Nevada Power rate hike issue is still unresolved

Wednesday, Jan. 19, 2000 | 12:30 p.m.

CARSON CITY -- Nevada Power Co. threatened but then backed off a plan to put a $40 million rate increase into effect without permission of the state Public Utilities Commission.

The Las Vegas utility told the commission in a Jan. 10 letter it would start charging the higher rates as early as Jan. 23 in what has become a tangled rate increase request.

But now Nevada Power says it has backed off, saying it wants the utilities commission to consider the case and it won't impose the new rate schedule until a ruling is issued.

Commission Chairman Don Soderberg said the Jan. 10 letter sounded like a threat and added he didn't know if the power company can go forward with its plan legally.

State Consumer Advocate Fred Schmidt complained about the "arrogance' of Nevada Power and added, "I don't think they have the right to put into effect any increase."

Nevada Power on July 15 asked for permission for $40 million to reimburse it for its past higher than expected costs of fuel. Then on Sept. 30, it upped the request to more than $110 million, which would have meant a 15 percent rate increase for consumers.

The staff of the utilities commission and Schmidt's office asked that the amended application for $110 million be dismissed. But Soderberg denied that on Nov. 16, allowing the full case to go forward.

Under Nevada law, if the utilities commission does not act on a deferred energy rate case within 150 days, the company can go forward with its plans. Nevada Power apparently felt that since Soderberg had not written a decision on the $40 million application, it was free after the deadline to start charging those rates.

Cheryl Hachman, Nevada Power associate general counsel, notified the utilities commission on Jan. 10 it wouldn't impose the $40 million rate hike when the time limit expires.

But then she also said, "If however, the commission grants the relief sought in staff motion for full commission review of the Nov. 16 order or otherwise dismisses the Sept. 30 (the combined application), Nevada Power will place the July 15 proposed rates into effect."

Hachman could not be reached for comment Tuesday. Laura Lipparelli, manager of regulatory pricing for parent company Sierra Pacific Power Co., said the Jan. 10 letter was just part of "on-going correspondence." Nevada Power, she said, does not "intend to implement anything at this time."

The second deadline for the utilities commission to act is March 28. The commission, however, has scheduled hearings starting Monday in Las Vegas on the $110 million increase.

Schmidt said the refusal of Soderberg to throw out the whole $110 million case has been appealed to the full commission and that has not been ruled on yet.

"I don't mind if they go ahead with the (full) case because we all expected to litigate the case," Schmidt said. "I don't think they have any right to put in the increase. I don't care what they say."

He said the letter was poorly worded about the intent of Nevada Power. But he said Nevada Power is still a regulated utility and open competition hasn't arrived so it can't charge whatever it wants.

This rate case is important because this is the last time Nevada Power will be allowed to raise its rates for three years after competition begins.

And whatever rate is approved by the state may be the level other electric suppliers will have to beat if they want to offer cheaper rates to draw customers.