Official: Public should not fret over delay in electric competition

Monday, Jan. 3, 2000 | 11:35 a.m.

CARSON CITY -- A state consumer advocate says the general public won't be harmed if Nevada doesn't make its suggested target date of March 1 to begin competition among electric companies.

Fred Schmidt, director of the state Bureau of Consumer Protection, last week said, "I don't mind slipping the date," adding that only the large electric customers might be miffed.

These big companies want the opportunity to negotiate with new electric suppliers for lower rates. But so far there are not many new firms coming into Nevada to sign up residential users under the era of open competition.

The Legislature allowed Gov. Kenny Guinn to proclaim March 1 as the beginning date for new competition. In the West, only California has opened its market, energy experts say.

Most customers in Nevada are expected to initially remain with Nevada Power Co. in Las Vegas or Sierra Pacific Power Co. in Reno, which have been monopolies for decades. The 1999 law also prohibits the two utilities from raising rates until 2003.

Schmidt's comments were made Thursday at a hearing of the state Public Utilities Commission, which is considering a plan by the two utilities to sell their generating plants. The commission has approved the merger of the two electric giants in Nevada but they must fulfill certain conditions, such as divesting themselves of their generators.

Commission Chairman Don Soderberg said at the close of the hearing Thursday that he is targeting Jan. 11 for a decision on the sell-off plan that was devised by Schmidt, the two utilities and the staff of the commission.

Soderberg said he expects the governor to name a temporary commissioner this week to sit on the case. This would avoid a potential deadlock on the commission.

Commissioner Richard McIntire, who was recently appointed by Guinn, has disqualified himself because he handled the case while he was on the staff of the commission.

It appears Soderberg and Commissioner Judy Sheldrew are split on the proposed divestiture plan.

And Sheldrew on Thursday accused Soderberg of dragging his feet on moving towards opening the electric market to competition. She said the chairman has not scheduled any hearings on another proposal to create an independent organization to oversee the transmission of power to ensure that all users get equal treatment.

"Your delay is frustrating the opening of that market," she told Soderberg. She pressed the chairman to reveal when he will start movement on an order for independent oversight group. Soderberg replied, "That order will come forward when I take care the rest of that docket."

She asked him again when that would be. Soderberg said, "Quite frankly commissioner, I'm not in a position to answer that question and I don't feel I need to."

Soderberg later told a reporter he doesn't want to rush into open competition and "make a significant mistake."

The proposed divestiture plan is another step towards deregulation. Schmidt estimates the merged utilities may realize $1 billion from selling off generating facilities.

As part of the sell-off plan, the two utilities would continue to control the transmission of electricity without any independent group overseeing it. That irks Sheldrew, who says leaving control in the hands of the two power companies gives them a "grand advantage" over other companies that want to compete in supplying power.

Alternative suppliers could receive a low priority to get their power to their customers with Nevada Power and Sierra Pacific still in charge of the transmission. "This can discourage customers from leaving" the two established companies, Sheldrew said.

Sheldrew complained this "simply authorizes an unauthorized monopoly" in the era of competition.

Schmidt defended the proposal, saying it was only temporary with the two utilities in charge. And he said the Federal Energy Regulatory Commission would have oversight over the transmission of the power. But Sheldrew said it takes the federal agency a long time to act.

Schmidt said the governor "is keeping our feet to the fire" to achieve a starting date of March 1 for open competition. But he told the commission, "I won't have tremendous heartburn if you delay," noting residential customers are protected from any rate increase.