Deregulated Nevada Power unit will sell more than electricity

Monday, Feb. 28, 2000 | 11:03 a.m.

The new Nevada Power won't be just about electricity.

The company that will enter the competitive marketplace when the industry is restructured will sell satellite dishes, lease computers and offer cellular telephone service. Eventually, it will sell access to the Internet and apprise customers of new technological advancements they may want in their homes.

And, it will sell electricity to residential customers.

"Nobody's ever done this before," Nevada Power Services President Steve Boss said of his company's entry into the competitive arena. "Until you get in the marketplace, you're shooting blind a little bit."

But then, everybody is uncertain about the future, starting with when exactly competition will begin. It was scheduled to start Wednesday, but Gov. Kenny Guinn said today he is delaying the start of open competition.

As soon as competition begins, Boss and his 60 employees at NPS will have a major marketing campaign ahead to explain the difference between his company and the old one.

Nevada Power Co., the utility that served Southern Nevada as a monopoly for years, merged last year with Sierra Pacific Resources Inc. Sierra Pacific is the Reno-based parent company that now has three subsidiaries, including a retail operation called Sierra Pacific Energy Co. That subsidiary does business in Southern Nevada as NPS.

Confused? Boss hopes to clear up all confusion with an advertising flurry with an undisclosed budget. The company also has four kiosks at local malls to explain the role of the new operation.

When the Public Utilities Commission of Nevada began establishing rules for the competitive marketplace, it determined that the original monopolies could not be among the competitors. Instead, the PUC ruled that those companies could establish affiliates for competitive retail service and that they would have to have management teams independent of the parent company.

The utilities won a major victory when they convinced the Legislature to allow the affiliates to use the names and logos of the parent companies. Members of the PUC were opposed to that because of the competitive advantage it would give to established utilities over new alternative sellers entering the market.

Meanwhile, Sierra Pacific Resources' other two subsidiaries will continue to operate and remain regulated. One of those subsidiaries is Nevada Power Co., which will maintain Southern Nevada's distribution system -- the wires that connect power substations to homes.

The PUC currently is conducting hearings to determine how much the company that maintains the distribution system can charge the new companies that will enter the market to use the wires. A dispute exists over whether Nevada Power Co. should charge a flat rate per residence, as proposed by the company, or a percentage charge based on usage, advocated by the state Bureau of Consumer Protection.

What NPS will charge consumers for electricity will be based in part on what their line charges are from Nevada Power Co. Competitors that plan to serve the residential market are waiting for the same information before they begin their marketing efforts.

Further complicating matters is the cap on Nevada Power rates consumers have heard so much about. The legislation that established competition in the industry also is capping Nevada Power Co.'s rates through March 2003. Nevada Power Co. will continue to serve customers until they choose new providers.

At what amount the rate will be capped will be determined after the company's final rate request, a $44.3 million deferred energy rate increase being heard by regulators this week. The company has also appealed a rejected $110 million rate case.

Once the final rate is established, competing alternative sellers will be able to offer their own packages to beat it. That's where NPS comes in. It will have to explain to potential customers the difference between Nevada Power Co., which has served customers as a monopoly for years, and NPS, the new alternative seller affiliated with the former monopoly.

Boss said NPS will make its money by reselling products and services from a one-stop utility store. The profit for NPS will be in its ability to package products and offer one monthly billing.

NPS has resale agreements with some partners and plans to negotiate more as new technology is gobbled up by consumers. The company is working with Dish Network to offer satellite television service and Howard Computers of Mississippi to offer leases on customized Esteem PC systems.

Boss said NPS is negotiating with an undisclosed company to provide prepaid and standard cellular telephone service. The company also plans to become an Internet service provider and will monitor the high-tech industry to offer products people will want as they are released.

"We will stay on top of technology so our customers don't have to," Boss said.

In addition to the new products, NPS will offer retail electricity, promising to offer innovations in bill-paying and account monitoring with the Internet. The company will offer a green-power option for customers choosing to pay more for electricity from renewable sources.

In addition to serving residential customers, NPS will have a division -- Energy Services Co. -- that will work with small businesses to provide central heating and cooling and energy conservation for small businesses that want to band together to consolidate costs. Boss said his company is working with the Fitzgerald and Four Queens hotel-casinos downtown and the Fremont Street Experience on such a consolidation.

The company already has another division -- Northwind Aladdin LLC -- that is doing that for the buildings in the new Aladdin hotel-casino property.

About two-thirds of the company's employees are members of the transition team that is taking Nevada Power Co. into the competitive arena.

NPS's application for a license is pending before the PUC. Other competitors planning to enter Nevada's competitive utility market are Utility.com Inc., Albany, Calif.; New Energy Southwest LLC, Phoenix; DukeSolutions Inc., Charlotte, N.C.; Enron Energy Services Inc., Houston; Coral Power LLC, Las Vegas; Avistar Inc., doing business as PHASER Advanced Metering Services, Albuquerque; Idaho Power Co., Boise; Creative Energy.com, Salt Lake City; PowerSource, Los Angeles; and Ormat Nevada Inc., Sparks.