Merrill Lynch downgrades utility’s stock

Thursday, Feb. 10, 2000 | 11:31 a.m.

New York-based Merrill Lynch & Co. has downgraded the stock of Nevada Power Co.'s parent company, Sierra Pacific Resources Inc.

A vote cast by Public Utilities Commission of Nevada Chairman Don Soderberg on a $110 million rate request last week was cited in an analyst's report downgrading the stock from a "buy" to an "accumulate" rating.

"(Sierra Pacific Resources) had hoped for a more stable environment and saw PUC Chairman Don Soderberg's appointment last year as a stabilizing development for the company; our recent conversation with him led us to share that view," said the report by Merrill Lynch's Sam Brothwell.

"However, Mr. Soderberg on Friday sided with longtime adversary Judy Sheldrew in rejecting Nevada Power's deferred energy case. This, along with other recent developments, suggests a still-unstable regulatory climate," the report says.

The report also said Sierra Pacific didn't communicate the range of outcomes of the rate case to Wall Street. The rejection of the rate increase, which is being appealed, would cost the company about $30 million in revenues, or 25 cents a share, the report says.

"We have long thought very highly of (Sierra Pacific's) management, but wish they'd anticipated and communicated the possible downsides here," the report says.