Electric rates frozen for five years

Jennifer Coleman

Wednesday, March 31, 1999 | 11:54 a.m.

CARSON CITY -- Lawmakers have released a draft of an electric deregulation amendment that would freeze rates for five years and would give Nevada consumers a choice of power companies.

Senate Commerce and Labor Chair Randolph Townsend, R-Reno, also said people who want to testify on the plan can do so at hearings this week.

He added that the committee's first concern was to ensure a seamless transition into the deregulated market for consumers and small-business customers of Las Vegas-based Nevada Power Co. and Reno-based Sierra Pacific Power Co.

He stressed the bill's requirement that residential customers not have to "mail in anything or check a box" regarding their electric service.

Steve Oldham, vice president of strategic development for Sierra Pacific, testified Tuesday against the proposal on behalf of his company and Nevada Power, which plan to merge.

He was particularly concerned about a provision that prohibits the utilities from offsetting fuel costs during the proposed freeze.

The utilities are selling off their power plants, making them subject to market forces and would no longer be able to control their fuel expenses. He said the utilities need the ability to recover expenses, which Oldham explained fluctuate from year to year between credits and deficits.

Oldham said fuel costs equal about 45 percent of revenues and that prohibiting the utility from recovering those costs would prevent the company from making a profit.

The state Public Utility Commission will set the rates for electric service. At the end of two years, licensed competitors for electric service could bid for 10 percent of an area, and would get a 5 percent discount on power transmission charges they pay to two major providers, Sierra Pacific and Nevada Power.

The deregulation plan gives the PUC the power to determine at the end of the five-year rate freeze period whether there's sufficient competition. If there haven't been many bids by alternative electric providers, the PUC could again freeze rates.

Casino lobbyist Harvey Whittemore suggested minor changes in the bill's language, saying his clients, the Nevada Resort Association, are "mindful of the impact on small residential customers and their protections, many of whom are our employees."

He urged the lawmakers to balance the competing interests by protecting residential customers and allowing casinos and other big power consumers to get a competitive rate.

"Some people, like my clients, want deregulation immediately," he said, adding that those customers have the resources to hire consultants to navigate the deregulated market but residential customers don't.

The amendment also allows the former electric monopolies to keep their names on all the services they offer.

The Sun's Richard N. Velotta contributed to this story.