Where I Stand — Mark Ruelle: Keeping the lights on

Friday, Aug. 17, 2001 | 4:25 a.m.

Editor's note: In August Where I Stand is written by guest columnists. Today's writer, Mark Ruelle, is president of Nevada Power Co.

IS THE ENERGY crisis over? Watching or reading the news, it would be easy to get that idea. And some industry critics would like to convince you that there was never a real crisis to begin with.

I can understand why you might consider the whole situation far too confusing and just wish it would go away. It is tempting to adopt all of these views, but to do so misses the true risk to our customers who deserve reliable, affordable energy. What is needed now, more than ever, are some honest discussion, hard choices and responsible leadership to make our future more certain.

I am the new president of Nevada Power, and I consider it my job to help do that. I also believe you deserve some straight talk about what we at Nevada Power are doing on these issues that so profoundly affect our way of life for all of us in Nevada. Before I took on this job, I had spent months trying to convince investors not to give up on Nevada. They did not give up, but it was a near miss. Their confidence was only restored after the Legislature, the governor and the Public Utilities Commission took action -- yes, actions that led to rate increases with the likelihood of more in the future.

So, when we are staring at some of the highest summer utility bills we have ever seen, why should we care about investors and how they feel about this state? The answer is that it takes a lot of investment capital up front to purchase or build the power lines, transformers, transmission grids and outside supplies of power and fuel to support our growing needs in Nevada. That money comes first from investors who are eventually repaid through revenues collected from customers who use those systems and supplies. If investors lack confidence in their ability to be repaid, they charge more for their loans or invest elsewhere, which hardly serves the needs of customers in Nevada.

This is a time when everyone in Southern Nevada needs and expects services to keep pace with our growth and lifestyle -- police, fire, schools and streets. This community can take a lot of comfort in knowing that when a new customer calls us to set up electric service to their home, we are ready with it the next day. It's OK with me that people take that for granted, because we take for granted that it's our job, but no responsible leader can ignore the economic realities that stand behind the reliability we have all come to expect in our community.

The other reality we face is simply the need for more power. No one can force a power plant developer to build in our state. What attracts them is a stable policy environment, a growing market for their power, the ability to have their power delivered to market, and a balanced rate structure that allows them a reasonable chance to recover their investment. We are investing $300 million over the next two years to construct the highest capacity power network ever built in Southern Nevada. This system will give our customers access to new power plants that are planned north of Las Vegas -- plants that could supply as much as half of the peak demand for power in our area.

We were successful this past week raising that money from outside investors simply because they were confident this state had a better and more honest energy policy than a state like California. To ignore these market realities, or to make political points by scoffing at the need to offer investors a fair return, is to put the consumers in this state at a much greater risk -- and we choose to not let that happen.

There are more issues ahead, including a misguided federal policy that puts Nevada in the position of subsidizing California's daily power at the cost of our state. It is another one of those complicated issues, but essentially these federal price controls allow California to buy power each day at a discount but limit the ability of states that have planned ahead, like Nevada, to sell power to California at its true cost, thereby reducing the overall cost of wholesale power purchases for our customers. We were the first to identify this risk to our state and have been personally and directly involved with several lobbying efforts to change these rules.

Critics would like you to believe that this energy crisis has easy solutions and easy culprits, but it is a confusing, complicated and difficult set of issues involving real market forces, real economics and a real need to be candid and clear about the choices we must make and the risks we face. Customers should be wary of anyone who suggests these issues can be made to go away through rhetoric or some new rule.

Instead, we are committed to working out these issues with responsible leaders who understand our mutual obligations to look out for your way of life and future.