Electricity-rate hearing delayed

Friday, March 2, 2001 | 11:34 a.m.

CARSON CITY -- A court hearing set for today in the battle by state Consumer Advocate Tim Hay to delay a $311 million electric rate increase for users in Las Vegas and Northern Nevada has been postponed until Tuesday.

Hay said Thursday he made the request because more time is needed to give notice to all the interested parties. He estimated there may be more than 40 groups or companies that have intervened in the rate case.

District Judge Mike Griffin heard initial arguments Wednesday and refused the request of Hay for a temporary restraining order to stop the 17 percent increase of Sierra Pacific Resources Inc. from going into effect Thursday.

Hay contends the rate increase, approved by the state Public Utilities Commission, is illegal. But Sierra Pacific Resources, the parent company of Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno maintains it faces an emergency situation in which it may not have enough resources to purchase power.

The PUC, in an effort to show it made the right choice in approving the rate increase without full hearings, filed an affidavit Thursday written by its manager of policy analysis, Kirby Lampley.

Lampley acknowledged that he did not have complete information on the financial status of the companies but said an initial review showed they faced serious problems. He suggested the utilities may have to deplete their cash reserves in order to purchase higher-priced electricity in the near future. That could result in the company losing its line of credit.

"Such a situation would probably lead to insolvency and even involuntary bankruptcy, given the expected low tolerance by lenders due to the California situation," he said in his affidavit. And an involuntary bankruptcy "could lead to the inability to purchase sufficient power to avoid blackouts ..."

Lampley said a bankruptcy filing would damage the credit rating and would lead to higher rates for all customers.

The PUC, in approving the requested rate increase, said it would consider the evidence later about whether the additional money was warranted. And it said it would order a refund to customers if the two utilities were found to be overcharging.

Hay maintains the utilities are overstating their plight. He said they authorized a $20 million dividend to their stockholders four days after they filed the $311 million rate request. And the utilities are selling power to California.

Utility officials say any delay in the start-up of the higher rates would damage their negotiations with banks for credit lines and might lead to blackouts because there would not be enough cash to purchase power.