Big customers may drop Nevada Power

Malcolm Hall

Friday, Dec. 21, 2001 | 10:53 a.m.

Coast Resorts Inc., Station Casinos Inc. and the Sahara hotel-casino have sent letters of intent to the Public Utilities Commission of Nevada indicating they may buy electricity from providers other than Nevada Power Co.

The letters of intent are the first step in the process for large electricity users to buy electricity from sources other than the dominant utility under provisions of Assembly Bill 661, which was passed earlier this year by the Nevada Legislature.

The regulations ensure that any customer who elects to buy electricity from an independent supplier may do so only if there is no economic disadvantage to Nevada Power and its customers.

Gage Parrish, chief financial officer for Coast Resorts, said the company sent a non-binding letter of intent in order to get the process started.

"It's similar to what we've done with natural gas the last several years," he said. "Our power bill is approximately $12 million for electricity at our four properties each year. We're exploring the opportunity to reduce our electricity costs."

Glenn Christenson, executive vice president and CFO for Station Casinos, said the company believes it could save costs that could eventually be passed on to shareholders and customers.

"We're in the process of exploring all of our options," he said. "Filing this letter of intent is the required first step for us to preserve our company's ability to purchase electricity on the open market if that is the direction we decide to go. Whether or not this information gathering process will lead to our company filing a formal application is a decision that will be made once we've had time to review all of the information."

Nevada Power spokeswoman Sonya Headen said the utility supports AB 661.

"We are working with Station Casinos to make sure if they decide to leave it will not cause a hardship or burden to shareholders or existing customers," she said. "It's too early to speculate whether the departure of large casinos would benefit the company's other customers."

Craig Hodgkins, president and general manager of the Sahara, also confirmed sending a letter of intent to state regulators.

"We're negotiating with the Nevada Energy Buyers Network to hopefully save money on electricity, which is a significant cost," Hodgkins said.

AB 661 permits large industrial and commercial users to buy power on the open market beginning July 1, 2002.

Companies must provide a description of the general terms and conditions that they expect to be included in the agreement with their new provider. Once the full applications are submitted, the PUC will determine whether each applicant has met the required conditions.

Vincent Borg, spokesman for Toronto-based Barrick Gold, said his company, which spends about $50 million a year for electricity at the Goldstrike mine in Northern Nevada, also is "looking at the viability under AB 661" of buying power from a source other than Sierra Pacific Power.

Steven Boss, president of the Nevada Energy Buyers Network, said his firm is consulting with Station, Coast and the Sahara. He said the letters of intent are a "head start" in the process of filing formal applications with state regulators.

"The Legislature was convinced that there were potential benefits to regular customers by allowing larger customers to seek their own provider," he said. "We believe it also would relieve financial burdens from the utility company, which has to buy close to $1 billion in fuel and purchased power to resell to customers at no profit."

With regard to Nevada Power's $921 million deferred rate increase filing, Boss said since the legislation requires that any customer leaving the system pay its fair share of purchased power and fuel costs, "they're not escaping any of these things."