PUC approves Sierra’s 17.7 percent rate hike request

Brendan Riley

Saturday, Feb. 24, 2001 | 10:06 a.m.

CARSON CITY - A record $300 million, 17.7 percent rate hike for Sierra Pacific Resources, whose subsidiaries provide electricity throughout Nevada, was authorized Friday by state regulators.

The rate hike had been opposed by the state's consumer advocate for utility customers, but state Public Utilities Commission member Richard McIntire said quick action was needed.

"We need to keep the lights on," McIntire said during a brief PUC meeting. "Otherwise, if we choose to suspend this docket, we will be hearing it by candlelight."

The PUC's unanimous ruling allows the rate hike to take effect now, subject to the outcome of further proceedings. At those later proceedings, opponents will get their first chance to detail their objections.

Executives of Sierra's Reno-based Sierra Pacific Power Co. and Las Vegas-based Nevada Power Co. filed for the rate hike only last month, saying it was vital to their financial health.

Jeff Ceccarelli, president of Sierra Pacific Power, said the PUC ruling is "a huge step forward for us" because of the improvement to the utilities' finances.

But Ceccarelli, asked whether still more rate hikes are likely, said that the energy market is increasingly volatile and he couldn't say what might happen later on.

Tim Hay, the state's consumer advocate for utility customers, said he was disappointed with the PUC action and may consider seeking a court injunction.

Hay and other critics have pointed out the utilities have been raising rates monthly since last summer, and those increases could total about 60 percent by March 2003 when the monthly rate adjustment program ends.

Hay said the utilities could recover most or all of their fuel and purchased power expenses by relying on the monthly incremental rate hikes - without the 17.7 percent rate hike they requested in January.

But Walt Higgins, chairman and chief executive officer of Sierra Pacific Resources, had said the utilities have been collecting only about half the cost of wholesale power and fuel prices.

Residential and small commercial customers will see increases averaging just over 13 percent, under terms of the latest increase. Hotel-casinos will see increases of about 20 percent, mines will get rate hikes averaging about 25 percent, and agricultural irrigators will get increases ranging from 15 percent to nearly 30 percent.

A residential customer using 650 kilowatt hours of electricity a month will see a 10.4 percent increase - up just over $6 to about $68.

The rate hike followed Sierra Pacific Resources' recent report showing fourth quarter losses of $18.2 million and year-end losses for 2000 totaling $39.8 million - a 177 percent drop from 1999.

Utility executives blamed the huge plunge on skyrocketing fuel prices, exacerbated by the California energy crisis.

The PUC action also followed Gov. Kenny Guinn's move Thursday against the utilities' planned power plant sales. Several legislators also have questioned the sales of plants that provide about half of Nevada's electrical supply.

Guinn asked the PUC to take a second look at the sale plans. He also said he's sticking with his earlier decision against implementing a 1999 Nevada deregulation law.

If the plant sales don't go through, Ceccarelli said Sierra Pacific Resources might not have a required debt-equity ratio needed to go ahead with a $3.1 billion acquisition of Portland General Electric Co. - even with the new revenue from the 17.7 percent rate hike.

But he and other utility executives said Sierra is moving ahead with its legal obligation to pursue the deal.