Friday, Feb. 15, 2002 | 4:36 a.m.
I have been in the utility business for 25 years. I have a passion about this business, and long ago I learned that there is a lot of intense scrutiny, accountability and even second-guessing that come with providing a service that is essential to everyone's life and livelihood. We welcome and expect that scrutiny to continue as we move forward in our rate case process with the Public Utilities Commission of Nevada.
However, what has been disheartening throughout the last few months is that our critics continue to portray evidence that we mismanaged our power purchases or speculated in the wholesale power markets. We do not speculate. We do not make money on buying and selling power. And we do not buy more power that we anticipate our customers will need. To address some of these issues, it might be helpful to revisit where the utility market was a little over a year ago.
What was on everyone's mind a year ago? California was facing daily rolling blackouts and power prices were continuing to rise. California was short nearly 4,000 megawatts of power which, interestingly, is just about enough to power Southern Nevada on a hot summer day. We were looking at what was happening over the western border with tremendous concern.
Historically, Nevada Power was able to obtain any additional power our customers needed on a hot day on the spot market at reasonable prices. That had changed dramatically over a year ago. Not only were prices skyrocketing, it was unclear whether or not power would even be available on the spot market with California signaling it would be grabbing all of it.
As early as the fall of 2000 we made the correct decision to purchase a firm power supply to ensure the lights stayed on the following summer. Keeping the lights on safely at the best possible prices was our main priority then and continues to be our focus today. Every signal we received, whether from our customers, public officials or members of the business community, was also very clear in that regard.
Our job was to secure the most reliable supply for our state during the worst wholesale market meltdown in the industry's history. Those who suggest we had the choice between high-priced power and low-cost power are just plain wrong. In fact, our plan was reviewed during hearings at the PUC and those involved, including the Bureau of Consumer Protection, were put at ease because we had secured a reliable supply.
To say we speculated in the wholesale power markets is simply ridiculous. We have absolutely no economic incentive to take any speculated risks whatsoever in the wholesale markets. Under deferred energy accounting restored by the Legislature last year, all of our expenses and revenues from power purchases or sales are put into a separate account. Any gains from power sales are used to offset costs to our customers and any shortfalls in the account would be applied to rates if the purchases were deemed prudent by the PUC. Anyone who suggests we speculated in the markets has yet to come up with a good reason why we would even do so.
Did we make the right calls? I believe we did. The issue to be reviewed by the PUC is whether or not our practices were prudent. The final determination of that come with the intense analysis, regulatory audits, mountains of documents, sworn testimony, cross-examination and intense scrutiny of every decision we made.
As anyone who has followed this situation is aware, this is a real issue that will not go away easily or painlessly as it affects every other state in the West. As a member of Nevada's community and a business leader committed to serving our citizens, we will continue to work on solutions to an issue that is of such vital importance to all of us.
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