Electricity deregulation heads toward passage in Legislature

Tuesday, May 25, 1999 | 11:15 a.m.

CARSON CITY -- A bill that eases Nevada into the era of electric deregulation and protects homeowners until the year 2003 was approved by an Assembly select committee Monday.

Assembly Bill 478, which goes to the floor of the Assembly, is one of the few major unresolved issues of the Legislature, which must end by next Monday.

Fred Schmidt, head of the state Bureau of Consumer Affairs, said the bill provides more consumer protection than present law. Steve Rigazio, chief financial officer for Nevada Power Co., said the bill represents a delicate compromise between utilities, shareholders, consumers and companies that may want to merchandise power in the future.

Rigazio called it a "soft way" into the future of competition for electric customers.

As approved, it will permit Nevada Power to file one more rate case -- expected in July for about 4 percent. That's to recover higher than expected costs paid for fuel.

Starting in March 2000, when competition begins, rates for Nevada Power and Sierra Pacific Power of Reno will be capped for three years.

Electric utilities will not be able to file any more deferred energy cases in which the utilities seek to recover for the rising cost of fuel. However, natural gas companies will still be able to seek relief in deferred energy cases.

A customer will be allowed to change to other electric suppliers at a lower cost, but there will always be the safety net of the two major utilities -- which are merging.

The bill, according to Schmidt, opens up a variety of opportunities starting in March next year. For instance, he said a large company may negotiate a deal for low cost power from a supplier, not only for its plant but for its employees.

Or a city may become an "alternative seller" in which it negotiates a deal for low rates from a supplier for all citizens.

Schmidt said hopefully by the time the ceiling is lifted on rates in 2003, competition will be in full bloom and consumers will benefit.

Rigazio said the ceiling on rates does not prevent Nevada Power from lowering rates. But he said future factors will dictate that decision. The Las Vegas utility, he said, may lower its rates just to keep customers.

But he said Nevada Power already has low rates.

The only major debate in the select committee came over allowing Nevada Power and Sierra Pacific to continue to use their names when they branch off into other businesses. The bill allows them to do so.

Rene Ashleman, lobbyist for the heating and air conditioning contractors in Southern Nevada, asked the committee to restrict the utilities from using their name in this area.

He said that gave Nevada Power "too great a competitive advantage." He asked the committee to carve out a section in the law that the utility could not use its name in the field of air conditioning and heating.

But Assemblywoman Sandra Tiffany, R-Henderson, said she did not favor giving an exemption to one industry in the law.

Bob Crowell, an attorney for Nevada Power, said the utility gave up a lot in agreeing to the "safety net" for consumers through 2003. Nevada Power, he said, would be the loser if it could not use its name in an expansion program.

Joyce Newman, spokeswoman for the stockholders of the two utilities, said it would be unfair to limit Nevada Power and Sierra Pacific from using their name. She said the shareholders were "at risk" in this new era of deregulation and "the name and logo is one of the most important things" to retain.

Committee Chairman Doug Bache, D-Las Vegas, noted that none of the members of the state Public Utilities Commission appeared at the meetings after the initial session to give testimony.

He wondered if they were being muzzled by the administration of Gov. Kenny Guinn. Pete Ernaut, chief of staff for Guinn, said the utilities commission job is to regulate, not to set policy.

The policy making, he said, is up to the governor, in explaining the absence of PUC Chairwoman Judy Sheldrew or member Michael Pitlock.

The bill is expected to be passed by the Assembly but will probably end up in a conference committee as senators and Assembly members iron out their differences.