Editorial: Mammoth rate boost shot down

Wednesday, Feb. 9, 2000 | 9:32 a.m.

The Nevada Public Utilities Commission wisely rejected Nevada Power Co.'s bid to increase its rates by $110 million, which would have been a 15 percent hike in the average electric bill for a customer. It was, to say the least, an interesting collection of groups aligned against the request. The commission's staff and the state consumer advocate teamed up with an occasional nemesis -- large casinos -- in opposing the move. These unlikely bedfellows believed the application flew in the face of the Legislature's intent to restrict Nevada Power's ability to recover fuel costs after July 15, 1999, in anticipation of deregulation, which is scheduled to start March 1. The vote to shoot down the request was 2-1, but it was an interesting alliance. Ironically, Commission Chairman Don Soderberg and Commissioner Judy Sheldrew -- who have been feuding in past months -- both came together to kill the utility's request.

As the Sun's Richard Velotta reported Monday, a shareholder group and an analyst for a brokerage house criticized the decision, which the company said it would appeal in court. Joyce Newman, president of the Utility Shareholders Association of Nevada, said she was "shocked and stunned" by the commission's ruling. Ron Tanner, managing director of utilities research for Legg Mason Inc. in Baltimore, went much further than Newman in denouncing the ruling. "You have terrible regulators out in Nevada," Tanner told Velotta. "Sheldrew has had a history of being punitive against the company, so her vote wasn't a surprise," said Tanner, who then went on to characterize Soderberg's decision to deny the increase as being "wimpy."

Sorry, Mr. Tanner, but this was neither punitive nor wimpy. The commission did the right thing by rejecting the power company's efforts to amend its original July application, a $44 million request that the commission will consider now that the $110 million bid has been thrown out. It is important that the current monopoly, Nevada Power, isn't able to unfairly amass a windfall prior to the start of deregulation, which not only would hurt its current customers but also put its potential competitors at a disadvantage if they choose to enter the market. Nevada Power certainly isn't happy with the commission's decision, but it is time for the utility to move forward and prepare itself for a radically different environment where consumers will have choices -- and Nevada Power will have to contend with the uncertainties of a competitive market.