Guinn: Utility won’t get record rate hike

Wednesday, Nov. 28, 2001 | 10:54 a.m.

CARSON CITY -- Gov. Kenny Guinn says Clark County residents can't afford the record $926 million record electric rate increase that Nevada Power Co. is planning to seek on Friday.

"I assure you that they're not going to get the money they're coming in to ask for," Guinn said Tuesday. "I'm not saying they don't deserve some sort of a rate increase."

Still, he said, the figures now being released by Nevada Power are a lot higher than what the company talked about during the 2001 Legislature.

The Las Vegas-based utility will submit its application to the state Public Utilities Commission, which has the final say regarding what to award the company. Nevada Power maintains the proposal is merely to recover the higher costs it paid for fuel and will not raise the company's profit margin.

Nevertheless, consumer bills will increase 25 to 30 percent.

Guinn said, "They were not talking about a big increase during the Legislature. I want a complete understanding on those figures and why they have changed that much."

Guinn said his position doesn't jeopardize the independence of the three utilities commissioners he appoints. "I'm not their boss. I can't remove them. They're not in harm's way."

The commissioners are appointed to four-year terms and can only be removed for cause.

Paul Heagen, vice president of corporate communications for Nevada Power, said the company agrees with Guinn.

But the increase, Heagen said, is to recover actual costs and not to garner profits. He said the governor has made it clear that the company will have to explain all the costs, "and we're prepared to do that."

The company will deliver every document from the past year showing how its fuel costs have risen, Heagen said. He added that the governor is free to scrutinize the filings.

Heagen said orders came down from Walt Higgins, head of the parent company, Sierra Pacific Resources, not to submit any document that can be questioned.

Guinn, former president of Southwest Gas, said he understands that the rate increase is based in part on the higher cost of natural gas.

He said he wants to examine whether the company bought the appropriate amounts of fuel at times, and if they paid higher costs than were justified.

The governor agrees with Nevada Power that an order from the Federal Energy Regulatory Commission hurt the utility. The federal agency capped the price regarding Nevada Power's sale of excess electricity.

In the past the company had been able to sell its extra power for higher rates and use the profits to hold down costs in Nevada.

Guinn said, "There is something to the fact they (Nevada Power) got hit with the rate caps by FERC. It was unfair to them and more unfair to ratepayers."

But, he said, "If they hadn't gotten hit by rate caps they would have purchased power anyway and used all that power," he said. "I want a complete understanding of why those figures changed so much" since the Legislature.

Rarely, if ever, has a governor spoken out publicly in opposition to a proposed rate increase that hasn't even been filed.

But Guinn said he is "entitled to have a position." He added, "We're going to go through this request with a fine tooth comb."

"I can speak up like legislators do. I do it different from the Democrats. They speak up from the political process. I speak up from the facts."

He was referring to a statement issued by Democratic legislative leaders earlier this month that urged the utilities commission to deny what they called an excessive power rate proposal.

Assembly Speaker Richard Perkins of Henderson, Assembly Majority Leader Barbara Buckley of Las Vegas and Senate Minority Leader Dina Titus of Las Vegas said the state commission should reject Nevada Power's request, as it would enable the company "to charge far more than their actual costs of providing power to Nevadans."

Officials for Nevada Power plan to suggest the higher rates be spread over several years.

A decision on the rate increase is expected in the spring of next year.