Nevada Power to raise rates again

Wednesday, Aug. 16, 2000 | 11:20 a.m.

CARSON CITY -- Nevada Power Co. customers will be hit with another rate increase.

The hike is the third since the state Public Utilities Commission accepted a negotiated settlement with the utility last month.

The company filed its plan Tuesday to boost rates by 1.3 percent, which will figure out to about $1.05 a month for a typical homeowner who uses 1,100 kilowatt hours. The increase will go into effect Sept. 29.

After the settlement was approved in July, the utility was permitted to raise rates by 4.7 percent effective this month. And another 1.3 percent rate increase will go into effect on Sept. 1 for Southern Nevada customers. This third rate will mean a total of more than 7 percent.

These rates are "pancaked" on top of each other so they compound each time. The extra money collected by the utility is to offset the higher cost of fuel or purchased power, incurred in the last 14 months.

Under the old law, the PUC had the authority to freeze any increase until it decided if it was justified. Under the negotiated agreement, the rates automatically go into effect. At the end of six months, the utility submits an audit to determine if the prior rate hikes were excessive.

Nevada Power officials said at a meeting of the PUC in July that rates would not rise by more than 9 percent by the end of the year. There is a limit on the amount of increase each month. But after six months, that ceiling rises.

Sierra Pacific Power Co., which serves northern Nevada, was allowed to submit its first rate increase on Tuesday. But Karl Walquist, public information officer, said the utility will not file its rate proposal until Sept. 15. The company is still working out how much it will be, he said.

The 1999 Legislature approved a law to allow outside companies to compete with Nevada Power and Sierra Pacific as early as last March 1, if Gov. Kenny Guinn approved. But Guinn said the state was not ready for deregulation then.

The law also allowed Nevada Power to file for one last rate increase before last October. It initially sought $44 million and then amended it to $110.7 million or a 14-15 percent increase. The PUC turned down both applications. Nevada Power then filed suit.

And Sierra Pacific Resources Inc., the parent of the two utilities, filed suit in federal court to invalidate the deregulation law.

Closed door negotiations started between the utilities, state Consumer Advocate Tim Hay, the staff of the PUC, the big casinos in Las Vegas and the Southern Nevada Water Authority. They reached agreement permitting the monthly raise increases, and the utilities agreed to drop their suits.

The settlement was approved by the PUC 2-1 with Commissioner Judy Sheldrew dissenting, saying the small consumer would be hurt by the deal.

These rate increases will be a double whammy for Clark County residents. The water authority may have to boost its rates to offset its higher utility bills, says Senate Minority Leader Dina Titus, D-Las Vegas, who has been a critic of the negotiated settlement.

Sen. Joe Neal, D-Las Vegas, has already ordered a bill drafted for the 2001 Legislature to scrap the deregulation law. But under the negotiated settlement, big users in Southern Nevada will be able to find alternate sellers of electricity in November and leave the Nevada Power system.

Neal sent a letter last Thursday to the governor asking him to delay the opening of competition. He said utilities under the old system had an opportunity to earn a fair return on their investments and to provide customers "with just and reasonable rates."

"However, what consumers are experiencing with deregulation is extortion," Neal said. "They are paying a ransom for a basic necessity that in extreme weather can mean the difference between life and death for the elderly and the inform."

Neal noted that the governor has the authority to decide when deregulation kicks in.

"The citizens of Nevada urge you to prevent the specter of unrestrained greed from descending on our state before the Legislature can intervene to protect consumers from rampant, rapacious deregulation that masquerades as competition."

In referring to the negotiated settlement, Neal told the governor "Unfortunately, recent secret meetings have resulted in a backroom deal to raise power rates and accelerate the start date of legally sanctioned price gouging to Nov. 1, well before the Legislature convenes."

The two utilities, as those across the country, have been hit with the rising cost of fuel. In California, in the deregulated market of San Diego, the electric bills have doubled this summer.

Those who negotiated the Nevada settlement said that won't happen here because of the cap that limits the amount that can be increased each month.