Lawsuit likely to test Nevada electric deregulation law

Tuesday, Sept. 19, 2000 | 11:14 a.m.

CARSON CITY -- A suit may be filed soon to test the constitutionality of Nevada's electric deregulation law that puts a three-year cap on power rates, Assembly Majority Leader Richard Perkins, D-Henderson, said today.

"We're actively looking at ways to have a judicial review so the courts can give us a thumbs-up or a thumbs- down," Perkins said.

The 1999 Legislature authorized competition to begin in the electric industry but also imposed a ban on higher rates until March 2003.

Legislative Counsel Brenda Erdoes said in a legal opinion the law was probably unconstitutional because of the rate freeze, which would force the utilities to sell power at a level lower than their costs. Sierra Pacific Resources Co., the parent of Nevada Power Co., also filed a federal lawsuit challenging the constitutionality of the law.

Sierra Pacific dropped the suit after a "global settlement" was reached permitting deregulation to go forward and for Nevada Power and its sister Sierra Pacific Power Co., to raise rates to recover higher costs of fuel or purchased power.

The settlement was reached between the utilities, Consumer Advocate Tim Hay, the big casinos in Southern Nevada and the staff of the state Public Utilities Commission. The commission, in a 2-1 vote, accepted the agreement, which many say violates the law.

"One of my biggest concerns is the law is being ignored," said Perkins, referring to the agreement that permits the monthly rate increases. So far Nevada Power has submitted four rate increases, the latest 1.4 percent. That will mean the rates in Southern Nevada will have increased by 8.4 percent in November.

Perkins and two other Democrat leaders -- Senate Minority Leader Dina Titus, D-Las Vegas and Assembly Assistant Majority Leader Barbara Buckley, D-Las Vegas -- have called on Gov. Kenny Guinn to ensure the ratepayers are protected before he allows open competition.

The "global settlement" permitted the big casinos in Southern Nevada and other large users, starting on Nov. 1, to shop around for lower rates in a deregulated environment. Homeowners won't be able to choose their own supplier until next September.

But Guinn still has to declare the market open.

Perkins said attorneys have differing interpretations on the constitutionality of the law. "I can't declare it unconstitutional. Nobody can. Only a court can.

"If we decide to ignore it (the deregulation law), what law do we next ignore?" he questioned. "The last thing we want to do is ignore the law."

He said he and others are searching for "somebody with standing" who could file suit and get a quick decision from a court.

The utilities, he said, should be able to recover their increased fuel costs. But both he and Titus said there should be prior review by the utilities commission to make sure the "pass-along" costs were justified. At present, the "global settlement" allows them to go into effect without any scrutiny by the state regulators.