Panel urges state to stay electric deregulation course

Friday, Jan. 5, 2001 | 10:41 a.m.

A bipartisan citizens panel has recommended that Nevada continue its course toward deregulating the electrical industry, even as Californians ponder bailing out of their two-year-old program.

A day after the California Public Utilities Commission raised electrical rates in the Golden State to help keep two utility companies from going belly up, the 17-member committee advising Gov. Kenny Guinn on a state energy policy voted to recommend that Nevada press ahead cautiously.

The committee, meeting by teleconference in Las Vegas and Carson City for a second straight day Thursday, debated two measures for about five hours, giving Guinn a couple of alternatives to consider when he makes a decision on when and how competition should begin from what always has been a regulated system served by monopoly utility companies.

The two issues discussed Thursday -- the timing of the startup of full electric competition at the retail level and a plan to stabilize a power market reeling from high fuel costs -- were the most controversial of eight recommendations being forwarded to the governor.

The panel also wrapped up a policy statement summarizing all of the recommendations heading for the governor next week and destined to be a cornerstone of Guinn's State of the State address.

"Extreme price volatility and uncertainty of adequacy of supply are unacceptable for Nevada," the draft policy statement reads. "It should be the policy of Nevada to put in place a plan so that there is an adequate supply of electricity at a predictable price and with acceptable environmental impacts for the residents of the state."

Committee Chairwoman JoAnn Kelly will edit the committee's proposals in the next week and the panel will meet one more time next Thursday to give it a final look before sending it on to the governor.

Kelly said differing recomendations representing some of the dissenting views of the committee also would be given to the governor to give him a wide range of alternatives to consider when establishing policy.

The most contentious issue debated was the timing of Nevada's entry into deregulation. This had at least five different viewpoints represented by different committee members and one company with an interest in the outcome.

The summarizing policy statements addressing the timing issue say, "Large electric or aggregated customers who are currently capable of making their own electric commodity supply and price arrangements (either through self-generation or purchasing) should be allowed to do so and use the electric transmission and distribution system at tariffed transportation rates, provided that the Public Utilities Commission of Nevada finds that such actions do not result in the transfer of costs to or otherwise harm customers who remain full service utility customers.

"Full electric competition at retail for other than large or aggregated customers should start only when it is beneficial to Nevada consumers."

The different recommendations addressing timing follow the same basic theme summarized by the policy statement, but differ on specifics of what Guinn should consider before opening the market. Some recommend specific deadlines by when certain actions should be taken in order to assure a smooth transition to deregulation. Others simply suggest that Guinn shouldn't start deregulation until certain economic conditions exist.

Consumer Advocate Tim Hay, another committee member, suggested that any efforts by large customers to negotiate their own power deals ultimately could help the rest of Nevada by increasing the supply for everybody else in the state.

"Large customers should be allowed to make their own electric commodity supply and price arrangements (either through self-generation or purchasing) immediately if such arrangements result in a net addition to generating capacity for Nevada," Hay's recommendation says.

"All other customers should be allowed to make their own electric commodity supply and price arrangements ... immediately upon appropriate aggregation and if such arrangements result in a net addition of generating capacity for Nevada."

A recommendation from Tim Cashman, a committee representative from the Las Vegas Chamber of Commerce, suggests deregulation should start no later than March 1, 2003, and lists a series of deadlines to help meet that date are outlined throughout his recommendation.

Cashman based the start-up date on the end of Nevada Power Co.'s power buyback contracts from companies that have acquired the utility's power plants, a condition of the company's acquisition by Sierra Pacific Resources Inc. Cashman figures that the public's dependence on favorable power rates negotiated in the plant sales will end and a competitive market will be needed to assure prices remain reasonable.

Backers of recommendations that have firm dates for deregulation to begin also argue that a solid start-up date would encourage companies serious about entering the Nevada market to start planning.