Nevada PUC chief has no answers yet on deregulation

Wednesday, Sept. 13, 2000 | 10:59 a.m.

CARSON CITY -- With the furor heating up over electric deregulation, the chairman of the state Public Utilities Commission told legislators Tuesday he doesn't know what he will recommend to Gov. Kenny Guinn on opening the market in Nevada.

Chairman Don Soderberg said he will meet with Guinn and "share information" on whether competition in the electric industry should be started on Nov. 1, as called for in a "global settlement" approved by the utilities commission earlier on a 2-1 vote.

Soderberg was pressed by Democratic legislators at a meeting of the Interim Finance Committee to reveal what he will recommend to the governor, who has the final word on whether the markets will be open. He said, "I don't know I have an answer at this point."

Democrats are calling for a delay in open competition until ratepayers are protected from a potential 64 percent increase in power rates in the next three years.

Assemblywoman Chris Giunchigliani, D-Las Vegas, said the "global settlement" that permits the higher rates "flies in the face of the law" that capped consumer rates for three years until 2003.

Giunchigliani and Sen. Bob Coffin, D-Las Vegas, tried to get Soderberg to reveal what he would tell the governor. But Soderberg refused to disclose what he planned to tell Guinn, who has said he will make a decision by the end of the month.

Earlier in the day, three Democratic legislative leaders from Clark County, called on Guinn to postpone deregulation until there were adequate protections for the ratepayers.

Under the "global settlement" reached by Nevada Power Co., Sierra Pacific Power, major casinos in Las Vegas, Consumer Advocate Tim Hay and the staff of the utilities commission, the big electric users in Southern Nevada will be able to shop for their power on Nov. 1. Homeowners will have to wait until September next year for the market to open to them.

Senate Minority Leader Dina Titus, Assembly Majority Leader Richard Perkins and Assembly Assistant Majority Leader Barbara Buckley said any move to deregulate electrical utilities must include protections against skyrocketing power bills for homeowners, apartment and mobile home residents and small businesses.

Under the "global settlement" the utilities can automatically raise rates every 45 days to cover the increased cost of fuel or purchased power. Under the "worst case scenario," they said an average residential customer's rate could rise from $71 last July to $117 by February 2003 in Southern Nevada.

Titus, D-Las Vegas, said the authority of the utilities commission should be restored to first study these proposed increases to see if they are justified.

The trio said, "We are particularly concerned that people who can least afford it -- seniors living on fixed incomes, small businesses struggling to survive, working families -- could face dramatic increases in their monthly power bills if there are not safeguards in place."

Nevada Power has already put in motion plans to raise rates by 7 percent by Nov. 1. Both Nevada Power and Sierra Pacific Power are expected to announce a rate increase this Friday. This rate increase does not raise company profits but only covers the higher cost of fuel the utilities use to produce electricity.

Nevada Power said its cost of purchased and generated power increased by 47.8 percent due to higher fuel and purchased power prices and additional megawatt hours generated and purchased. Sierra Pacific Power's cost rose by 43.6 percent.

The 1999 law, agreed to by the utilities, permitted Nevada Power one last rate increase before electric deregulation that could have started March 1. The PUC rejected the application by Nevada Power for higher rates. And Guinn decided Nevada was not ready for the opening of the market.

After Titus, Perkins and Buckley issued their statement, Guinn said he would be willing to meet with the three to discuss deregulation. And he said the plight of the ratepayer is one of the main things that will be considered when he decides on open competition.

In an interview earlier, he said that deregulation won't stem the rises in utility costs. He said that's due to higher demands and a limited number of plants that are producing electricity.