Editorial: Tougher regulation at home …

Friday, March 30, 2001 | 3:30 a.m.

The past week saw the first steps taken on the path to restoring some measure of sanity for electricity customers in Nevada. The moves by the Nevada Legislature alone won't guarantee that electricity rates will come down anytime soon, but there is hope that lawmakers are developing a reasoned strategy on how this state might cope with the region's energy crisis.

Legislation started getting traction that would bar Sierra Pacific, the parent company of Nevada Power, from selling its power plants. When California initiated its electric deregulation, it forced its utilities to sell its power plants, which led to their purchase by out-of-state companies. These companies showed their neighborliness by engaging in price gouging, which has devastated customers in the Golden State. Not wanting to witness a repeat here, Nevada lawmakers are set to forestall sales of power plants for some time, which is a wise move.

While out-of-state companies won't be able to hold consumers hostage if the plant-sale prohibition becomes law, that doesn't automatically prevent Nevada-based utilities from raising their rates unfairly. Indeed, in the past year this state's Public Utilities Commission hasn't displayed the kind of toughness that Nevadans have come to expect and demand of regulators overseeing a government-sanctioned monopoly. In response, Assembly Democrats introduced legislation last week that would essentially turn back the clock to an era when regulators treated rate hike requests with a harsher eye.

Assembly Bill 661 would require the electric utilities to open their books so that regulators would have an opportunity to look at the entire finances of the companies. The bill also aims to put tighter controls on what kinds of energy costs are passed on to consumers. One section of AB661 even calls for utility regulators to be elected instead of being appointed by the governor as they are now, but it's unlikely it will become law. It appears instead to be the legislative equivalent of a two-by-four, an effort to get the attention of regulators, so that they might start taking their jobs more seriously again.

Nevada had planned to deregulate the electric industry by 2000, but Gov. Kenny Guinn fortunately postponed its implementation when he felt the state wasn't ready. The shock over out-of-control costs for electricity, just as California deregulated its electric industry, has produced quite a public backlash. Consumers and businesses just don't think it's worth the gamble right now to rush forward with deregulation -- it's good to see that state elected officials are listening.

Appointments to the Federal Energy Regulatory Commission usually elicit yawns -- but these aren't ordinary times. The commission regulates wholesale power sales, but its unwillingness to stop price gouging in the West is maddening.

Last week President Bush nominated two new members to the five-member commission, producing cautious optimism from some consumer activists that the laissez-faire attitude finally might change. That might be a rosy scenario, in light of Bush's own free-market approach to this issue, but it is critical that the commission stem these exorbitant prices before they seriously damage the region's economy, including here in Nevada.