Guinn seeks aid for utilities

Thursday, March 22, 2001 | 11:37 a.m.

CARSON CITY -- Gov. Kenny Guinn on Wednesday sent word to the Nevada Legislature that he wants electric utilities to recover full costs when buying higher priced fuel. This means customers of Nevada Power Co. and Sierra Pacific Power Co. would be dealt millions of dollars in higher rates.

As it stands, the two utilities can collect from their customers only part of the higher costs the companies pay for energy. For Nevada Power, that amounts to about $19.3 million more every month, or an increase of 1 percent more per month on the electric bill in Clark County.

Guinn's legal counsel, Keith Munro, has told the Senate Commerce and Labor Committee the governor wants legislation to permit "deferred energy to make the utilities whole." Deferred energy is the amount the utilities are entitled to recover when they pay higher than expected costs for fuel.

Munro's testimony came as the committee debated the bill to stop the two utilities from selling power plants. Committee Chairman Randolph Townsend, R-Reno, had hoped for a vote on the bill, but objections were raised regarding sections of the measure.

Senate Bill 253 would also repeal a 1999 law in which legislators thought they had placed a freeze on utility rates until 2003. If this section is enacted in SB253, then Nevada could return to the old system permitting the two utilities to file general rate increases to boost profits, which have been sagging because of the energy crunch.

Sierra Pacific Resources Inc., the parent company of the two utilities, reported a net loss of $18.2 million for the quarter ending Dec. 31. And it suffered a new loss of $39.8 million in the full year, partly because of the rising energy costs.

Legislators in 1999, as part of a bill to deregulate the electric industry, included what they thought was a restriction that Nevada Power and Sierra Pacific of Reno could not boost their rates nor file applications to pass higher costs along to customers.

But when the utilities ran into financial trouble, a "global settlement" was reached among the utilities, state consumer advocate, gaming industry and Public Utilities Commission staff.

That settlement, approved by the utilities commission, allowed the two utilities to, each month, file rate applications to recover part of the higher costs they pay for fuel or purchased power. Under Guinn's proposal the company would be able to recover the full cost of the higher power rates.

Doug Ponn, vice president of Sierra Pacific Resources, endorsed the new Guinn position for full recovery. He said it was the "highest and best way" for the companies to avoid substantial financial emergencies.

The bill before the committee would halt the sale of the utilities' generating plants for $1.7 billion. Consumer representatives say stopping these sales will save consumers money. The moratorium on the sales would continue for two years.

Nevada Power in May agreed to sell its 14 percent interest in the Mohave Generating Station to AES Corp. of Arlington Va. The sale was approved by the state Public Utilities Commission and the federal government. State Consumer Advocate Tim Hay filed a motion Wednesday asking the utilities commission to reconsider its earlier order.

"In light of current market conditions resulting in high prices for electricity purchased at the wholesale level, the sale of generation plants located in Nevada, especially coal-fueled generation plants that provide electricity to the citizens of Nevada at the lowest cost, should be re-examined," Hay said.

"If the Mohave plant is sold, Nevada will lose control of one of its least expensive sources of electric generation," Hay said.

The Senate committee will also consider Minority Leader Dina Titus' bill to streamline the process regarding the approval of new power plants.