Power plant sales grinding to a halt

Erin Neff

Wednesday, March 7, 2001 | 11:15 a.m.

CARSON CITY -- Even though it won't solve the state's power shortage, consensus is building to halt Sierra Pacific Resources from selling its plants.

During testimony this morning before the Senate Commerce and Labor Committee, the state's consumer advocate, water suppliers and even the power company begrudgingly agreed a moratorium on the sale is probably the best public policy.

Senate Bill 253, as drafted, would halt the sale of the plants until July 1, 2003, when perhaps the current Western energy shortage might have eased.

When Sierra Pacific and Nevada Power announced a merger in 1998, state and federal regulators both required the sale of the companies' assets.

"At this time what was an appropriate policy is probably not the best policy going forward," said Doug Pond, vice president of governmental and regulatory affairs for Sierra Pacific Resources.

Now Sierra Pacific Resources has signed contracts for seven of its nine plants, including state approval for the sale of the Mohave plant in Laughlin that serves Southern Nevada and Southern California. But lawmakers questioned whether even that approval should be allowed, given the current crisis.

The state's consumer advocate, Tim Hay, recommended amending the bill's wording to include a measure halting that sale.

Steven Oldham, senior vice president for Sierra Pacific Resources, said since his company is a relatively small player in the overall power industry, it would probably make more sense to either sell or keep all of the plants.

"If there's going to be a change in state policy, we recommend that it happens very, very quickly and clearly," Oldham urged.

Numbers continue to fly about whether selling the plants will actually benefit the consumer. In previous testimony, Hay said divestiture would cost consumers, conservatively, $915 million over the next five years.

Sierra Pacific said divestiture would actually benefit the consumer in the first two years to the tune of $872 million. After that period, the company would have to buy power on the open market at unknown costs.

Oldham agreed that the sale of the plants would have a negative impact on consumers over the next five years.

"For the foreseeable future, it's very difficult to say selling the plants is in the best interest of the consumers," Oldham said.

Since consensus appears to have been reached on halting the sales, lawmakers must now consider how long the moratorium should last.

Hay recommended the bill be amended to make the moratorium last until 2005. Fred Schmidt, a lobbyist for the Southern Nevada Water Authority, recommended 2006.

"We do not think that it's clear that the supply situation will be completely turned around by 2003," Schmidt said.

Even if the sales are halted, Southern Nevada faces growing energy problems because Nevada Power controls only about 2,000 of the region's peak 4,600 required hourly megawatts. The company has long-term contracts for about 600 additional megawatts, but must purchase the remaining power on the open market.

"We are still substantially short of the peak requirements needed for this summer's load," Schmidt said.