Panel struggles with solutions to Nevada power dilemma

Thursday, Jan. 4, 2001 | 11:31 a.m.

Members of the Nevada Electric Energy Policy Committee on Wednesday crafted a series of recommendations expected to be one of the cornerstones of Gov. Kenny Guinn's State of the State address to the 2001 Nevada Legislature.

Committee members waded through a series of issues they've discussed since first meeting in early November. They left the most controversial of the issues for detailed discussion today.

Chairwoman JoAnn Kelly is expected to wrap up the panel's work today with recommendations on how the state should work toward stabilizing the electric industry. Included in the debate: discussions on if and when Guinn should call for a start to deregulation of the electrical industry.

The committee had difficulty reaching a consensus on the timing of the transition from a regulated electrical industry. Some committee members are having the same doubts many consumers have on deregulation after watching California struggle with high energy prices and power outages.

In California, where the state's Public Utilities Commission approved another rate increase Wednesday, there have been calls for an end to deregulation, enacted in March 1999.

Today's discussion on the timing of adopting deregulation and on a market stabilization plan is expected to be arduous because there are divergent views from committee members on how the state should proceed.

Some committee members favor a slow approach on deregulation because of the experience California has had with its implementation of it. Others want to see a rapid entry into the free market to enable large electricity users, like mines and casinos, to negotiate cheaper power deals from new competitors entering the market.

Others prefer a conditional implementation based on certain standards being met. Under one proposal, deregulation would occur after an independent system operator overseeing power transmission is operational, electric price stability has been met and plants in Nevada and California have a 15 percent excess capacity of available power.

Some want the governor to establish a firm date for implementation; others want to allow the market to evolve. The latter is problematic for potential energy suppliers who view the slow pace as a lack of commitment.

Some also are wary that residential consumers receive the same benefits of deregulation as business and industry. They fear that business will capitalize on cheap power rates at the expense of residential users.

The issue of deregulation in Nevada also is complicated by the fact that the state entered into a settlement with Nevada Power Co. and its parent company, Sierra Pacific Resources, enabling the utilities to recover fuel costs monthly at a time when the cost of fuel has skyrocketed.

Because of the settlement, local Nevada Power customers have seen their electricity bills climb by about 13 percent since July.

Nevada Power also is getting out of the power-generation business and has agreements with companies that bought its power plants for electricity at favorable rates through February 2003.

State officials also are hoping to resolve soon what company would become the "provider of last resort" for customers who don't choose an electricity provider when deregulation occurs. Shell Energy and Coral Energy have expressed an interest in that role and have provided the committee with their own views of how the governor should be advised on energy policy.

Recommendations also have been offered by Consumer Advocate Tim Hay, several citizens and other lobbying organizations and corporations.

Some committee members have incorporated some of those recommendations into the document being prepared for the governor.

Kelly also said dissenting opinions may also be forwarded to Guinn -- a possibility during today's session, since there are so many diverse opinions that have emerged on the two controversial issues.

The 17-member bipartisan committee, meeting via teleconference in Las Vegas and Carson City, completed four more recommendations for the governor, giving it six ready for delivery. The panel developed recommendations on low-income energy assistance services, taxation, incentives to build power plants in Nevada and conservation measures.

In its last meeting in December, the committee approved recommendations on renewable energy and establishing a long-term policy committee on energy issues.

In the recommendations approved Wednesday, the committee agreed: