Power rate hikes on horizon

David Strow

Wednesday, Aug. 29, 2001 | 10:53 a.m.

The West's electricity markets may have stabilized, but the same can't be said for the bills of Nevada Power Co. customers.

Southern Nevadans will likely face power bills 20 percent to 27 percent higher than current levels by this time next year, Walt Higgins, chief executive of Nevada Power parent company Sierra Pacific Resources, said on the television program "Face to Face with Jon Ralston" Tuesday.

"It would seem unlikely to us (that bills would be higher than that), unless the markets melt down again," Higgins said. "They might be lower, if we're able to procure power for our customers for next summer at lower prices, because the markets have stabilized somewhat right now."

"Face to Face," produced by the Las Vegas Sun, is aired on Las Vegas One, a channel partially owned by the newspaper.

This massive hike in rates isn't a prediction of where electricity rates will be in one year, but a reflection of costs as they stand now. There is a cap on the rate the company can charge customers for electricity, but that is not enough to pay the cost of purchasing that electricity on the open market.

The losses taken are recorded in a deferred account. In December, Nevada Power will ask the Public Utilities Commission of Nevada for permission to increase its rates to pay off this balance, starting in April 2002. These increases could be phased in over three years. Nevada Power also plans to ask for a separate general rate increase in October.

In a conference call with investors earlier this month, Higgins estimated that the final deferred balance will be between $700 million and $900 million.

But Nevada Power won't get this request without a fight -- Tim Hay, Nevada consumer advocate, says he plans to "vigorously contest" Sierra Pacific's planned rate increase requests.

"We'll be arguing there are issues of prudency (in the company's wholesale power purchasing) and management that need to be resolved as well. We will be scrutinizing the power purchasing practices of the utility," he said.