Nevada shouldn’t face blackouts

Thursday, Jan. 18, 2001 | 11:27 a.m.

CARSON CITY -- Nevadans should not be hit with rolling blackouts in the near future as are being experienced by California, state officials said today.

Don Soderberg, chairman of the state Public Utilities Commission, said the crisis in California was not caused by a shortage of energy but by the inability of the major utilities to pay their bills. The suppliers were not willing to sell electricity to these utilities.

"Our (Nevada) electric utilities are credit worthy and have no such problems," Soderberg said. In fact, the Nevada utilities have been selling their surpluses into the California market and that "has softened some of the bite" in the neighboring state.

Bob Sagen, a spokesman for Sierra Pacific Resources Corp. that is the parent of Nevada Power and Sierra Pacific Power, said, "We're in pretty good shape. We don't have the problems California has.

"Financially, we not in bad as shape as PG&E and Southern California Edison," Sagen said. The two Nevada companies have been partially recovering their increased fuel costs through monthly rate increases. These rate hikes, Sagen said are "no where what we need," but they are adequate for the company to meet its bills.

Soderberg said the provision in the so-called "global settlement" permits the two Nevada utilities to increase rates each month to partially offset the higher cost of fuel. "They (the utilities) are assured enough cash flow to meet their obligations," Soderberg said.

But the utilities commission has to keep an eye on the financial stability of the utilities to make sure they don't fall into the same problems as facing California. "We can't let them get into that situation," said Soderberg. "But it looks like they will be OK."

Gov. Kenny Guinn said he intends to contact Gov. Gray Davis today to get his perspective on how California fell into its troubles. He said he wants to see what lessons might be learned to avoid those problems.

Guinn tried to talk to Davis Wednesday but could not get through because Davis was tied up with the emergencies.

The governor also intends to take a look at the suggestions of State Consumer Advocate Tim Hay who has recommended that Nevada Power Co., and Sierra Pacific Power Co., be stopped, at least temporarily, from selling their coal fired plants.

Hay said he wants to approach the Legislature for a law to permit the utilities commission to put conditions on any sale to make sure there is low cost power available to Nevada citizens and an ample supply.

Under the conditions of the merger between Nevada Power and Sierra Pacific, the two had to sell off their generating plants. They now have contracts to sell nine of their generation facilities for $1.7 billion. But there are also clauses in the contracts that permit them to buy back enough electricity to supply Nevadans at low costs.

Sagen said the buy-back proposal allows the Nevada utilities to purchase power from the generating plants at 1998 rates. The utilities also have long-term purchase contracts with other suppliers, at least until 2003.

Whether or not there is enough volume to supply Nevada depends on the rate of growth, Sagen said, noting that there should be enough energy until 2003. By that time, he said the company expects new power plants and transmission lines to be built.

Hay said today, "I don't foresee any problems at this point," in having enough power to meet the needs of Nevadans.

"The main load in Las Vegas is in the summer so we are in good shape," he said. There also should not be any problem in Northern Nevada this winter, Hay said because Sierra Pacific does not have to import a great deal of its energy supply.

"I don't think we're faced with rolling blackouts," Hay said.

The governor also said he is studying the recommendations of his task force on energy. And his priority will be to see that the "most vulnerable population -- the low income and the senior citizens on fixed income -- are not adversely affected."

In a report Guinn's task force, headed by former public utilities commissioner JoAnn Kelly, said there is a need for more power plants in Nevada to meet the growing population and increased demand. It suggested that Guinn "make a strong policy statement" that new generation facilities must offer Nevada customers a portion of the electricity generated.

The task force also recommended Guinn issue an executive order that all state agencies be involved in a joint review of an application for a new generation plant, in an effort to speed up the process to issue a permit for the facility.