Editorial: Hasty ruling is bad move

Tuesday, Feb. 27, 2001 | 9 a.m.

It is disturbing that state regulators last Friday hastily approved Nevada Power's bid to hike electricity bills by 17 percent. State consumer advocate Tim Hay was upset by the state Public Utilities Commission's consent to the utility's emergency request for a $300 million boost in rates. "I believe the company has manufactured hysteria and manipulated the commission into approving a record rate increase without even one word of public comment," Hay told Sun reporter Richard N. Velotta.

Executives of Sierra Pacific, the parent company of Nevada Power, have said that they need the increases in order to offset the skyrocketing costs they are bearing to purchase the power. It is true that high energy costs are affecting nearly all power companies in the West, but there still were a number of important questions that should have been answered before any action was taken on such a monumental increase.

State regulators should have sought additional input to determine if the utility is in the dire financial straits it claims it is. Sierra Pacific CEO Walt Higgins contends the company was "two weeks from having the checkbook run dry." But Hay correctly noted that earlier this month the company paid out a 25 cents-per-share dividend, which cost the company $20 million. In addition, while the company reported a net loss of $5.8 million, a previous agreement approved by the commission allowed them to recover losses from fuel and purchased power. Customers shouldn't have to pay for any bad business decisions that may have contributed to the company's losses.

The commission said it will continue to monitor the situation and, if a further review finds that the rates weren't justified, it will make adjustments later. But this after-the-fact approach doesn't do consumers much good while they pay huge bills now -- Hay believes the average monthly electric bill for a residential customer could peak at $232 this August. Public confidence in state regulators won't rise with this latest decision, nor did it last year when a huge increase was allowed despite a state law passed in 1999 that was supposed to freeze electricity rates for three years. Regulators should ensure the continued financial health of Nevada Power, but at the same time the commission must look out on behalf of residential customers and businesses, all of which are having to absorb these costly blows.