Guinn delays opening electric market

Wednesday, Oct. 4, 2000 | 11:25 a.m.

CARSON CITY -- For a second time, Gov. Kenny Guinn has decided Nevada is not ready for open competition in the electric industry, dealing a setback to the major casinos in Clark County that sought the option of shopping for cheaper power starting next month.

Guinn said he will delay deregulation until next year and will name a bipartisan panel to study the issue. The governor said deregulation will begin no later than Sept. 1, 2001, for all customer classes.

The 1999 Legislature allowed the market to open in March this year, if the governor agreed. But Guinn said then Nevada was not ready.

Today, before an 11 a.m. news conference to announce his decision, Guinn appeared on DayONE Las Vegas on Cox cable channels 1 and 39, to say that he "just didn't feel comfortable" in March over issues like the rates for single families vs. larger entities and sent the matter back to the table.

Guinn called for a summit of those involved to work out the issues. But that summit never came to agreement.

"(It is) most important (for me) to look out for the people of Nevada ... the majority of the people," Guinn said on DayONE, noting that deregulation could come at any time but "timing is very important.

"We have an energy crisis in the world, the U.S. and in the West. We need to look for a plan for the future."

Guinn said he is concerned that Nevada does not have a state energy plan.

According to the sources who asked not to be named, the governor has not been "getting clear answers" on allowing alternative suppliers to compete against Nevada Power Co., in Las Vegas and Sierra Pacific Power Co., in Reno.

But the governor believes the rate increases by the utilities to recover their higher fuel and purchased power costs comply with the law. And he feels the so-called "global settlement" is also legal.

In the global settlement big casinos on the Las Vegas Strip got the right to look for lower-cost electric rates. That would allow them to leave the system where there are almost sure to be escalating power rates. Homeowners under the agreement would have had to wait until next September.

Industry officials say, however, they doubt the casinos would have found many alternatives in this period of rising fuel costs.

It was not immediately known when Guinn will decide to open the market. But his delay will apparently give the 2001 Legislature a third chance to tackle the issue.

The Global Settlement provided the two major utilities the right to recover their increased fuel costs. Nevada Power Co. has announced four increases totaling 8 percent and Sierra Pacific is calling for a 4.8 percent rise in rates.

Guinn's announcement means those rate increases put into effect already will not be rolled back.

It's not clear if those automatic rate increases will continue or if the Public Utilities Commission will examine them before they can go into effect. In a worse cast scenario, rates for residential users in Las Vegas could go up by as much as 64 percent by March 2003.

The 1999 law prohibited the two utilities from raising rates to recover fuel costs. But both utilities said they were losing large amounts of money because of rising fuel costs without any chance of getting reimbursed. So the settlement permitted them to recover part of their fuel costs on a monthly basis and pass the increase to the consumer without prior approval of the PUC.

The bipartisan committee to be named by Guinn will not only consider deregulation but examine the state's energy policy, which the governor feels is lacking, according to the sources.

It's been evident the state is not ready for deregulation. The utilities commission has not approved rates that Nevada Power and Sierra Pacific Power can charge other sellers for using their distribution systems to get electricity to the consumers.

The Federal Energy Regulatory Commission has yet to approve an independent operator to oversee the distribution system to make sure it is fair to all users.

The provider of last resort regulation hasn't been completed by the utilities commission, which set Nov. 16 for a hearing. That deals with customers who don't choose any supplier and determines which company should serve them.