Summit fails to end dispute over Nevada Power rates

Wednesday, March 22, 2000 | 11:05 a.m.

CARSON CITY -- Gov. Kenny Guinn is disappointed at the failure of closed-door summit meetings to reach agreement on how much of a rate increase Nevada Power Co. of Las Vegas should receive -- but he urged the parties to return to the bargaining table to negotiate on other issues towards deregulation of the electric industry.

Guinn's chief of staff Scott Scherer said Tuesday the parties were "too far apart" to reach any agreement on the rate request by Nevada Power and now the issue will be decided by the state Public Utilities Commission on Monday.

Commission Chairman Don Soderberg, the presiding officer in the case, has a draft decision that suggests a reduction in rates of $9 million to $10 million a year instead of the $44.3 million increase sought by the Las Vegas utility.

The commission was scheduled to make a decision this past Monday but Soderberg delayed a vote to allow the parties to work out a compromise. Scherer said Tuesday no agreement was possible by the opposing sides.

If Soderberg gets one of the two remaining commissioners to side with him, that means that rates will inch down slightly, rather than going up 7.7 percent for residential customers and 4.2 percent for commercial users, as proposed by Nevada Power.

Sierra Pacific Resources Co., the parent of Nevada Power Co., has threatened suit if the utilities commission orders a rate reduction rather than a rate increase. And legal action could further delay the start of open competition.

The 1999 Legislature authorized deregulation to begin March 1, if the governor approved. But Guinn determined there were too many outstanding problems to open the market on that date and he asked the parties to hold summit meetings to cure their differences.

Those in the two private sessions included the staff of the Public Utilities Commission and representatives from the state Bureau of Consumer Protection, the water authority in Las Vegas, the gaming and mining industries and Sierra Pacific Resources Co., the parent of Nevada Power Co.

Scherer, who sat in on the two summit sessions, said the commission staff and others made an offer on a rate increase for Nevada Power. But he said it was not accepted and Nevada Power did not make a counter offer. He did not reveal the rates that were proposed.

"The governor is disappointed," Scherer said, referring to the failure to reach a consensus on the rates. "But he's hopeful there can be common ground on a number of key issues," and he wants negotiations to continue as soon as the PUC makes its ruling Monday.

"As some point the governor is going to have to pull the trigger (to start competition) and without some agreement on the issues, it could end up in litigation," Scherer said.

"It's better for everyone if the outstanding issues are resolved and we avoid litigation," he said.

Some remaining issues include what group will operate the transmission lines to make sure there is fairness among companies that want to supply consumers with power. Also to be decided is how much Nevada Power and Sierra Pacific are due in "stranded costs," -- those costs the utilities have incurred and need to recover in the future and scheduling for delivery of the power to various clients.

Scherer said the parties may not be able to determine what the "stranded costs" are for the two major utilities. But he said they may be able to hammer out a method to determine them later and how the utilities could recover them.

The governor is not taking a side on these issues but is "trying to facilitate" the discussion, Scherer said.

The rate increase is important because rates for Nevada Power and Sierra Pacific Power in Reno will be frozen for three years. "This is the one last shot at deferred energy (rates) and it's intertwined with the whole deregulation," Scherer said.

The future of deregulation is clouded because Nevada Power and Sierra Pacific want to sell their generating plants; keep only the transmission and distribution lines and abandon selling electricity to the end-line consumer. Nevada law says these two major utilities must be a "provider of last resort" to customers who don't choose other electric suppliers when competition arrives.

But that duty ends in July 2001. And this issue of deregulation could end up back in the Legislature, which starts in February next year.