Barring plant sales could force monopoly

Erin Neff

Friday, March 16, 2001 | 11:51 a.m.

CARSON CITY -- A company that wants to build a power plant in Nevada suggested this morning that if the Legislature prohibits Sierra Pacific Resources from selling its plants, Sierra would have control of all of the state's generation in an unsure energy market.

But power company Pinnacle West's concerns about generation led lawmakers to a shift of position.

If big users are kicked off the Sierra Pacific system, it would lessen the demand for power, and the state won't face a shortage for residents and small businesses.

"We may not give them a choice," said Sen. Randolph Townsend, R-Reno, chairman of the Senate Commerce and Labor Committee. "We may say: 'You've been asking for it. Get out of here.' "

The suggestion to remove the big users from the system came as Scott Craigie, a lobbyist for Pinnacle West, warned that halting the sale of the plants would give Sierra Pacific Resources -- the parent company of Nevada Power -- an unfair advantage.

"(Senate Bill) 253 makes it harder to build new generation," Craigie said, referring to a measure that would prevent the sale of Sierra's generation assets until 2003.

The higher costs paid by large users like casinos and mining companies led them to seek lower prices and more generation. Casinos were represented when the so-called Global Settlement was reached to help Sierra Pacific stay financially sound.

Now the requests for lower prices and more generation led Townsend and others on his committee to suggest the big users ought to buy their power from the new generators.

"I think we need to protect the citizens, ma and pa on the street," said Mike Schneider, D-Las Vegas. "The big guys can take care of themselves."

Harvey Whittemore, a lobbyist for the Nevada Resort Association, admitted his clients recognize: "We are in the light business. We need to keep the lights on."

"Our biggest concern has always been that in Nevada we have too little generation," Whittemore said. "But we're concerned about getting kicked out of the system.

"We need time to negotiate new contracts," he added. The committee will consider the issue of large power users next week, but spent the bulk of this morning's session attempting to amend language in the bill to try to get the legislation passed as quickly as possible.

Testimony continued this morning in support of a moratorium on divestiture with savings now on the higher end of earlier $915 million to $3.5 billion estimates.

Fred Schmidt, a lobbyist for the Southern Nevada Water Authority, said the recent drop in natural gas prices make the estimated savings higher because Sierra Pacific will have to pay less for the gas it uses to fuel its plants.

Timing of the bill's passage is now critically important, and not just from a political standpoint due to competing legislation from Assembly Democrat Barbara Buckley.

Kevin Powers, an attorney for the Legislative Counsel Bureau, said the state could defend the Constitutionality of the bill against a threatened lawsuit from a company trying to buy one of Sierra's plants - but only if the measure passes soon.

AES, which has a contract to buy Sierra's Mojave power plant, has threatened a lawsuit if the bill passes. AES contends its contract with Sierra Pacific - approved by the Public Utilities Commission - cannot be voided by the legislation.

But Powers said lawmakers have the discretion to protect the public interest and can pass the bill as long as that sale is not finalized.