Sierra Pacific cautions investors about settlement

Friday, Oct. 20, 2000 | 11:18 a.m.

The parent company of Nevada Power Co. is warning investors that the company still isn't recovering all its fuel costs from customers, even though there is a court settlement in place that enables it to seek monthly rate increases.

Officials with Sierra Pacific Resources Inc., the Reno-based parent company, said the company's inability to keep up with skyrocketing fuel costs would have an impact on earnings, scheduled to be announced next month.

In Nevada Power's Southern Nevada service area, the company has sought the maximum rate increase allowed under the settlement from customers every month since the settlement took effect in August.

"While we are now increasing electric rates to begin recovery of these costs as permitted under the global settlement, it is important for investors to realize that the monthly fuel and purchased power recovery tracking mechanism lags changes in actual fuel and purchased power expenses, which will continue to negatively affect earnings," Mark Ruelle, senior vice president, chief financial officer and treasurer for Sierra Pacific Resources, said in a statement today.

In another announcement, the company said it agreed to sell its half interest in the Valmy Power Station in Northern Nevada to NRG Energy, Minneapolis, for $273.3 million.

Sierra Pacific maintained the right to buy energy at contracted prices from the Valmy station through early 2003.

Valmy, a coal-fired 286-megawatt plant that sells electricity in Northern Nevada, is jointly owned with Idaho Power Co. and is 40 miles from Winnemucca.

Also included in the sale to NRG Energy are the company's Battle Mountain Diesel Plant and the Winnemucca Gas Plant.

Earlier this year, the company also agreed to sell its 14 percent interest in the Mohave Generating Station in Laughlin to AES Corp. It's also planning to sell other power plants in a bid process that will conclude in early 2001.