Panel passes bill to halt sales of two power plants

Friday, March 23, 2001 | 10:58 a.m.

CARSON CITY -- A major bill that would repeal Nevada's law allowing deregulation of the electric industry was approved Thursday by an Assembly committee.

The bill would stop the state's two major utilities from selling their generating plants for $1.7 billion.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the state faces an energy crisis that "necessitates drastic action." She said Nevada consumers would save $1.6 billion to $3.2 billion in the next five years with Nevada Power Co. and Sierra Pacific Power Co. retaining ownership of the generating plants.

The Assembly Special Energy Committee voted, with the two Republican members present dissenting, to send Assembly Bill 369 to the floor of the House.

Earlier in the day, the Senate Commerce and Labor Committee approved a bill to streamline the government process to allow companies to come to Nevada to build generating plants.

Senate Minority Leader Dina Titus, D-Las Vegas, said Senate Bill 362 would expedite the approval process. "Stretching the process to a year or more can increase the cost dramatically."

Titus' bill does not shorten the period for public comment or for notices to be given. And it doesn't weaken any environmental requirements, she said.

The two bills were authored by the Democratic leadership in the Legislature and are the first major pieces of legislation to move forward.

Assembly Bill 369 was approved after one hearing by the special Assembly committee in contrast to the Senate Commerce and Labor Committee, which has been trying for weeks to hammer out a bill to stop the sale of the plants.

Before the vote in the Assembly Committee, members were told that there could be legal action filed because the bill interfered with the contractual right of AES Corp. of Arlington, Va., to buy Nevada Power Co.'s 14 percent interest in the Mojave generating plant near Laughlin for $133.5 million.

Harold Franson of AES urged the committee to amend the bill to "grandfather" in the sale, which has been approved by the state Public Utilities Commission, the Federal Energy Regulatory Commission and other federal agencies.

But Committee Counsel Kevin Powers suggested if a suit was filed a court would likely defer to "legislative judgment." He said, however, the bill was "pushing constitutional outer limits."

Barry Huddleston, director of state regulatory affairs for Dynergy Inc., which is buying Reid Gardner and the Clark Generating Station from Nevada Power, told the committee that allowing the sale to go through would save consumers more than $400 million over the next five years.

Larry Semenza, lobbyist for Dynergy, noted there were some fears that the company would start selling its power out of state after 2003. But he said the firm was willing to commit for five years to sell to Nevada Power to keep the generating supply in Nevada.

But Buckley said one reason to stop the sales is that the generating plants would remain under the state authority. If the state lost its jurisdiction, there would not be any way to stop price gouging in the sale of electricity.

State Consumer Advocate Tim Hay, endorsed the moratorium on the sale, suggesting consumers would be saved $850 million. Fred Schmidt, representing the Southern Nevada Water Authority, estimated Nevada consumers would save $1.6 billion to $3.2 billion over five years if the plants remained with Nevada Power and Sierra Pacific Power Co.

Assemblywoman Kathy Von Tobel, R-Las Vegas, was one of the two who cast the dissenting vote on the committee.

She said she feared this bill would put Nevada Power "in peril" because it would lose part of the proceeds of the $1.7 billion sale. She expressed concern the utility would not have enough money to purchase fuel to run the plant. She also said the threatened legal challenges puts uncertainty into the market.

Von Tobel noted that Nevada Power will be able to buy its electricity from the new owners of the plant at 1998 wholesale prices, which would be a benefit to consumers.

At the beginning of the hearing, Assembly Speaker Richard Perkins, D-Henderson, said the bill would stop the sale of the power plants until July 1, 2003, and then until 2007, they could be sold only because of a "substantial financial emergency." Some of the companies seeking to buy the plants in Nevada are under investigation in California for manipulating the energy market.

The 1997 and 1999 Legislature passed bills allowing deregulation of the industry. But it was never put into effect. It was supposed to start in March last year but Gov. Kenny Guinn delayed it because the state was not ready. And the Assembly will would scrap open competition altogether.

Both bills should be ready for final passage by their respective houses next week.