Independent power producers fighting Nevada electricity settlement

Wednesday, Sept. 20, 2000 | 11:37 a.m.

CARSON CITY -- The "global settlement" that permitted Nevada to open the electric market to competition and to allow continued rate increases to consumers is under attack from another source.

The Nevada Independent Energy Coalition has asked the state Public Utilities Commission to reconsider its approval of the settlement, which has already been criticized by others.

The coalition represents cogeneration companies that produce electricity to sell to Nevada Power Co. in Las Vegas and Sierra Pacific Power Co., in Reno. In southern Nevada, these plants produce 300 megawatts of power, said Michael Alcantar, attorney for the coalition.

"Those units are essential to keep the lights on in Southern Nevada," said Alcantar, a San Francisco lawyer.

For instance, Nevada Cogeneration Association 1 and Nevada Cogeneration Association 2 produce steam and a byproduct of the steam production is electric power that is sold to Nevada Power in Las Vegas, said Alcantar.

In Northern Nevada, they are the geothermal plants that sell electricity to Sierra Pacific Power.

The settlement, said Alcantar, "inappropriately interferes" with federal and state approved contracts between the utilities and the cogenerators. For instance under the "global settlement," these contracts can be auctioned off to other companies. "State and federal law assured us the contracts would be protected.

"The settlement doesn't seem to do that," Alcantar said. "We expected to have contracts with the utilities, not somebody else."

Under a federal law enacted in the 1980s, these alternate energy suppliers negotiated long-term contracts with the utilities to buy a certain amount of power at certain rates. These cogeneration suppliers now fear those contracts will be voided by this settlement. And the value of those contracts could be diminished.

The settlement was negotiated by the utilities, state Consumer Advocate Tim Hay, the major gaming casinos in Las Vegas and the staff of the Public Utilities Commission. It was approved by the commission on a 2-1 vote. But the cogenerating interests were not involved in the negotiations.

Alcantar's effort to get the PUC to reconsider the "global settlement" was rebuffed Monday. Commissioner Richard McIntire said the Alcantar petition could not be considered with the rule involving past costs.

Alcantar said he intends to file a petition in another docket or rule to get the commission to take jurisdiction and to reopen the settlement. "We're going to pursue every avenue. We hope the utilities and the commission and the state Legislature will work with us to get this done."

Meanwhile Gov. Kenny Guinn said Tuesday he has not decided whether to go along with the "global settlement" and open the market on Nov. 1 to allow the big casinos in Clark County and other major users to shop around for alternate sellers of electricity.

Under the settlement, homeowners will have to wait until September next year before the market opens.

The settlement, in allowing Nevada Power and Sierra Pacific Power Co. to seek monthly rate increases to cover the higher cost of fuel, goes contrary to the deregulation law. It said the rates would be capped for three years.

Some attorneys say the law is unconstitutional. Assembly Majority Leader Richard Perkins, D-Henderson said Tuesday he wants a test case to determine if the rate freeze law is valid. He said nobody but a judge can determine if that law is unconstitutional.

Perkins thinks the settlement violates the rate freeze law but he wants to make sure the law is valid.

And Perkins, Senate Minority Leader Dina Titus, D-Las Vegas and Assembly Assistant Majority Leader Barbara Buckley, D-Las Vegas, want Guinn to hold off on deregulation until ratepayers have some protection against the rising power rates.