Nevada Power: Future hookups in doubt

Wednesday, April 17, 2002 | 10:59 a.m.

Nevada Power Co. says its financial situation is so grave it is no longer certain it can provide reliable electricity to future residential and business developments in the Las Vegas Valley.

Company spokeswoman Sonya Headen said Nevada Power remains focused on providing reliable electricity to existing customers but cannot guarantee its ability to serve future hookups.

The company was forced into this uncertainty by a March 29 ruling from the state Public Utilities Commission, Headen said. The PUC granted the utility $485 million of the $922 million it was seeking from ratepayers for energy used last year.

The company last week sued the PUC and has asked the Carson City District Court to compel regulators to reverse writeoff of $437 million, though critics and state regulators have charged that the utility made poor business decisions and has only itself to blame.

"The PUC's decision was so severe we are uncertain at this point of the impact this will have on our distribution system's ability to serve new hookups, new development centers and anything else dealing with new customer service," Headen said. "We think that developers should have been more engaged in the process when we went before the PUC.

"We're trying to operate business as usual, but there's a lot of uncertainty going forward."

The company is uncertain how future developments will be affected by its decision to delay $50 million worth of work this year on a massive transmission line project designed to increase the flow of electricity to the Las Vegas Valley, she said.

Transmission lines carry hundreds of thousands of volts of electricity from generating plants to Nevada Power substations, where the high-voltage currents are transferred to smaller distribution lines. The currents then are transferred to even smaller power lines that serve homes and businesses.

The company has also said that an untold number of construction contractors, engineers and other consultants will have to be let go because of the spending cutbacks. An undisclosed number of part-time employees and interns of Nevada Power will also be getting pink slips.

"This comes at a very bad time for us," Steve Holloway, executive vice president of Associated General Contractors, said. "The construction economy here has hit a lull. We thought we would come out of it in June or July, but this decision by Nevada Power will affect a lot of contractors and subcontractors.

"I don't presume contractors will go out of business, though it could happen in a few cases. But they could cut down on their workforce, which translates to layoffs."

Valley customers won't notice the transmission construction delays because there are enough power lines to meet projected electricity needs for the next two years. As much as 4,600 megawatts of electricity a day is now consumed in the valley during peak periods.

The so-called Centennial transmission line project was expected to provide enough transmission capacity to meet the valley's electricity needs through 2005, based on projections that peak demand locally grows by 300 megawatts a year.

But the Centennial projections were made before Nevada Power parent Sierra Pacific Resources decided to slash $125 million in capital spending this year in a belt-tightening reaction to the PUC ruling. Included was the decision to postpone expansion of a transmission line substation northeast of the valley and delay engineering work on a planned 60-mile transmission line from Apex to south of Boulder City.

"We will be able to meet customer demand in the short term," Jack Byrom, executive director of strategic business development for Sierra Pacific, said. "But if you can't build facilities, you affect our ability to serve future customers. The net effect is if we don't have enough electrical infrastructure, there's no way we can hook up additional power plants.

"We're in constant discussions with the generators. We are discussing our plans and they're assessing what they can build based on what we can afford to do."

The utility has not made county planners aware of any effect on development, John Schlegel, Clark County director of comprehensive planning, said.

"There are projects going on all over the valley," Schlegel said. "We're still getting a net gain of about 5,000 people a month. That's a lot of people who need power and we don't see signs of that diminishing.

"If they are going to have capacity problems, they will have to start telling us what they are. We haven't heard any of that yet."

Del Webb Corp., which builds homes, has made inquiries about Nevada Power's ability to serve future customers. But company spokesman Sean Patrick expressed confidence that Del Webb will get all the power hookups it seeks this year.

"Our main concern is short term, because we can't close a home until Nevada Power puts a meter on it," Patrick said. "Beyond the short term, it hasn't been a focus of ours yet."

Irene Porter, executive director of the Southern Nevada Homebuilders Association, said she also works closely with Nevada Power but has not been made aware of any potential problems with future hookups.

The Centennial project originally was to have meant the completion of more than 100 miles of new transmission lines by June 2003. That deadline has now been pushed back to June 2004 for two reasons. One reason cited by the company was the PUC ruling.

"If it weren't for the PUC, we would have been able to stick with our budget," Byrom said.

The other reason for the Centennial delays is uncertainty over whether Nevada Power will be able to add transmission lines across a portion of federal Bureau of Land Management acreage near Sunrise Mountain. The area has been considered part of a wilderness study area by the federal government, which could curtail expansion of an electricity corridor.

Nevada Power is hoping Congress adopts a proposed Clark County lands bill that would allow the utility to add transmission lines along an existing corridor. If the bill is approved, Nevada Power would then have to conduct public hearings and secure building permits before constructing new transmission lines in that area.

Despite the budget cuts, portions of the Centennial project are now being built and should be completed on schedule. A new 38-mile transmission line from Primm to a substation in the southwest valley is 75 percent complete and should be ready by October. A new substation near Apex in the northeast valley will be completed by August, and a 30-mile transmission line between that substation and one in the northwest valley will be ready by next March.