Power settlement would allow rate hike

Wednesday, July 19, 2000 | 10:41 a.m.

CARSON CITY -- The Nevada Legislature promised consumers that with the advent of open competition in the electric industry there would be no power rate increases until 2003.

But that promise may soon be ignored.

The state Public Utilities Commission will consider a proposed settlement Thursday of the disputes involving Nevada Power Co. and its sister utility, Sierra Pacific Power Co. of Reno.

The agreement, negotiated behind closed doors over the last few weeks, was filed Tuesday with the PUC and for the first time became public.

It allows Nevada Power to boost rates by $48 million for the next year, which will mean a 4.7 percent increase for homeowners in Clark County. Rates for larger users would go up anywhere from 5 percent to 6.2 percent, depending on the amount of power used.

The PUC previously turned down requests from Nevada Power for a $44 million increase and for a $110.7 million hike in rates. Instead the commission ordered a $9 million rate reduction.

The 1999 Legislature allowed Nevada Power one last rate increase to recover fuel costs before deregulation. But after that, rates were to be frozen.

The stipulation, however, allows Nevada Power and Sierra Pacific to raise or lower rates monthly, based on the cost of fuel and purchased power. And the rates for fuel have been rising.

The settlement claims the monthly adjustments "are lawful" and should be accepted by the PUC. The agreement also said the PUC will not challenge the legality of these monthly changes in the bills of ratepayers.

Senate Minority Leader Dina Titus, D-Las Vegas, today called the settlement a "back room" deal.

"And who was not present -- the ratepayer," said Titus, one of the few who voted against the deregulation that has led to a rate increase.

The monthly rate hike will be capped. But the limit on the amount of increase will be raised every six month.

Sen. Randolph Townsend, R-Reno, one of the main authors of the deregulation law, previously said rates would rise by three times what they are today if the Legislature did not pass the 1997 and 1999 laws opening the market to competition. He praised the negotiators and especially state Consumer Advocate Tim Hay for protecting the small customers in the settlement.

The stipulations are signed by Hay; Jeff Parker, who is counsel to the PUC; Jackie Rombardo, staff counsel for the regulatory operations staff at the PUC; William Peterson, general counsel for Sierra Pacific Resources, the parent company of Nevada Power and Sierra Pacific, and by Martha Ashcraft, representing Mandalay Bay Resort Group, Park Place Entertainment Corp. and Mirage Resorts Inc.

The agreement settles a number of pending suits filed by Nevada Power or Sierra Pacific Resources.

After the PUC denied the two rate increases sought by Nevada Power, the Las Vegas utility filed suit. And Sierra Pacific Resources sued in federal court to invalidate the 1999 deregulation law.

Those suits and others will be dismissed by the utilities.

Under the agreement, the electric market will be open to big customers in Clark County on Nov. 1. Major resorts and the Southern Nevada Water Authority would be able to sign up with other electric suppliers on that date.

Other major power users would be able to shop for cheaper electricity in April 2001. Deregulation would be available for commercial customers in June 2001, and the homeowner would be able to look for alternate suppliers to Nevada Power in September 2001.