Electric rate hike is set in motion

Thursday, March 1, 2001 | 11:15 a.m.

CARSON CITY -- Sierra Pacific Resources Inc. is being allowed to put its $311 million rate increase into effect today after telling a district judge that any delay could lead to blackouts similar to what occurred in California.

District Judge Mike Griffin refused Wednesday to issue a temporary restraining order requested by state Consumer Advocate Timothy Hay, who complained the rate increase was illegal. Hay sought a delay of at least two days until the case could be more fully argued.

The case returns to court Friday as Griffin hears additional testimony.

The judge will determine whether to issue an order to delay the 17 percent average rate hike to customers of Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno, which are subsidiaries of Sierra Pacific Resources. This is the largest increase in the history of the company and amounts to $850,000 a day in higher rates for customers.

Hay said Sierra Pacific has overstated the harm it will suffer if the rate hike is delayed two days. The utility, he said, has just paid $20 million in dividends to its shareholders and has been selling power to California.

"The rate increase was illegal," he told the court in seeking the temporary restraining order.

But Bill Petersen, general counsel for Sierra Pacific, said the company was negotiating with its bankers for financing. If the rate increase was delayed, even two days, that would end the talks. And he said it would "cause power suppliers not to sell us power." He said that could lead to blackouts.

"The company would be severely impaired," Petersen said, in arguing against any delay.

Jeff Parker, counsel for the state Public Utilities Commission that permitted the higher rates, said there would not be an "irreparable harm" to the ratepayers since they would be eligible for a refund if the higher rates were allowed. He said, "Nobody's power is going to be turned off for a $1 a day," and nobody is going to be evicted from their homes in a two-day span.

The credit worthiness of the company is important, he said. If that is damaged, Parker said there could be blackouts.

The judge, during the 90 minutes of arguments, juggled two cases. He presided over a criminal case in another courtroom in which the jury started its deliberation. When Griffin completed hearing arguments in the rate case, he was notified the jury in the other chambers had reached a verdict.

There were several reasons, Griffin said, for refusing to stop the rate increase.

All of the parties to the case have not been notified, and the consumer advocate's office had not filed a complaint that is required in seeking a restraining order. In addition, the judge said Hay must show evidence of the risk of harm to the ratepayers and the likelihood he will prevail in the suit.

This case has moved very fast, the judge said, adding that it was not his intention to blame Hay for some of the procedural defects. But Hay said later the complaint had been filed.

Griffin said he also will consider on Friday the motion by the PUC to dismiss the Hay petition.

Martha Ashcraft, attorney for Las Vegas casinos, participated in the hearing by telephone and supported the consumer advocate in calling for a delay in the rate increase, at least until another hearing on Friday.

Sierra Pacific was suggesting a "clamity" with rolling blackouts if the higher rates were delayed two days. "The world would not come to an end if the rates were not implemented," Ashcraft said.

Hay officially filed the suit against the Public Utilities Commission, claiming it illegally approved the increase without hearings.

The law, according to the consumer advocate, prohibits a utility from filing for rate increases that are less than 30 days apart. In this case, Nevada Power and Sierra Pacific filed a request to boost their rates on Jan. 15 to recover the higher cost of fuel. And then they came in with the 17 percent on Jan. 29.

The public utilities commission, without holding hearings or taking evidence, agreed to allow the increase and said it would process the case later to determine if the higher rates were justified. The commission said the utility faced an emergency financial crisis and needed relief immediately.

Hay said the staff of the PUC "expressed serious reservations about the filing," but the regulatory agency went ahead with its approval.