Secret electricity meetings criticized

Tuesday, April 4, 2000 | 11:23 a.m.

CARSON CITY-- The Legislative Commission told Gov. Kenny Guinn on Monday to open to the public the closed-door meetings of his task force to negotiate a settlement on deregulation of the electric industry.

But Guinn isn't going to follow the wishes of the commission, a bi-partisan group that handles the business of the Legislature between sessions.

The commission Monday also unanimously rejected a proposed regulation by the state Public Utilities Commission on how to compute stranded or past costs of Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno. It told the commission to redraft the regulation to take care of the concerns of the two utilities, which are now combined under Sierra Pacific Resources Inc.

And this will mean more delays in opening Nevada's electric market to competition.

During the Monday discussion by the legislative commission, Assemblywoman Barbara Buckley, D-Las Vegas, said she was disturbed by the "secret closed-door meetings" of people hand-picked by Guinn to hammer out an agreement on deregulation. These discussions should be in public before the utilities commission, she said "to make sure the little person is protected."

Her motion to have these "summit" meetings in public passed the commission unanimously.

Guinn's press secretary Jack Finn said future meetings of "summit" members will continue to be closed.

There has been progress in the two private sessions, except on the issue of a rate increase for Nevada Power Co., he said. "The parties have felt free to speak their minds."

He said the meetings have "been inclusive because all parties in the nuts and bolts of deregulation" are there. There are representatives of the two utilities, the gaming casinos, mines, the state consumer advocate and the staff of the state Public Utilities Commission.

Those companies that want to come in and compete with the two major utilities in selling energy have not been invited. And Guinn, a former utility executive, said he has not included the state Public Utilities Commission because it must rule on any compromise that is hammered out.

There has been criticism of the closed door process talking about negotiating a rate increase for Nevada Power Co. behind closed doors. It's up to the utilities commission to decide such cases.

Finn said, "It is our intention to try to get the parties together and move forward with those meetings ... as we have been doing," in private.

Guinn had the option of opening the electric market to competition on March 1, but he delayed it saying many issues have to be resolved and he appointed the task force to work out the solutions.

Meanwhile the utilities commission is going forward with its rules towards deregulation.

One regulation involves past costs the utilities have incurred to keep up with growth and to maintain dependable service. With deregulation, Nevada Power and Sierra Pacific will lose customers and revenue. The two utilities and its shareholders should be able to recover such "stranded costs."

The utilities commission approved a regulation giving it wide latitude in determining what these costs would be and who should pay them. Nobody knows what these costs will be. Utility and state officials say they could be hundreds of millions of dollars or could be close to nothing.

And there's the issue of who should be saddled with these costs to protect the shareholders and the utilities as they enter deregulation.

In the meeting Monday, the utility and its shareholders lined up against the gaming industry and the three-member utilities commission. Nevada Power and Sierra Pacific won the skirmish as the lawmakers unanimously said the proposed regulations violated the law and needed to be rewritten.

It directed the utilities commission to come up with a new regulation within 90 days. PUC Chairman Don Soderberg said that would be a "tight" deadline because there must be workshops and public hearings before anything can be adopted.

Soderberg and Commissioners Judy Sheldrew and Richard McIntire argued the proposed rules conformed to the law. Harvey Whittemore, lobbyist for the Nevada Resort Association, said the utilities are trying to throw a roadblock in front of deregulation.

He said the objections to the regulation by the utilities are an attempt to stall deregulation and to buttress their newly filed lawsuit seeking to have the electric competition law declared unconstitutional.

But Bill Peterson, attorney for Sierra Pacific Resources, argued the two utilities were in "an untenable position," since there are no standards set forth in the proposed regulations, which he called "vague and ambiguous." He said there must be specific things enumerated in the regulation so the two utilities know what to submit to prove their case.

The hearing Monday also broke down into a finger-pointing contests as to who is to blame for the free-fall of the stock of Sierra Pacific Resources, which has dropped from $26 per share last summer to $12.31 Monday.

Malyn Malquist, president and chief operating officer of Sierra Pacific Resources, said decisions by the utilities commissions wiped out 75 percent of the earnings of Nevada Power. He said the value of the stock has been cut in half at a loss of $1 billion.

"Half of the decline is due to the state," he said referring to an unfriendly regulatory environment.

But Sen. Randolph Townsend, R-Reno, said it was "inappropriate to lay the decline on the commission." He said after the merger of the Las Vegas and Reno utilities, there's been a steady decline. "To blame a regulatory mechanism is inappropriate," said Townsend, whose Senate Commerce and Labor Committee processed the deregulation bill.

He said the decisions by the company are partly to blame for the decline in the stock.