Water Authority ponders power play

Thursday, Dec. 21, 2000 | 11:02 a.m.

The Southern Nevada Water Authority, the primary water provider for Clark County, is thinking about getting into the power business.

The authority's board will discuss in January whether to make a bid to be the provider of last resort under power deregulation, Deputy Manager Richard Wimmer said today. That position under current deregulation law is to be held by Nevada Power Co. until March 2003. The timetable for deregulation is still undecided.

As the largest power consumer in the Las Vegas Valley, the water authority is so worried about paying rising rates to pump water from Lake Mead to customers, it has already discussed building a power plant for its own use.

But water authority officials lately also have expressed concern for residents who are facing an $18 million to $20 million increase in their power bills in January. Those proposed rate hikes by Nevada Power are before the Public Utilities Commission.

If the water authority becomes the "default provider," or provider of last resort, it would provide electricity to all Clark County users who don't choose to contract with a for-profit power company. That could make it a major player in the local power industry.

A subsidiary of Shell Oil Co. plans to make a bid to become the provider of last resort.

The authority could build generating stations on tax-free funds and as a public entity, "it is a not-for-profit entity," Wimmer said. "Our customers are also power customers and this is one big issue that needs to be dealt with," he said.

Public Utilities Commission Chairman Don Soderberg called for a cautious approach.

"The Southern Nevada Water Authority is considered one of the best water utilities in the country," Soderberg said. "However, there are pros and cons to making a change in this turbulent environment and we have to review all options very carefully."

The authority has already teamed up with the Colorado River Commission to buy a firm supply of electricity last summer that allowed the sale of surplus power on the spot market, Wimmer said.

Nevada Power has been looking for a way to get out of being the provider of last resort after March 2003, utility spokeswoman Sonya Headon said. As it sells off its existing plants, the company wants to provide transmission access rather than supply electricity, she said.

The company has buy-back agreements until February 2003 with the generating plants it is selling in order to fulfill its duty to provide power until March 2003.

Nevada Power has been moving in that direction already, not building a new generating plant in Southern Nevada for more than 30 years. In fact, its ability by produce enough electricity to fulfill its existing obligations has been questioned by the Public Utilities Commission, which ordered Nevada Power Nov. 28 to update its resource plan within 90 days.

"Somebody has to step up to the plate to supply long-term power at, hopefully, fixed rates," water authority consultant and former state consumer advocate Fred Schmidt said. "Otherwise Southern Nevada will be buying power on the spot market in two years."

Reliance on the spot market could trigger higher power bill increases than the 1 percent to 2 percent -- about $10 million a month -- allowed by the Public Utilities Commission, Schmidt said.

An advisory committee to Gov. Kenny Guinn is expected to report to the governor by Jan. 15 on the future of electrical supplies if the market is deregulated in Nevada.