Nevada Power in talks to sell electricity for pipeline

Monday, Jan. 22, 2001 | 11:17 a.m.

Nevada Power Co. is attempting to negotiate excess power sales to Southern California Edison to guarantee that electricity to a pipeline that supplies fuel to Southern Nevada won't be disrupted by rolling blackouts.

Electricity was cut periodically last week to the CALNEV Pipe Line Co., operated by the Chicago-based GATX Corp.

Gov. Kenny Guinn has negotiated with his California counterpart, Gov. Gray Davis, to keep the pipeline operating around the clock through Friday, a move that should help Nevada through the busy Super Bowl weekend.

The pipeline is part of a 550-mile refined petroleum products pipeline system that extends from Colton, Calif., to Las Vegas and transported an average 112,000 barrels of gasoline, deisel and jet fuel per day in 1999. There are two pipelines, an 8-inch and a 14-inch line, that operate around the clock to provide Las Vegas consumers more than 1 million gallons of gasoline a day.

GATX, in December, announced the sale of the pipeline to Kinder Morgan Energy Partners LP, Houston, for $1.15 billion. The deal hasn't closed.

Nevada Power President Steve Rigazio said Friday that his company is attempting to help ease the fuel crunch in Nevada by negotiating with Southern California Edison to provide power to keep fuel in the pipeline flowing.

A pipeline company spokesman said power to the pipeline was cut for 18 hours Wednesday and 17 1/2 hours Thursday. By Friday afternoon, operations were normal and continued that way through the weekend.

"If there is a way to work with Edison to get some of our power over there to prevent interruptions, we're going to do it," Rigazio said.

But as of Friday, he said there were no assurances that any power sent to Edison would assure that the pipeline would be kept running.

Rigazio said the pipeline powering matter was one of several issues discussed by the two companies. Another: what to do about the two companies' planned sale of their stakes in the Mohave Generating Station near Laughlin.

In May, Edison and Nevada Power announced they were selling their combined 70 percent stakes of the coal-fired 1,580-megawatt plant to AES Corp., Arlington, Va., for $667 million. Nevada Power was to net $123 million in the deal after negotiating $10 million in power buy-back agreements with AES to enable the company to receive electricity at lower rates through March 2003.

Edison, which operates Mohave, owns a 56 percent stake in the plant and Nevada Power, 14 percent. The remaining 30 percent of the plant that AES is not buying is held by the City of Los Angeles Department of Water and Power, which holds 20 percent, and the Phoenix-based Salt River Project, which has 10 percent.

But both Edison and Nevada Power have been asked by their respective state government leaders not to sell the plants.

The California Public Utilities Commission voted Thursday to block Edison's sale to AES. Meanwhile, Nevada Consumer Advocate Tim Hay recommended that Nevada Power and its parent company, Sierra Pacific Resources Inc., Reno, be stopped from selling their coal-fired plants as a precaution against energy shortages in the state.

The Mohave deal was the first of seven plant sales worth $1.7 billion Sierra Pacific and Nevada Power negotiated as a government-mandated condition of their merger. A Sierra Pacific spokesman corrected an earlier statement that the two companies had negotiated nine sales.

"We're still working on what happens next," Rigazio said. "It's all brand new to us. Our No. 1 objective has been to keep the plants running and to keep the lights on in Southern Nevada and try to help California if we can."