Energy bill sails through Capitol

Thursday, April 19, 2001 | 11:13 a.m.

CARSON CITY -- Electric rates are frozen until March, state electric utilities' generating plants cannot be sold and the law allowing deregulation of the industry is scrapped under a bill approved Wednesday by the Nevada Legislature and signed by the governor.

Gov. Kenny Guinn said the Legislature's action was a "victory for everybody who pays power bills in Nevada."

The Senate passed and the Assembly accepted amendments to Assembly Bill 369, which stops Nevada Power Co. in Las Vegas and Sierra Pacific Power Co. in Reno from selling their generating plants.

The bill also freezes electric rates until next March and scraps the law that allows deregulation.

Within three hours after the action by the Assembly, Guinn signed the bill that he said was crucial and that included many parts of his energy policy announced earlier this year. It provides a ratepayer protection plan, he said.

Sierra Pacific Resources Inc., which is the parent of the two major utilities in Nevada, praised Guinn and the Legislature, saying this was a decisive step.

"This is an elegant solution that protects consumers from sticker shock by delaying and spreading any increases out over time, while offering our business partners the immediate assurance that our creditworthiness is strong," said Walt Higgins, chairman, president and chief executive officer of Sierra.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, and Sen. Randolph Townsend, R-Reno, agreed this would help Nevada avoid a debacle similar to the one suffered by ratepayers and utilities in California.

"If the sale was allowed to go forward, the ratepayers would have suffered the same fate as California. They allowed their power plants to be sold. Out-of-state companies came in and manipulated prices and prices skyrocketed," Buckley said.

Townsend said these generating plants will remain in the control of Nevada companies. And the system of regulating utilities will return to its former oversight, where the state Public Utilities Commission will decide whether rates will be increased.

It reinstates deferred energy accounting, permitting the utilities to recover the higher costs of the fuel they purchase for their generating plant and the higher prices they pay for purchasing power from outside sources. Those rate increases won't go into effect until early 2002. And they could be as high as 30 percent. But the utility could spread the increase over three years.

Buckley said this deferred energy accounting will permit the companies to borrow money to buy fuel, now that they are able to recover full cost. And this will "ensure we have adequate supply for the rest of this year," said Buckley.

She said rate applications will be open to the public now, in contrast to the secret negotiations that led to the so-called "Global Settlement" that allowed monthly rate hikes to recover costs of power purchases.

The special Assembly Committee on Energy will hold hearings next week concerning whether a modified form of deregulation might be allowed. But it would not be permitted without protections in place for the small consumer. The bill, AB661, has gained a second extension of a week to be processed by the Assembly, Buckley said.

The big companies such as mining and gaming "should not be able to exit our system in this time of crisis, especially without consumer protection," she said.

But Townsend said there is "talk about getting rid of people who are creating problems for residential customers, but that's not deregulation. There may be some large users we may have to force off the system to protect the reliability and the accessibility of the average customer."

For instance, mining companies in Northern Nevada take about 25 percent of the load produced by Sierra Pacific Power.

Gaming and mining companies are preparing a plan to allow them to leave either Nevada Power or Sierra Pacific to contract for electricity from "new Nevada resources." The plan, expected to be presented to the Assembly committee next week, would allow these groups to depart the system if the utilities "find it in the public interest."

The commission would have to determine if the departure would result in increased costs of service to those customers remaining with the present power suppliers.

Townsend said true deregulation probably won't occur for five or six years.

The bill also allows the Public Utilities Commission to review the proposed purchase of Portland Electric in Oregon by Sierra Pacific Resources Inc.

Townsend suggested that the merger probably would not go through in the present climate. And Buckley said the acquisition would "result in Nevada ratepayers subsiding ratepayers in another state." The deal called for Sierra Pacific to give a break to customers of Portland General Electric.

The utilities commission said it does not now have any authority to approve or reject the merger.

archive