Editorial: It sure isn’t going to be easy

Thursday, March 2, 2000 | 9:30 a.m.

It certainly came as a surprise when Nevada Power announced late Tuesday that it would not be a retail seller of electricity once deregulation of the power industry gets the green light from Gov. Kenny Guinn. This is the same company, after all, that had argued vigorously before the 1999 Legislature about ensuring its retail affiliate be allowed to use "Nevada Power" in its name, a decision that critics believed would be anti-competitive, dissuading other retail sellers from entering the market.

Nevada Power's move this week is an about-face, but it still plans on being a wholesale distributor of power. Also, once competition begins -- and that could be a few months away, if not more -- Nevada Power still will be the provider of last resort until at least July 2001. So residential and business customers won't have to worry about scurrying to find a retail provider once deregulation begins; they can simply stay with Nevada Power for the time being.

So why would Nevada Power opt against being a retail seller of electricity? In a statement released by the company, Nevada Power said that as a result of the state Public Utilities Commission's decision last month to deny the company's $110 million rate increase, the company is looking to reduce costs wherever possible. So this meant dropping its retail unit, which included employee salaries and all the costs associated with advertising and marketing. The implication, though, that state regulators' February ruling was responsible for the decision is quite a stretch, especially since the company's stock has been falling steadily for nearly a year. But there may be a silver lining in this for Nevada Power. This decision will allow the company to concentrate on its core business and, as the Sun's Richard N. Velotta reported Wednesday, Wall Street analysts vie wed positively this cost-cutting.

Nevada Power's decision to forgo a retail presence could even foster competition, because other companies have expressed a concern that a Nevada Power affiliate would have a huge advantage because of its name recognition. Now more companies might consider entering the market, including those serving residential customers, which is the group least likely to be courted by retail sellers. Still, it is worrisome that very few companies so far are willing to sign up residential customers, a troubling sign that competition will be just in name only and not a reality -- unless you happen to own a large business that needs a lot of electricity.

There have been plenty of bumps in the road in the deregulation of the long-distance phone market, so no one should have expected that bringing competition to the power industry would be any easier. While the governor's decision Monday to delay the beginning of competition was expected, no one should be surprised if consumers are confused by Nevada Power's decision to drop out the very next day. This is mind-bending news for consumers who have never had to worry before about shopping for their power -- but may be able to do so in just a few months.