Assembly speaker not sure PUC will protect ratepayers

Monday, Dec. 17, 2001 | 9:55 a.m.

CARSON CITY -- Assembly Speaker Richard Perkins, D-Henderson, says he's still not confident that the state Public Service Commission will protect the residential customers in a Nevada Power Co. request to raise rates by $921 million.

"They (the PUC) are supposed to protect the ratepayers and I'm concerned they are not going to do that," Perkins said after a meeting of the Legislative Commission on Friday.

At the meeting PUC Chairman Don Soderberg assured the commission the agency would give "thorough scrutiny" to all the issues in the rate case.

Perkins and Assembly Majority Leader Barbara Buckley, D-Las Vegas, questioned Soderberg about several issues that could come before the commission.

Perkins wanted to make sure the PUC looks into administrative expenses, such as the $6 million severance pay given to two former executives. He added that Nevada Power officials during the last Legislature said the utility probably would drop rates in a general rate case, and that would offset the request for more money to cover higher fuel costs.

But the utility asked for rate hikes both to cover higher fuel costs and to increase its profits.

Soderberg said the PUC would look into salaries paid executives of Nevada Power, much as it had in a past rate case involving Southwest Gas. He also remembered the same statements about offsetting costs, Soderberg said, and that would be closely scrutinized.

Buckley said legislators were told that the merger of Nevada Power and Sierra Pacific Power companies would create savings. Soderberg said he recalled the same statements and that also would be examined.

Buckley said if any transactions are deemed imprudent, than the utility should not be able to recover that money from taxpayers.

After the hearing Perkins said Soderberg "gave all the right answers" but he still lacked confidence in the PUC. The agency "is the last line of defense for the ratepayers," Perkins said.

But it hasn't performed that way, he charged.

He referred to the so-called "global settlement" that allowed both electric companies to raise rates every month to recover part of the cost of higher-priced fuel. The PUC approved that settlement and the increases were nearly automatic. Perkins called that settlement "a sham."

Meanwhile the legislative committee told the PUC to re-draft its regulation to remove limits on subsidies that can be paid by Nevada's electric companies to buy renewable resources such as wind, geothermal and solar resources.

The subsidy helps cover the development costs of the renewable resources and is passed onto consumers.

The two utilities are required to get 5 percent of their energy in 2003 and 2004 in renewable energy.

The commission had adopted a rule that would permit Nevada Power Co. to pay up to $30 million for renewable resources. Sierra Pacific Power could pay about half of that.

Sen. Mike Schneider, D-Las Vegas, said the Legislature debated the issue of putting a cap on the subsidy and rejected it. "We knew it (renewable resources) would be more expensive. But it will be a lot more stable in the long run."

The price of renewable resources will come down in the long run as competition develops, Schneider said.