Judge orders hearing in power rate-hike case

Wednesday, Feb. 28, 2001 | 3:08 a.m.

CARSON CITY -- District Judge Mike Griffin signed an order today directing Sierra Pacific Resources Inc. to show why it should not be stopped from levying a $311 million increase in electric rates in Las Vegas and Northern Nevada.

Griffin agreed to hear the petition of state Consumer Advocate Timothy Hay, who contends the 17.7 percent average increase was illegal, even though it was approved by the state Public Utilities Commission. The higher rates were to go into effect Thursday.

A hearing has tentatively been set for Friday morning by Griffin.

Hay said he will face a "steep burden" to convince Griffin to issue a temporary restraining order.

Paul Heagen, acting vice president of corporate communications for Sierra Pacific Resources, said he has not seen Hay's suit but added, "We look forward to the opportunity to have the issue before a judge where the facts can be presented."

Heagen said the utilities commission dealt "responsibly in the face of an evident emergency."

Rather than following the normal routine, the utilities commission approved the rate request and decided it will examine the case later to determine if the increase was warranted. If it finds the rates are excessive, the commission said it would order refunds by Sierra, which is the parent company of Nevada Power Co., of Las Vegas, and Sierra Pacific Power Co., of Reno.

Hay said that at the least, he wants the judge Friday to order the utilities commission to hold a hearing so evidence can be presented justifying the 17 percent hike.

The consumer advocate maintains the application by the electric company was defective because the law prevents successive rate increase petitions to be filed within 30 days of each other. The two companies have been requesting monthly rate increases, and the $311 million increase request came on Jan. 29, after one was submitted on Jan. 15.

Meanwhile the Senate Commerce and Labor Committee introduced a bill Tuesday to stop the utility from selling its nine power generating plants for at least two years.

Sen. Randolph Townsend, R-Reno, said halting the sale could save consumers from $1.7 billion to $3.2 billion over the next five years.

"We don't want to give up that asset," said Townsend, who is chairman of the committee. Retaining those power plants, he said, will mean reliable power for Nevada.

Sierra Pacific Resources has agreements to sell seven of its nine plants for $1.7 billion. Those sales are now pending.

Heagen said the Federal Energy Regulatory Commission and the state Public Utilities Commission ordered the sale 18 months ago -- a decision Sierra fully supported. The company, he said, is under a contractual obligation to sell and must follow the law.

Since those sales were ordered, the market has changed, he said. The contracts allow Sierra to buy power from the new owners at 1998 rates, which Heagen said had a "precious value." If the company is ordered to keep the plants, it must go out on the open market to find fuel to generate the power. And most of these plants are run by natural gas, which has become more expensive.

Haegen says that the fuel market is "volatile" and that Sierra would lose a benefit of buying power at 1998 rates.

On the other hand, Heagen said "consumer confidence" is at risk if the sales are completed. He said there is a risk that prices in three to five years may cost consumers several hundred million dollars more in higher rates.

In its rate filing, the utility, Heagen said, is asking permission to sign long-term contracts to buy electricity at set rates. And these long-term contracts could replace them having ownership of these generating plants.

Hay said the Townsend bill goes along with his plan to halt the sale until the market can stabilize. The consumer advocate has asked the PUC to reconsider its approval.

Heagen said the utility wants to do what's best for the consumer on this issue.