject any proposal that will dampen competition and hurt consumers.