Columnist Jeff German: Shalmy has Herculean task before him

Friday, Aug. 2, 2002 | 4 a.m.

PAT SHALMY isn't Superman. But Nevada Power is counting on the high-powered connections of its new president to help fend off a takeover bid from the Southern Nevada Water Authority.

At first glance the appointment of the 61-year-old Shalmy would seem to be a tremendous morale boost for Nevada Power, which has earned the public's wrath through poor business decisions and skyrocketing electric bills.

Shalmy, a former county manager and Las Vegas Chamber of Commerce president, is the ultimate political insider who has friends at all levels of government. He's media friendly, adept at building alliances and regarded as a straight shooter.

Yet with all of his communication skills, he knows little about running a power company and probably less about the past management decisions that landed Nevada Power in trouble with regulators and ratepayers.

"He certainly brings a lot of credibility and political acumen to the company, but I'm not certain that's what they need," says Nevada Consumer Advocate Timothy Hay, who gets paid to tangle with Nevada Power. "I think they need a top-to-bottom review of their management practices."

What Hay and others find odd is that Shalmy's first priority is not to reshape management and restore public confidence in the privately run utility, but rather to spend money fighting a county ballot question this November that seeks to test the waters for the Water Authority's proposed buyout.

Voters are being asked in a non-binding referendum whether they approve of a public utility, such as the Water Authority, taking over the power company.

Shalmy thinks it's a bad idea.

"I strongly believe that private industry does things much better than the public sector because it removes the politics from it," he says.

This must be a different Shalmy than the one who spent 31 years in public service, 12 as county manager, the most powerful of all local public jobs.

As for the referendum, Shalmy says: "We will fight this, and we will be very aggressive about it. We will show how this company has been a reliable company, how rates have been favorable compared to other utilities in the Southwest and how good service has been."

And how will that be accomplished? Through a media campaign that likely will include newspaper and television ads.

R & R Partners -- which has a marketing contract with Nevada Power's parent company, Sierra Pacific Resources -- has been asked to participate in the campaign.

Shalmy won't say how much money will be spent, but R & R doesn't come cheaply. With a long list of influential clients, it is considered the brightest advertising agency in the state.

Its president, political kingmaker Billy Vassiliadis, seems anxious to take up Shalmy's cause, so the power company must be willing to part with a lot of cash.

"At the end of the day, Pat Shalmy gives Nevada Power a credible voice that will create a level playing field," Vassiliadis says. "The Southern Nevada public needs to hear both sides and make a decision on the merits."

R & R's role in the fight, however, isn't going over well with Pat Mulroy, the veteran Water Authority boss, who points out that the firm also is under contract with her agency to promote its conservation program.

Is there a conflict? Vassiliadis doesn't think so, but Mulroy may be the ultimate judge of that.

Mulroy, meanwhile, appears more upset that Nevada Power plans to use revenues generated from ratepayers in the assault on the ballot question. Essentially Nevada Power will be spending the public's money to persuade the public to continue paying high power bills.

"Don't you think people are going to get a little bitter?" Mulroy asks.

Outraged is more like it.

If Nevada Power isn't careful, its advertising campaign could backfire and create a new tidal wave of public animosity toward the company, leaving Shalmy wishing he was back in his cushy Chamber job.

And if the Water Authority can show that electric bills will drop dramatically with a buyout, it's going to be lights out for Nevada Power.

In the end it probably won't even matter whether the high-powered Shalmy is at the helm.

Shalmy can make himself dizzy doing all of the political spinning he wants between now and Election Day. But as long as Nevada Power fails to demonstrate an ability to reduce the cost of providing power to the valley, it will come up short in this fight.

Its only hope is to give the public what it wants -- lower monthly statements.

That won't be accomplished through a fluffy advertising campaign, but rather through tough management decisions and the realization that it's no longer acceptable to gouge hard-working families.

Mulroy understands Nevada Power's predicament better than most people, which is why she's not impressed with its decision to hire Shalmy.

"This company's financial situation is not going to be changed by one man," she says.

Not even Superman.