Editorial: Talk about a double whammy

Wednesday, Jan. 31, 2001 | 9:42 a.m.

Bob Shriver, the state official in charge of luring companies here, believes Nevada could gain from California's energy crisis. California companies have been hit hard by the rolling blackouts and high electricity prices, so the conventional wisdom is that many might want to leave. Shriver, according to an Associated Press story, plans to launch a new ad campaign to target businesses in the San Francisco Bay Area and Southern California. But before state officials get too excited about portraying what they view as the stability of Nevada's energy market, they might want to check out the beating that residential customers and businesses are receiving in their own back yard.

Nevada isn't suffering from blackouts, but this state is hardly the sea of tranquility when it comes to energy costs. Southern Nevadans have been on the receiving end of a double whammy -- both electricity and natural gas prices have been skyrocketing in recent months. Nevada Power announced on Monday that it will seek approval of rate hikes for its residential customers by a whopping 17 percent while larger users, such as businesses, could see rates go as high as 25.4 percent. Meanwhile, Southwest Gas in the past few months has boosted its rates -- the average residential customer now pays $26.80 more a month -- and the company wants even more, last week requesting a 28.6 percent increase.

The pancake effect of these sizable increases, stacked one on top of another, can be brutal on an economy. Consumers tagged with larger electric and gas bills will have less money to spend, possibly even cutting into buying other necessities. Also, when energy costs start to jump, they can jolt consumer confidence, which can cause people to scale back on all purchases. If that happens, businesses likely will scale back their operations, which can mean the loss of jobs.

Meanwhile, Walt Higgins, the chief executive officer of Sierra Pacific (the parent company of Nevada Power), tried to reassure Nevadans that the rate hike could have been worse. "Even with this increase, our rates will still be lower than in California," Higgins said. But that begs the question of whether a rate boost in Nevada is justified. The state Public Utilities Commission should put Nevada Power's request under a regulatory microscope, ensuring that residential customers and businesses aren't being gouged. If Nevada regulators were to reject unnecessary rate hikes, then that would give the state's economic development officials something tangible to crow about it.

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